Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1284

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I have started to meet with developers for my new book – becoming a real estate developer – and I can’t begin to tell you how impressive and inspiring it is to learn about their stories.

It’s easy to look at someone who is successful and feel overwhelmed by everything they’ve accomplished. But nobody starts at the top of their game (unless maybe they were born with a silver spoon in their mouth). Usually there’s a backstory of sweat and struggle that rarely gets told. As the saying goes: success has many fathers, but failure is an orphan.

But those are exactly the kinds of things I hope to uncover with this little project. I am less interested in the successes and more interested in the early decisions, struggles, and thoughts that went into making those successes even possible.

And one thing I’ve noticed is a tendency to just go for it. In fact, when I asked one developer if he had any advice for young aspiring developers, he said: just fucking do it.

As soon as he said this I couldn’t help but think of my elementary school English teacher who used always tell us the same thing – minus the expletive – whenever we’d ask him something such as, how long should this paper be, should we focus on this or that, and so on. He would always say: What does Nike say? Just do it. No buts. Just do it.

At the time, I obviously didn’t give this much thought. But the fact of the matter is there’s so much value in doing. And it’s easy to overthink at the expense of doing. What he was teaching us was to have confidence in ourselves that we would figure it out along the way.

The reason there appears to be a lot of interest in “how to be a real estate developer” is because there isn’t really a set path. You don’t go to school, apprentice for a year under the wing of a developer and then, boom, you’re a developer. 

Most developers have carved their own paths. They just did it.

Understanding building areas is a fundamental component of real estate and development. But it can actually get surprisingly complicated. Definitions, naming conventions, and measurement techniques vary greatly around the world. 

To some, “GLA” means gross leasable area. But to others, it means gross livable area. So it’s important to understand what exactly is being measured when someone tells you that that a building is X number of square feet. Are we talking gross building area, gross floor area, or rentable area? Does that number include the below-grade areas or just what is above-grade? To make matters even more complicated, there are nuances to consider depending on whether it’s a residential or commercial building. 

By now, I am sure you’re starting to see how complicated something as seemingly simple as building areas can get. So let’s talk about some of the basics today. Again, definitions might vary depending on where in the world you area. They might even vary based on conventions you’ve adopted within your particular firm.

Gross Building Area : Also referred to as  Gross Construction Area  by some, this is the total area of the building, measured to the outside walls without any deductions. As you’ll see later, some area definitions allow for certain deductions. Gross Building Area is important because it’s a big driver of your costs – specifically construction costs. This is how much building you’re building. But, and this is important, it does not drive your revenue. That comes later.

Gross Floor Area : This is usually a specific locally-defined measurement convention. It often allows you to deduct certain areas from your gross building area, such as “major vertical penetrations” and below grade parking areas. This number doesn’t directly drive construction costs or revenue (saleable/rentable area), but it’s important because it’s what the city will use to determine important planning numbers such as the building’s density/floor space index and to calculate any applicable levies. It’s also a fairly public number and might be what the brokers are using to calculate, as one example, what certain land sold for on a per buildable square foot basis.

Net Saleable/Rentable Area : This is a hugely important number because it directly drives revenue. It’s your top line. It’s the amount of space you can collect rent on or the amount of space that you can sell. And unless your revenue exceeds your costs (which you’ve calculated using the numbers above), you’re not going to be able to build. 

Note : Commercial spaces (at least in this part of the world) often work a bit differently in that there is what is known as a gross-up factor. What that means is that tenants pay rent on portions of the common areas (such as corridors) that fall outside of what is known as their “usable area.” In this scenario, the rentable to usable area ratio (R/U) becomes important. Naturally tenants don’t like paying for a lot of space beyond their usable area.

This is just a brief overview of building areas. A good architect will make sure that your building area calculations are meeting all local rules and conventions. But as a developer it’s important to know and understand what exactly is being measured and what the “loss factor” of your building is. In other words, how much space is being lost to areas that cannot be sold or rented? Typically, you want to minimize lost space, unless maybe you’re pushing some new concept .

Anything to add to this building area summary? Do you use different terminology or conventions in your part of the world? Let us know in the comment section below. That would make for a fascinating discussion.

Today’s blog post is coming to you live from Quantum Coffee at the corner of King and Spadina in Toronto.

I’m sitting by the window (where I keep running into friends) in a beautiful space that used to be an ugly youth hostel. Nice work Reflect Architecture and MAAST . 

It’s my first time at Quantum, but I am so intrigued by all that is happening here that I feel compelled to share.

So Quantum is a coffee shop. The americano I had this morning was quite good. I hope to have another one sometime in the future. But there’s more to this story. 

Quantum is actually just one leg of something bigger. Attached to it – literally upstairs – is something called BrainStation. And across the street from it is something called The Konrad Group.

The Konrad Group is a digital agency that does everything from brand strategy to mobile development. BrainStation teaches those same skills to other people via in-person courses in this recently renewed heritage space. And Quantum is the stimulant that helps fuel it all.

The connective tissue between these 3 businesses, which are all basically owned by the same poeple, is something that I find super fascinating.

It also feels like the intersection of design, technology, and space (real estate). And as many of you know, that’s what I’m all about.