Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1326

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As further evidence that real estate is a local business , let’s take a look at the housing market in Japan today. It’s a very unique market.

According to this Freakonomics podcast , 50% of all single family houses in Japan are demolished by the time they reach 38 years old. That’s their half-life. By contrast, in the US, this number is 100 years.

The reason for this is rapid depreciation. Real property typically consists of two things: land and the building. Land doesn’t depreciate. But the structure sitting on the land does.

In Japan, the building or structure is thought to be fully depreciated (and therefore worth nothing) after about 30 years for a single-family home and after about 40 years for an apartment/condominium.

The result is that there’s virtually no resale housing market. When somebody buys a house, it is usually torn down and completely rebuilt. It’s a uniquely Japanese phenomenon.

So why does this happen?

The Freakonomics podcast presents a couple of hypothesis. Some believe that it’s caused by a Japanese fixation with newness. New is seen as pure and clean. 

Others believe that it has to do with a building code that is constantly changing due to the high frequency of earthquakes in Japan. 20% of the world’s earthquakes with a magnitude of 6.0 or greater happen in Japan. And so there appears to be a belief that newer homes – with the latest seismic technologies – are the safest.

Whatever the case may be, the fact that there’s virtually no resale housing market in Japan, not surprisingly, produces some interesting outcomes. For one, maintenance and DIY home projects are uncommon. Why invest in your home when it’s not viewed as an asset, but as a disposable good?

At the same time, people worry very little about marketability when they are building new. And this is a big reason why Japan is so famous for its radically designed homes . When you’re building only for yourself, you just do what you want.

But most importantly, some (such as Richard Koo, who is interviewed in the podcast) believe that this approach to housing is a huge “obstacle to affluence.” Without a functioning resale market, the Japanese don’t get the opportunity to build wealth/equity in the same way that other countries do.

Do you buy that?

Given yesterday’s post about Times Square in New York , the timing is perfect to talk about the revitalization of Union Station here in Toronto , its new public spaces, and the programming that’s now happening in and around the station.

Perhaps the most noticeable is something called Front Street Foods  @ Union Summer, which is an outdoor food market set up along Front Street. It’s on this summer from July 6th to September 27th, 2015. 

However, Front Street Foods is only one part – the food part – of a larger events and programming strategy known as Union Summer. I recently had a quick chat with Brad Keast of Osmington , who is involved in a lot of what’s happening right now at Union Station.

I found it interesting to learn about how organic the process was. And I thought you all might find it interesting as well.

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Tell us a little bit about you and your company’s involvement with Union Station. 

I’ve been with Osmington for over 4 years now and Union Station is a major focus of my waking life. 

The company won a public RFP with the City of Toronto in 2009 to be the City’s retail partner in the redevelopment. What this means is that while the City owns the building and is doing base building construction, we are overseeing all the retail, advertising, and special events and programming. We are finding all the tenants, doing a bit of overshell work and then turning it over for fit-up.  

We think the real special part of the project comes in through the special events and programming. We really want to make the station a destination in itself and you’re starting to see that with some of the programming we’ve done this year, be it a contemporary art event like Villa Toronto or something more community-focused like Union Summer – the current animation of the area in front of the station.

How did the idea for Union Summer come about? 

This really was a collaborative internal effort. We started by thinking ‘hey, let’s put a bunch of tables and chairs on the new plaza in front of the station and see what happens.’ Then we added in the idea of food. We knew it had to be accessible but didn’t want traditional food trucks, rather something less mobile but still not permanent. 

That’s when we reached out to Toronto Market Company and they started rounding up the vendors. Then we layered on entertainment – daily music be it live or DJs, as well as a movie night with the Toronto International Film Festival (TIFF) . We even have some kids programming on the weekends. Then we worked with the Farmers’ Market being displaced from Nathan Phillips Square due to Pan Am this year to have them here on Wednesdays.

What was involved in making Union Summer a reality? What was the biggest surprise and/or hurdle that needed to be overcome? 

There was a tremendous amount of coordination needed. First we weren’t sure when the construction was even going to be finished, all that was certain was it would be before Pan Am started. 

Then the infrastructure required for the event itself was an exercise in creativity – power, water, and grey water disposal in particular. There was a lot of meetings with City officials for things like building permits, fire code, council approval to apply for a liquor permit, and health and food safety measures. Operationally things like loading in, coordinating with the installation of the Pan Am banners between the columns, interim furniture when our original order didn’t make it onto a ship in Antwerp, and then the first week was so busy that some vendors started losing staff because they were burnt out. 

Like all things with this project we have to be mindful that this is an operating train station. In fact it’s the busiest building in the country with over 250,000 people per day passing through so we can’t impede those operations. We’ve done our best and have learned some lessons along the way and the reception has been overwhelming. 

One of the best things about having that many entrepreneurs in close proximity is that some vendors have been pairing up to try experiments. Frozen custard-stuffed churro?

Toronto is getting much better at designing and programming its public spaces. Given your experience with Union Summer, is there something the city could and should be doing to encourage more of these kinds of urban activations?

Well, first of all, our contacts at the City, in particular Denise Gendron and Scott Barrett in Real Estate Services have been incredibly supportive of our efforts and we couldn’t have done it without them. If I could make one recommendation it would be to build in the supportive infrastructure for services. Of course that’s only beneficial if there is someone to take charge of the space and program it appropriately. It’s not a part time job.

What’s next for Union Station?

Right now the focus is on getting the first retailers open on GO’s new York Concourse. On the programming side we will host art for Nuit Blanche (October 3rd, 2015). That promises to be exciting. And then opening November 30th, 2015 is the Holiday Market. It was a huge success last year so we’re bringing it back for 3 weeks this time.

Under the Bloomberg administration, public space in New York went through a dramatic transformation. A transformation that I believe was for the better. Here’s a quick video showcasing the changes:

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But now Times Square is filled with topless women in body paint (as well as other characters) looking to get paid for a photo with them. Here’s what that looks like ( photo source ):

And this is making some people very grouchy (including the current mayor, Bill de Blasio). Though to me it doesn’t feel all that different than the Naked Cowboy , who has long been a fixture in Times Square.

In any event, Mayor de Blasio is now floating the idea of reversing one of Bloomberg’s biggest legacies and removing the pedestrian plazas in Times Square. Not surprisingly, lots of people, including myself, think this is a terrible idea. Here’s a snippet from NY Magazine :

I understand that the mayor doesn’t care for the carnival atmosphere at Times Square — neither do I. But eradicating a pedestrian plaza because you don’t like who’s walking there is like blasting away a beach because you object to bikinis or paving a park because you hate squirrels. It represents such a profound misunderstanding of public space that it makes me question the mayor’s perception of what counts as progressive.

Well said. 

But what are your thoughts? Out of the following 3 options, which do you think the mayor should go with?

1. Remove the pedestrian plazas.

2. Find an alternate solution to curb “undesirable” behaviour in Times Square.

3. Do nothing and maintain the status quo.

I’d be curious to hear your thoughts in the comment section below.