Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 229

A beautiful new 43-storey rental building was just approved in Toronto's Liberty Village neighborhood. More info about the project can be found, here . Not surprisingly, some people in the community were against it. Here is a recent article that blogTO published talking about people who live in high-rises not wanting a new high-rise next to them.

One argument that is being made is that the neighborhood is already full. It has reached its density limit. We also hear this about the City of Toronto as a whole. But we know this isn't true. Architect Naama Blonder recently did a study that found we could fit another 12 million people within our boundaries with more efficient land use policies.

This particular site in Liberty Village is also about 400 meters from a future subway stop on the Ontario Line. So it is exactly where we should be putting more density. The problem today is that the area is suffering from a massive infrastructure deficit. The road network is inadequate and the King streetcar hasn't been prioritized.

It's no wonder the area feels full. But the reality is that there are lots of examples of highly livable neighborhoods from around the world with much higher population densities. The difference is that they have the right infrastructure, the right public realms, and the right modal splits.

Liberty Village will get there as well and it's already underway. For a preview of the future, check out the City of Toronto's Public Realm Strategy for the area. It was published in April 2024 and it includes things like new streets, new mid-block connections, and new parks. It is what the area needs and it's exciting to see it happening.

I started a new French class his week. Most of my classmates are regulars, but since we have a new teacher, we were all asked to introduce ourselves. And to spice things up, we were asked to talk about whether we're glass half full or half empty kind of people.

When it came to my turn, and before I could answer, one of my classmates jumped in and said "Brandon est un optimiste." And you know what, this made me happy. I took it as a great compliment.

Because to be a real estate developer, I think you need to be an optimist. I have argued this before on the blog.

This is not to say that you don't need to carefully manage risk, and think about all of the things that can and probably will go wrong. It is say that the inertia working against you is so great, that you really need to believe in the future you are trying to create. If not, you're liable to not make it.

So this morning, when my partner Lucas showed me the below quote from Nobel Prize winner Daniel Kahneman, I immediately thought, "yeah, this is going on the blog."

"If you are allowed one wish for your child, seriously consider wishing him or her optimism. Optimists are normally cheerful and happy, and therefore popular; they are resilient in adapting to failures and hardships, their chances of clinical depression are reduced, their immune system is stronger, they take better care of their health, they feel healthier than others and are in fact likely to live longer.
​
Optimistic individuals play a disproportionate role in shaping our lives. Their decisions make a difference; they are the inventors, the entrepreneurs, the political and military leaders – not average people. They got to where they are by seeking challenges and taking risks. They are talented and they have been lucky, almost certainly luckier than they acknowledge… the people who have the greatest influence on the lives of others are likely to be optimistic and overconfident, and to take more risks than they realize."

This excerpt is from Kahneman's book, Thinking, Fast and Slow. I haven't read it. But now I want to.

Here is a recent chart from Mike Moffat showing how much development charges have increased in the City of Toronto from 2009 to today:

We've, of course, seen this before. Back in 2020, I shared an article that developer Urban Capital published where they did a cost comparison between a project they had done in 2005 and a project they were doing in 2020. What they uncovered was that development charges alone had increased by 3,244%! The most of any line item in their pro forma.

Development charges over the last real estate cycle have been an insidious problem. Meaning, the industry knew they were crazy high, and we were all trying to be vocal about it, but let's face it -- the general public doesn't have a lot of sympathy for developers complaining about high fees. They are also largely hidden from purchasers and renters. The charges just get lumped in.

If our industry could figure out how to be more transparent and separate out these charges, much like a sales tax, I think it would go a long way to showing consumers what they're actually paying when it comes to new housing. And then maybe something positive would happen. Because this is a major reason why new housing has gotten so expensive in this region.

Can you imagine if property taxes had increased by 3,244% over the last 15 years? I can't. Because no one would have ever allowed that to happen.

For better and for worse, the current market is going to serve as a rude awakening for municipalities. We've reached the breaking point. The housing market is, as we've talked about , in a "state of economic lockdown." And when people don't buy new homes, it means developers no longer have the money to pay development charges.