Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 535

Marty over at Laneway Housing Advisors published this listing in his newsletter today. It's for an entitled lot at 78 Gladstone Avenue in Toronto that has been approved (by way of a minor variance) for 6 units. Five units in the front where a house currently sits and one unit at the back in a standalone laneway suite. Though it also happens to be a corner lot and so the laneway suite isn't really "in the back".

It's listed for $2.5M. And according to the description, you can build about 5,500 square feet (4,200 sf in the front with a 1,300 sf laneway suite). This ask translates into a land cost that is just over $450 per buildable square foot, which is far more than what high-density land typically trades for in the city right now. This is usually the case for smaller low-rise sites.

To help put this figure into some kind of context, Bullpen Consulting published in their latest insights report that the average high-density land price in Q4-2021 was $135 per buildable square foot in Toronto (416 area code only). Of course, averages only tell you so much. To truly evaluate the feasibility of a site like this, you'd need to create your own pro forma and do your own residual land value calculation. The value of development land depends on what you can build on it.

If you were to do that, I suspect that you would discover at least two things: 1) you would find it challenging to make the numbers work, particularly for rental housing, and 2) you would quickly realize that this sort of "missing middle" housing isn't, in its current form, some undiscovered bastion of housing affordability.

Part of the problem is that these 6 units are not being delivered on an as-of-right basis. Somebody had to go out and entitle the land in order to secure these permissions. That means that time and money were spent and that the current owner is now rightly seeking a margin for their efforts. But if we collectively believe that this is an appropriate and sensible form of housing, then this should not be a necessary step in the whole process. Especially for only 6 units.

All of this being said, we know that Toronto and many other cities around the world are taking a hard look at this issue . And that there is a groundswell of interest in allowing more housing in our low-rise communities. It's going to be a battle -- just look at how Toronto's new garden suite policies have now been appealed by various resident's groups. But I'm certain that we'll get there, just like we are getting there with laneway housing and other types of ADUs.

The Financial Times recently reported on "the great NFT sell-off" here in this article . Daily trading volumes on OpenSea , which is the largest NFT marketplace, are down 80% ($50M) from their high in February ($248M). Bored Ape Yacht Club, which is the most expensive NFT collection out there, has seen its average daily price come down by about a third (see above). Of course, they still remain extremely valuable NFTs. And a recent CryptoPunks auction was just pulled from Sotheby's so that the owner could " HODL " until things recover.

I don't think any of this should surprise both NFT holders and the naysayers. This is a high-risk space and it is all very speculative. You can't run a discounted cash flow (DCF) model on a Bored Ape and most other NFTs (though some might actually produce cash flow through, for example, secondary sale royalties). The more important point of all of this is that we are living through what many people believe is the creation of a new kind of internet. Cryptocurrencies are what underpin these new digital economies, but we are still figuring out how they will function and what their long-term business models will be.

For me, this is an exciting thing to be a part of. I'm not a venture capitalist, but buying NFTs and doing other crypto things feels a bit like I am an amateur one. Holding ETH or SOL is similar to holding Canadian or US dollars (currencies that underpin economies). So what I am doing is using these currencies to put money into ventures (NFTs) that seem interesting. And to do that, you look at the art, the team behind the project, the roadmap, and how well they appear to be executing against that plan. Indeed, many of the most successful NFT projects are naturally run by teams who are constantly building and shipping.

At the same time, I mentally write off every NFT I buy to $0 as soon as I purchase it. I am also limiting my total crypto allocation to between 5-10% of my non-real estate investments and buying with a scheduled dollar-cost averaging approach. So if this whole web3 thing went to zero tomorrow (which I firmly do not believe will be the case), my life would still go on. None of this is, of course, investment advice. Please do your own research and make your own decisions. But I can tell you that it is a lot of fun following and learning about what smart, creative, and entrepreneurial people are doing in this emerging space.

If you're interested in NFT photography, check out my global citizen collection on Foundation .

Chart: Financial Times

The relationship between car ownership and urban density is a fairly intuitive one. Below are two charts from a study by Francis Ostermeijer, Hans Koster, Jos van Ommeren, and Victor Nielsen, showing how urban density is inversely correlated with car ownership. In other words, the more people with cars, the less dense that a particular place is likely to be.

But there's an interesting chicken-and-egg question here. Does Atlanta, which is near the bottom right in the above chart, have a lot of cars because it wasn't dense enough to support other modes of transport, or did the prevalence of cars in Atlanta cause the city to spread out and become less dense? And that is exactly what the above researchers set out to determine.

To do this, they started by looking at the presence of commercial car manufacturers in the above geographies in the 1920s. One of the things they found was that having a car manufacturer in your city at this time appears to have had no effect on population density. But over the long run, rising car ownership seems to have had a sizeable effect on reducing population densities in those places.

The conclusion they draw from this is the title of this post: cars have made cities less compact, rather than low population densities causing people to go out and buy more cars. This makes some sense to me because cities were doing just fine before we invented cars. But like all transportation innovations that allow us to move faster over longer distances, the car encouraged decentralization.

There are, of course, all sorts of possible implications for a finding like this. But the authors specifically mention developing countries where car ownership may still be relatively low. This is something to be mindful of because if you put most people into cars, history strongly suggests that it will impact the kind of city that you end up building.

Chart: Cars make cities less compact