Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1262

Those of you who know me or are regular readers of this blog, will know that I’m an avid social media user. 

My favorites – judging by battery consumption on my phone – are Twitter , Instagram , and Snapchat (donnelly_b). I think it’s incredible what these platforms are doing to branding, marketing, personal connectivity, city building , and the list goes on.

To that end, the March issue of Harvard Business Review has an interesting article by Douglas Holt called, Branding in the Age of Social Media . Whether you’re running a company, a city, or a real estate development project, I think you’ll find the information relevant.

The article starts by describing a shift, brought about by social, whereby big brands are now struggling to capture the attention of consumers. Instead, consumers are listening to individuals and more grassroots movements.

“Or consider Red Bull, the most lauded branded-content success story. It has become a new-media hub producing extreme – and alternative – sports content. While Red Bull spends much of its $2 billion annual marketing budget on branded content, its YouTube channel (rank #184, 4.9 million subscribers) is lapped by dozens of crowdculture start-ups with production budgets under $100,000. Indeed, Dude Perfect (#81, 8 million subscribers), the brainchild of five college jocks from Texas who make videos of trick shots and goofy improvised athletic feats, does far better.”

So what should brands be doing? Holt argues that they need to tap into these developing subcultures and emergent ideologies:

“These three brands broke through in social media because they used cultural branding—a strategy that works differently from the conventional branded-content model. Each engaged a cultural discourse about gender and sexuality in wide circulation in social media—a crowdculture—which espoused a distinctive ideology. Each acted as a proselytizer, promoting this ideology to a mass audience. Such opportunities come into view only if we use the prism of cultural branding—doing research to identify ideologies that are relevant to the category and gaining traction in crowdcultures. Companies that rely on traditional segmentation models and trend reports will always have trouble identifying those opportunities.”

For me, this ties into one of my favorite lines from Simon Sinek : “People don’t buy what you do, they buy why you do it.” And now, thanks to social, it has become a lot easier to figure out what people and communities care about. It has become easier to figure out your why.

Do you see this as being relevant to your work? I am certainly thinking about it in the context of mine.

Earlier this week I saw the Chief Planner of Toronto, Jennifer Keesmaat, tweet this out:

New buildings shouldn’t maximize the envelope prescribed by guidelines, but employ creative designs within it. pic.twitter.com/l7axVB4Hke

— jennifer keesmaat (@jen_keesmaat) March 3, 2016

//platform.twitter.com/widgets.js

I responded with the below quote retweet because I figured I should probably devote a blog post to this topic and not just a tweet.

🤔 https://t.co/WqdaCCWkNi

— Brandon G. Donnelly (@donnelly_b) March 3, 2016

//platform.twitter.com/widgets.js

Now, I don’t know for sure, but I am guessing that her tweet was in response to the criticism from architects and developers that Toronto’s design guidelines are creating homogenous architectural outcomes. Some people – and I’ve written about this before on ATC – believe they’re too prescriptive.

So today I’d like to talk about why playing creatively within the guidelines/zoning envelope, particularly at the mid-rise scale, is a lot easier said than done.

Generally speaking, the value of land is dependent on what you can do with it or, in this case, what you can build on it.

If all you could do was plant things on it, then the value of the land would be correlated with crop yields. If on the other hand you could build a building, it would be correlated, at least in theory, with the amount of space you could build and the rents you could charge for that space.

Of course, this isn’t a perfect science. That’s why I said “in theory.”

Landowners obviously want to maximize the value of their asset when it comes time to sell. So they, along with their brokers, will naturally try and stretch what is possible with the land. Why else do you think the best neighborhoods seem to magically grow new boundaries?

When you combine this with the fact that mid-rise buildings are inherently less efficient to build and with the fact that their smaller size creates diseconomies of scale, it can be exceptionally difficult to find development sites where the numbers make any sort of financial sense. That is, even if you “maximize the envelope” and push rents or sale prices.

So, with all due respect, not maximizing the envelope is almost unthinkable, unless you somehow managed to get a bargain on the land.

Many of you will likely respond in the comments saying that all of this is simply a result of real estate developers being greedy capitalist pigs. But what we are talking about is no different than in any other competitive business environment. 

Developers rent and sell products – albeit products that take an incredibly long time to make and bring to market. To make those products, there are a many costs, ranging from the cost of land to the cost of drawings. But hopefully within all of those numbers sits a profit margin that makes sense given the amount of work and risk that the developer has taken on. 

Put differently, telling developers not to maximize the envelope is like telling a pizza maker to throw out 10-15% of her dough before she makes every pizza – even though she already (over)paid in full for the dough.

If you’ve ever created a development pro forma, you’ll know that it’s not easy getting the numbers to work when you’re operating in a competitive market. This is not a knock against creative design. Trust me, I am a design snob. This is just business.

Today, the new World Trade Center Transportation Hub, designed by architect Santiago Calatrava, opened up – at least partially - in New York City. 

Given that it was originally supposed to open in 2009 and cost about half as much (original budget was $2.2 billion), the critics haven’t been kind.

Here are a few snippets from Michael Kimmelman’s writeup in the New York Times, called, Santiago Calatrava’s Transit Hub Is a Soaring Symbol of a Boondoggle :

…at first blush,  Mr. Calatrava’s architecture can almost — almost — make you forget what an epic boondoggle the whole thing has been. That virgin view, standing inside the Oculus and gazing up, is a jaw-dropper.

The project’s cost soared toward a head-slapping, unconscionable $4 billion in public money for what, in effect, is the 18th-busiest subway stop in New York City , tucked inside a shopping mall, down the block from another shopping center.

And it’s not really a hub. A maze of underground passages connects the site to far-flung subway lines, but there are not free transfers. The place is a glorified PATH station for some 50,000 weekday riders commuting to and from New Jersey.

I haven’t been following this project, so I can’t really comment on the delays and cost overruns. But I sure wish that main hall (called the Oculus and pictured above) was a part of my regular travel routine.

Image via Curbed