Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1553

I was reading Novae Res Urbis this morning and they had a piece on the 3 tower Mirvish + Gehry proposal in Toronto’s Entertainment District. It was talking about David Mirvish’s “sales pitch” to the Empire Club of Canada this week, an attempt to help overcome the criticism around the design, height and overall density of the project. The article ended by saying that the developer will be appealing to the OMB this January.

I know that I’m probably biased in this matter, but I fail to understand the concern around height and density - particularly since the site is 2 blocks from a subway station. Why are we - citizens and policy makers - so obsessed with building height? Good architecture and urban design involves a lot more than the number of floors. Can we not have more sophisticated conversations about built form rather than fixating ourselves on building height?

Secondly, whenever a building gets proposed in Toronto that attempts to, literally, step outside of the box it gets pegged as controversial. Take, for example, the Royal Ontario Museum by Daniel Libeskind. When people used to ask me what I thought of the crystal addition, I used to say that I was a fan simply because it was pissing off so many people. Love it or hate it, it’s architecture. The same can’t be said for a lot of the other stuff going up in this city. Why doesn’t mediocrity invoke the same response? It should.

So my issue is that we seem to be far more comfortable accepting banality than we are with accepting bold new changes like the Mirvish + Gehry proposal. And frankly, if we could actually pull off three 80+ storey towers, it would be down right impressive in this market. How many cities in the world have a real estate market robust enough to support this scale of development?

But this is not a post of unconditional support. I do have concerns.

I’m concerned that 4 heritage designated properties will need to be destroyed in order for this project to move forward. This makes me wonder: What’s the point of a designation if the building can still be demolished? I’m actually surprised that this topic hasn’t been getting its fair share of attention. Again, we’ve been more interested in talking about building height.

Further west along King Street, I have similar concerns with a development proposal that would demolish “restaurant row.” This a spectacularly successful - albeit touristy - restaurant strip and I would hate to see it go. It’s difficult to create this kind of fine grain retail experience from scratch. 

Now don’t get me wrong, I believe in development. I am a developer, after all. But I don’t believe we should be so quick to erase our history.

After I rejoined TAS, I was asked to write a blog post on why I came back. It went live this week on tasdesignbuild.com , and so here it is:

After almost four years at Morguard Investments, I’ve made the move back to TAS. The first time I was here was in 2008, while I was still completing my master’s in architecture and real estate development at the  University of Pennsylvania .

I was then, as I am obviously now, a big supporter of TAS’s commitment to “ Shaping Beautiful Cities™ ”; however, I decided to spend some time on the commercial and more institutional side of real estate. During that time I was fortunate enough to work under someone I consider to be one of the best in the business. She taught me a ton and I’m hugely grateful for that opportunity.

So why did I make the switch? I did it for one simple reason: alignment.

I love cities. That’s why  I blog about them daily . I’m also a big believer in the power of design to make them more beautiful, livable, prosperous and environmentally sustainable. I see the vitality of our cities as the key to Canada’s overall economic competitiveness and I see this vitality as starting with each individual neighbourhood. Every building matters. As a trained architect, I don’t think I’ll ever be able to shake this belief. Real estate is, and will always be, something more to me than just bricks and mortar.

So when I say alignment, I mean a shared sense of purpose. A belief that, as real estate developers, we have the opportunity (and responsibility) to shape cities and, hopefully, improve the way people live, work and play. It’s no easy task, but I think half the battle is knowing that we’re all in this business for the same reason.

Over the past five years I’ve watched TAS evolve as an organization. From its roots in the custom home business to a company in transition, it has grown to become–in my humble, and now biased, opinion–one of the best builders in the city.

TAS is now laser-focused on developing urban mixed-use buildings and is committed to doing so using its  Four Pillars of Sustainability™ . This means that everything TAS does is considered in terms of its impact on (1) the social fabric of communities, (2) the environment, (3) culture and (4) local economies.

It’s an admirable ambition and it really resonated with me.

I was born and raised in Toronto and I can say with all honesty that I care deeply about this city and its future. It pains me when I see buildings go up that clearly privilege economics over experience–not only because it makes for poor city building, but because I think it’s pretty clear that  good design also pays  (to put on my MBA hat for a second). So on a more basic level, I could also say that we’re aligned around one simple goal: To build really great urban buildings. It doesn’t need to be more complicated than that.

But this distinction around urban buildings is an important one because I believe that our world is entering a decidedly urban era. In 1900, only 13% of the world’s population was urban. Today, 75% of the developed world’s population is urban and by 2025 that number is expected to rise to 84%. At the same time, cities all around the world are witnessing what author Alan Ehrenhalt calls “The Great Inversion.” Census figures show that there’s a growing preference for more compact and walkable communities – people are returning to city centres.

Having said all this, I truly mean it when I say that I’m thrilled to be joining a team of ambitious people, passionate about cities and design. I’m honoured by the opportunity and I look forward to collectively working towards making Toronto an even greater city.

Hong Kong’s MTR (Mass Transit Railway Company) is one of the most profitable transit systems in the world. Rider fares amount to roughly 186% of its operating costs.

In comparison, Toronto recovers about 70% of its operating costs from fares and New York recovers 57% . This means that in the latter two cases, government subsidies are required to keep the systems in operation.

On top of this, Hong Kong relies on a unique “rail plus property” model, meaning that they also use the profits from real estate development activities to fund transit expansion. Here’s more on how it works :

"In a value capture scheme, MTR is granted low-cost land around its future stations [from the government]. It then develops the land and uses the profits to pay for system expansion. Through this system, MTR has managed to build subways and elevated rail lines throughout the islands that make up Hong Kong, largely paying its own way."

Overall, this seems to make a lot of sense. Which begs the question, could this model - specifically “rail plus property” - be exported to other cities?

NextCity asked this question with respect to New York , but came up with 3 problems: first, New York has an operating shortfall, unlike Hong Kong; second, New York doesn’t have the same amount of government owned land; and third, construction costs are way higher in NYC.

The first thing that comes to my mind is, why are Toronto and New York so bad at farebox recovery? Our infrastructure is not self sustaining; we’re reliant on government handouts.

Looking at fare pricing, there’s a big difference between the cities. Hong Kong charges based on distance traveled, whereas Toronto and New York charge a flat rate. Intuitively, dynamic pricing makes sense, since you’re then able to capture shorter rides that would otherwise be replaced by walking (or other alternatives) and you capture more value during longer rides.

The other big difference is the hyper density of Hong Kong, since we know there’s a correlation between urban density and transit ridership. I would assume that the demand for most of their rail lines is fairly high. And it’s for this exact reason that I’m opposed to the new Scarborough subway line here in Toronto. Building subways in areas of the city without the densities to support it will only exacerbate our farebox recovery problem.

As for the other two points regarding government land and high construction costs, I have to believe that there’s a way to create a “rail plus property” model that circumvents these concerns.

For one, why does it have to be government land? Could we not reward developers with additional density if they build a subway station in the basement of their new building or contribute to a transit fund? The city already allows additional density near subway stations. Why not do the same for locations where we simply want a station?

Transit is too important not to get right. I hope Toronto will soon understand that.