Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1560

I was driving down St Clair West yesterday and I noticed that Urbancorp had erected a marketing sign on their site at 836 St Clair Ave West (former Hungarian House ) and was in the midst of constructing a sales office.

The project is called The Homes of St. Clair West and it looks like it’ll be a promising set of semi detached houses. However, if you look at the City of Toronto’s Development Application website , the site shows a mixed use project with almost 100,000 square feet of residential space and roughly 12,000 square feet of retail space.

I’m not sure how to reconcile what’s planned for site, but I have two things to say:

First, I think it’s a damn shame that the Hungarian House was even torn down in the first place. I’m not exactly sure when it was built, but I thought it was an interesting building with lots of potential to be incorporated into a new mixed use project. We really need to get better at preserving the history that we do have in this city.

Second, if they’re planning townhouses along St Clair Avenue then I think it’s absolutely the wrong type of development for that street. St Clair deserves midrise. Let’s hope that’s what they have planned.

One of the things I often hear people say to me is that “you can never go wrong with real estate.” And indeed, if you’re talking about Toronto real estate over the past decade, then yes, it was fairly difficult to go wrong.

But that’s not a universal truth - either here or elsewhere. Real estate is very much an  imperfect market and it has always been prone to protracted market cycles.

Furthermore, if you’re in the wrong city or part of town, there could be absolutely no market for your property. Take this example from Business Week :

Helene Pearson’s belief in homeownership was shattered in Roseland, the mostly black Chicago neighborhood where President Obama got his start as a community organizer. Pearson, who bought her two-bedroom, red-brick bungalow on South Calumet Avenue for $160,000 in 2006 with a high-interest loan, put it on the market a year ago for $55,000—and didn’t attract a single offer. Her bank has agreed to take it back in exchange for canceling her remaining mortgage debt. “I was so excited to buy my first house right down the street from my mother, but they got me good,” says Pearson, a 35-year-old guidance counselor and mother of two girls. “This scarred me so badly that I never want to buy again.”

Here you have a case where the value of the property (whatever it may be - clearly it’s not even $55,000) is below the replacement cost. That is, the value is well below what it would cost to actually go out and build a similar property. When you have a scenario like this, it intuitively translates into very little new investment.

And this is the case in many places, which is why when I hear somebody say “that you can never go wrong with real estate”, I secretly cringe inside.

During  TIFF  is an awesome time to be in Toronto. The city is buzzing, the bars are open until 4am (that should be standard), and everybody is talking about films. I used to go to a lot more movies when I was younger, but that’s sort of fallen off in recent years. Thankfully, my good friend Meg was kind enough to invite me out last night. We saw Blood Ties , which I really enjoyed. It’s about a good cop and a bad brother.

Before the movie started we started talking about the history of TIFF and it’s impact on Toronto’s economy. Curious, I looked it up today and the estimated annual contribution in 2011 was approximately $170M  (which appears to be comparable to Cannes ). That’s pretty impressive given that, even though there’s technically programming all throughout the year, it’s really only an 11 day festival.

I was also reminded of Roger Martin’s book the Opposable Mind , where he talks about the founding of the festival and the dichotomy the founders were faced with. He argues that, at the time (1970s), there were 2 predominate film festival models in place: the elitist jury driven Cannes model and the sort of grassroots model. The problem with the former was that it didn’t feel inclusive for festival goers and the problem with the latter was that it didn’t attract the buzz of say a Cannes.

The solution was to do both - basically make the audience the jury. The solution was a People’s Choice Award. This made festival goers feel like they had a say and were a part of the process, and it served as an effective buzz machine. There were also a bunch of other benefits, including the fact that the industry could now get a clear sense of a movie’s commercial appeal prior to going to market. More insular festivals couldn’t do this as well.

Here’s how Roger Martin put it :

"The People’s Choice Award put the Toronto International Film Festival on the map. By 1999, Roger Ebert, America’s most influential film critic, was telling one reporter that "although Cannes is still larger, Toronto is more useful and more important." By 2005, TIFF had booked the largest volume of sales in film festival history, and film critic Liam Lacey named it "the most important film festival in the world - the largest, the most influential, the most inclusive.""

This is an incredible achievement and we’re lucky to have it in our city. Now let’s get out and create some more of the world’s best.