Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1118

City Observatory recently published a post called, The 0.1 percent solution: Inclusionary zoning’s fatal scale problem . 

I recognize the political attractiveness of this land use policy, but I’ve always been skeptical about its effectiveness. 

Here’s an excerpt from the post:

“While inclusionary zoning gets top mention as a preferred policy by many affordable housing advocates , there’s precious little evidence that its ever had more than a token effect on the size of the housing affordability problem in any city. In addition, because inclusionary zoning requirements essentially shift the cost of housing subsidies onto new development, they raise its cost, and likely reduce the number of units that get built–which tends to aggravate housing shortages and further accelerate prices.”

Sadly, I think that many housing policies tend to be more about optics, than about impact. There’s rarely such thing as a free lunch.

I find the topic of pricing incredibly interesting. How much is someone willing to pay for item X? I’ve said this before, but pricing was one of my favorite classes in business school.

Here is a line that I really liked from a recent blog post by Tomasz Tunguz’s on price anchoring :

“Relative pricing comparisons are among the most common method of price rationalization.”

The topic of his post may not be all that interesting to this audience – it’s about software as service platforms – but the principles should be. 

In Tomasz’s post he talks about how companies building SaaS products aimed at salespeople will often have their pricing compared to that of Salesforce. In other words, people might say to themselves: Salesforce costs $X per seat. Is this other product worth half of $X? Salesforce is the anchor.

I can tell you that I do this all the time. (Do you?) I’ll say to myself, condos of this build quality are selling for $Y in this neighborhood. Is this other neighborhood better or worse? If better, how much of a premium might someone apply to it?

So if you’re in the business of pricing products, you may want to give some thought to how your customers might be anchored when assessing your offering. Relative pricing comparisons allow us to rationalize dollars in our mind.

There has been a lot of exciting tech + urbanism news this week in Toronto. Uber announced that it’s building a new artificial intelligence team in the city and it came out that Sidewalk Labs (Alphabet company) had responded to an RFP put out by Waterfront Toronto. 

The RFP, which closed at the end of last month, was to find an “innovation and funding partner” for the 12-acre Quayside precinct shown above in purple. It’s the first parcel of the “eastern waterfront.” ( Click here if you’d like to download a copy of the actual Request for Proposal.)

These days, it’s easy to be cynical about these sorts of announcements. Every day you hear about some new innovation center or tech hub. But what’s perhaps unique about this one is that Sidewalk Labs is thinking crazier than most and they have the financial backing that crazy sometimes needs.

If you’re not at all familiar with Sidewalk Labs, I suggest you read this post about how the company wants to build cities “from the internet up.” It’s by their CEO, Daniel L. Doctoroff. 

Not surprisingly, they are thinking about everything from automated trash systems and autonomous vehicles (including their impact on built form, cost of living, productivity, etc.) to exchange-based thermal grids and more cost effective construction methods. And it’s not just about the technology. It’s about marrying tech + urbanism.

Also interesting is their model of setting up a “ hyper-focused labs ”, which are each run by entrepreneurs-in-residence. These internal labs are focused on things like housing affordability, the health challenges faced by low-income city residents, and so on. 

It’s all very exciting. So let’s ensure this moves forward and let’s hope Sidewalk Labs keeps thinking crazy. Toronto is ready to lead and show the world how a city built from the internet up should perform.