Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 158

According to the WSJ , the US office market saw a significant increase in leasing activity in the first quarter of this year. Approximately 115 million square feet of space was leased, which represents a 13% increase from the previous quarter and the highest level since before the pandemic in mid-2019.

But then, tariffs for everybody! Now tenants are worried that a recession is coming, inflation is going to rise, and that so too will interest rates. Uncertainty is bad for business.

Here's where things broadly sit as of the beginning of this year:

• The national office vacancy rate was 19.7% at the end of February 2025

• San Francisco had the highest vacancy at 27.8%

• $7 billion worth of office sales were recorded in the first two months of the year and the average price was $177 per square foot

• The cheapest markets are/were in the midwest with Minneapolis-Saint Paul recording the lowest average sale price of $50 per square foot (versus $215 psf a year ago)

• Chicago averaged $67 psf

• The most expensive markets were places like San Diego ($662 psf), Manhattan ($450 psf), San Francisco ($282 psf), Miami ($239 psf), and Los Angeles ($207 psf) — we continue to see a flight to quality

Maybe things will get better later this year, or maybe they won't. It's impossible to know what comes next in this trade war.

Cover photo by Delia Little on Unsplash

Urban sprawl is how much of the US provides new housing. And here's Conor Dougherty in the New York Times arguing that America needs more of it to fix its housing shortage:

Even if all the regulatory restraints were removed tomorrow, developers couldn’t find enough land to satisfy America’s housing needs inside established areas. Consequently, much of the nation’s housing growth has moved to states in the South and Southwest, where a surplus of open land and willingness to sprawl has turned the Sun Belt into a kind of national sponge that sops up housing demand from higher-cost cities. The largest metro areas there have about 20 percent of the nation’s population, but over the past five years they have built 42 percent of the nation’s new single-family homes, according to a recent report by Cullum Clark, an economist at the George W. Bush Institute, a research center in Dallas.

The obvious benefit is that the resulting housing tends to be cheap. The above article is filled with examples of people buying large homes for a few hundred thousand dollars in newly formed communities across Texas. And if you live in a high-cost city, the social algorithms have almost certainly found you at some point with a shockingly cheap house in one of these places. But, Dougherty also admits that sometimes this may be the only redeeming quality:

Escobar told me he moved to Princeton because he could find a big house there for less than $300,000, but now the city is home, and he didn’t like where it was headed. Over the next four years, he said, his goal is to redevelop the downtown, try to attract offices where locals can work and build out a park system that voters recently funded with a bond measure. “You ask anybody what they love about Princeton, and it’s simply just the affordability,” Escobar told me. “We need to be more than that.”

According to the article, this isn't necessarily a problem, because it's just how cities are built in this day and age. What you do is start with low-cost housing in fringe locations. You grow as quickly as possible until traffic becomes "godawful" and vital infrastructure can't keep up. Then you implement moratoriums on new housing, and start working on other uses like, you know, employment. Eventually, after all this chaos is complete, you end up with something that possibly resembles a real city.

Yeah, I don't know, this seems like a roundabout way of getting to where you want to go. Why not build and plan for something with a high quality of life right from the start?

Cover photo by Leon Hitchens on Unsplash

I never used to listen to very many podcasts. But lately I've started doing it while heading to/from meetings, either in the car or on the train. This past week I listened to a Bankless podcast talking about crypto and AI, and one of the arguments that was made was that it's probably a safe bet to assume that we're going to need dramatically more compute and electricity in the future.

This seems obvious enough. If you recall , there's no such thing as a wealthy, low-energy nation. If you're a wealthy country, you consume a lot of energy. And that's why Build Canada recently argued that we need a kind of energy revolution. By 2050, it's likely Canada will have 2-3x the electricity demand that we have today. So today I thought I would share a few related charts .

Here's electricity production by source across the world. Coal dominates.

Looking at renewables more closely, we again see that wind and solar are making a run for it. And if you consider that solar is one of the fastest growing energy sources , it's not inconceivable that it will start to become a more dominant source in the near term. In the US, solar PV projects make up the largest share of new planned generation capacity.

But the US is not winning this race today. Right now it's China. (Chart below sourced from here .) They have the largest cumulative solar capacity, followed by the EU, and then the US. That said, coal still forms a dominant part of China's energy mix, and the country continues to construct coal-fired power plants to meet its short-term energy needs.

It's unfortunate that Canada is not on this list. That needs to change.

Cover photo by Benjamin Jopen on Unsplash