Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 575

Hedge fund manager Bill Ackman is a pretty wealthy guy and so it is fairly safe to assume that he could choose to live almost anywhere. For some people the ideal might be a low-rise house with a backyard in the suburbs.

But since 2018, Ackman has chosen a kind of penthouse apartment on the roof of a 1920's co-op building in Manhattan's Upper West Side. It was formerly the home of author Nancy Friday and Ackman supposedly purchased it for $22.5 million .

He is now looking to demolish the penthouse and build a new two-storey residence designed by architect Norman Foster. The design looks like this, which kind of reminds me of Philip Johnson's The Glass House :

Today it was in the news that Ackman has been having a fun time trying to convince his co-op board that a new set of glass boxes on the roof their building is a good idea. FT reported that the project has created "an atmosphere of fear and distrust among residents in the building."

I'm not exactly sure what it is about this proposal that is causing fear and distrust but Ackman is on record saying that he thinks this isn't about heritage preservation or architectural integrity; it's about people not wanting the disruption that comes along with construction. Fair.

One way to test this, I suppose, is to propose something more traditional or similar to what's already there. But I suspect that the other dynamic at play here is simply that he is a rich guy with a starchitect trying to build something cool.

Building things is tough.

CityLab recently published this article about "why Hong Kong is building apartments the size of parking spaces." It's about the city's "microflats" which are typically in the range of 150 to 300 square feet. Supposedly there about 8,500 of these apartments across Hong Kong and in 2019 (this was apparently peak microflat) they represented about 7% of all new residential construction.

Hong Kong is one of the densest and most supply constrained real estate markets on the planet. And so there are very good reasons for these affordability pressures and the push toward smaller apartments. The article gets into a number of them. The concern I have is that the article also seems to blame developers for a number of these problems, without a clear understanding of the economics behind new construction.

It is not enough to simply say that developers need to be less greedy and build bigger apartments. If a 250 sf apartment currently costs $1 million and you think it should be twice as big, then the price is now also going to be somewhere around twice as big. Is the answer more $2 million apartments? Developers trade in space and more space costs more money to build.

All of this is not to say that housing affordability isn't a problem worth addressing. It of course is. I am simply saying that there is a cost structure behind every new development that is driving decision making and driving what ultimately gets built. Understanding it can be helpful when looking for solutions. Believe it or not, not all developers are bad. Some actually want to help build beautiful, sustainable, and prosperous cities.

https://twitter.com/donnelly_b/status/1457700400417619975?s=20

For the last year or so the City of Toronto has been doing a review of parking requirements for new developments. This would include things like how much car and bike parking needs to be provided for each residential unit in a new building. More information on this work can be found here .

City staff are now preparing to release their initial findings and, as I understand it, it is going to include the removal of most minimum parking standards across the city and the introduction of some maximum parking standards. What this should mean is that in most cases you can build as little parking as you want, but in some cases you'll be stopped from building too much of it.

There are lots of examples of other cities doing this. Buffalo is one example and I recently wrote ( over here ) about what happened to new developments once its minimums were eliminated. Among other things, it revealed where the previous parking requirements were overshooting what the market was actually demanding.

Urban parking is heavily dilutive to new developments. It drives up the cost of new housing. It is also hypocritical to claim that we want to encourage alternative forms of mobility while at the same time mandating that we build a certain amount of car parking. Do we want people to drive or do we want people to do other things? Which is it?

Some will bemoan this inevitable loss of parking (though it was already happening). But I think this is a great thing. It is Toronto growing up and continuing to realize that it's pretty damn hard to build a big and well-functioning global city if everyone is driving around everywhere. Maybe one day we'll even allow e-scooters.