Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 407

There are lots of ideas out there for how to improve the supply of new rental housing. But it is important to remember, at least here in our market, that the playing field is not level between new condominiums and new rental homes. We have spoken about this before, over here , where I compared the (per square foot) revenue generated from your average new condo against that generated by your average new rental home. Of course, since I wrote that post in 2020, we have seen upward pressure on cap rates (meaning downward pressure on values). So feasibility has gotten even more challenging.

https://twitter.com/benmyers29/status/1642120297858977793?s=20

The important thing to remember is that developers do not have some philosophical aversion to building more rental housing; it is that the math is challenging. You generally need economies of scale (really big projects), patient long-term capital, and a belief that rents will continue to exhibit meaningful positive growth. If you want to negatively impact new supply, cap rental growth. But if you want to encourage new supply, somebody needs to pull out a development pro forma and make the call to improve the cost structure for new rental housing.

In my opinion, two obvious line items to focus on are development charges (as well as the other government levies) and HST (our harmonized sales tax). The point of development charges , as we always talk about, is for growth to pay for growth. They are intended to pay for municipal services like roads, transit, water and sewer, and so on. In the other words, they're supposed to capture of the cost impacts of new housing. But what about the impact of not building enough new rental housing? Are we thinking about this the right way? Especially if you consider the possibility of more new rental housing in our existing transit nodes.

The HST charged on new rental housing is also significant. There is a new residential rental property rebate available to builders (not tax advice!), but the thresholds have not been indexed and so it's grossly out of date compared to where values sit today. In any event, if the goal is more homes, why not make new rental homes exempt? Developers are simple. If the math works, they will build. If the math doesn't work, they will not build. And these two line items, alone, would go a long way to helping the former.

Photo by  Pierre Châtel-Innocenti  on  Unsplash

Consider the following stat : 65% of all transit trips across the US in 2019 came from just 6 metro areas: New York, Boston, Chicago, San Francisco, Washington, DC, and Philadelphia. Not surprisingly, these are all places with dense and walkable urban centers. In other words, they have built environments that are conducive to the use of public transportation.

While we know that more people working from home has been bad for transit and that agencies across the world are facing deep holes in their budget, I continue to come back to two things. One, we have not yet reached a post-pandemic equilibrium . We are still making our way back to the office. And two, the single most important thing when it comes to transit ridership is land use.

If we want more people to take transit, then we need to build our cities accordingly. That means streets people actually want to walk on, and a lot more density.

This Sunday, Paris will be hosting an important referendum that has nothing to do with France's retirement age. The question is whether shared electric scooters should be banned citywide . And while there are concerns about whether this single-question referendum will draw many people out to vote, the city has said that, whatever the outcome, the results will be binding.

To be clear, this would only apply to the three micromobility rental companies that operate in the capital: Lime, Dott, and Tier. It would not apply to privately-owned scooters, of which there are many. In fact, France might just be one of the scooter capitals of the world . Over 900,000 scooters were purchased across France in 2021, and last year the number was about 759,000.

Mayor Anne Hidalgo has publicly said that she thinks these scooters should be banned. But does that really solve things given the number of private scooters in circulation? And are the current problems truly ones we can't solve? As I have said many times before, I like scooters. I like them a lot. They're convenient and fun to ride, and I see their value in helping to solve the last-mile problem.

I also can't help but think back to the early 1900s when cars were just starting to infiltrate our cities and there were absolutely no traffic regulations to think of . It was chaos, it was dangerous, and I'm sure it was similarly divisive at the time. So should we have banned them and stuck with horses? Hmm. Maybe.