Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1180

Aaron Renn has  a few observations  up on his blog from a recent trip to San Francisco. Number 2 is as follows:

“A curiously low energy city.  It’s tough to judge any American city’s street energy after living in New York, but San Francisco felt basically dead. Tourist areas around Union Square and the Embarcadero were crowded, and the Mission on a Friday night was hopping, but otherwise the city was very quiet. Haight-Ashbury was nearly deserted and many neighborhoods had the feel of a ghost town. It’s very strange to be walking around a city with such a dense built fabric but so few people.”

I feel this way every, single, time, I visit San Francisco. I love San Francisco, but outside the main draws, the city feels eerily quiet. I have never understood why that is the case.

This is something that I am sensitive to because I find it even impacts my own energy levels. For instance, Sundays in Toronto often feel too quiet for me. Fewer pedestrians. Slower drivers. Our collective metabolic rate slows down.

I love the hustle of a busy city.

This afternoon I walked the High Line with a friend of mine who seemed to know everything there is to know about new residential development in Manhattan. 

She recently purchased a place and so she had done her homework. She was pointing out every building and telling me the price per square foot range; whether the floor plans were well designed (or if they had misproportioned rooms and awkwardly placed columns); and who the architect was. 

Takeaway: To be competitive in the luxury segment in New York, you really need to have a name brand architect on the project. That seems to be the price of entry.

As she was telling me about the “competitively priced” building in the low $2,000′s psf and the expensive penthouse that recently sold for $7,000+ psf, I started to wonder about historical pricing in New York. How has it trended? 

I also told her that you could buy a really great condo in Toronto for $700 psf. She laughed at how affordable that was. It’s all about your point of reference.

In any case, I found a research report from 2004 called: Why is Manhattan So Expensive? The story is one that you’ve heard before. It’s about the impact of land use restrictions on home prices. But it does also include some historical data on average condo prices.

In 1984, the median price per square for a condo in Manhattan was $359 psf. It peaked in 1987 at $505 psf and then dropped back down to the $300′s in the early 90′s. That was not a great time for real estate. However, by 2002, the median price had rebounded to $606 psf. All USD figures.

From 2002 onwards, Manhattan saw a dramatic increase in home prices. Below are two charts from Corcoran (Q3 2016 data) and Castle Avenue , respectively:

Toronto is obviously not New York, but’s interesting to consider that the average price of a downtown Toronto condo, today, is probably in the low $600′s psf. That’s in Canadian dollars and that’s pricing that New York saw decades ago. 

It reminds me that “crazy pricing” can oftentimes be a psychological reaction to a pricing anchor that we previously set in our minds. It feels crazy. But is it?

Image: Me

Councillor Kristyn Wong-Tam recently put forward a request for a report on the implementation of a 1-year moratorium (let’s ”hit the pause button”) on new tall building rezoning applications in the downtown core of Toronto. You can read the full letter here .

Not surprisingly, the building industry doesn’t like this .

But besides that obvious point, I did want to draw attention to the following comment made by Quadrangle Architects partner, Richard Witt (taken from this BuzzBuzzNews article ):

“The city has, for years, used the development charges that should have been used to upgrade infrastructure to artificially lower property taxes by putting the development charges into general revenue,” he says.

The intent of development charges is that they fund the infrastructure required as a result of new development – everything from transit to water. In the US, they are (I think) more commonly called  impact fees . In this case the name makes the intent quite clear.

I am curious to what extent we are relying on development growth to fund the status quo. Because growth may not always be there. History has shown us that.