Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 603

In the world of development, there is something known as a floor space index (FSI). Some places call it a floor area ratio (FAR), but they mean the same thing. It is one measure of density. To calculate it, you simply divide the total building area by the site area. For example, if you had a 25,000 square foot piece of land and you were to build a single storey building that occupied every bit of the site (also 25,000 sf), you would have an FSI or FAR of 1.0. If you built a two storey building on only half of the site, you would similarly have an FSI or FAR of 1.0. The area didn't change, you just moved things around. That's how FSI's work.

A ratio like this tells you how intensely you may be using a piece of land, but it doesn't tell you everything or necessarily give you the full picture. Which is why I find it silly when too much emphasis is placed on this singular number. I don't think anyone in the history of the world has ever traveled to a city -- let's take Paris -- and remarked how beautiful it is because of its floor space indices. Nobody thinks like this. It's way too esoteric. What guides our experiences is built form, the ground plane, relationships to streets, materiality, light, context, and many other important things.

To give a specific example, let's take One Delisle . This project was in effect approved twice. After it was approved by City Council in July 2020 an adjacent land parcel was acquired. It wasn't absolutely necessary to do this, but we felt it made for better city building and so we did it. (We wanted to look back knowing we did the right thing.) That meant that we needed to go back to Council to revise our approvals, which ended up happening at the beginning of this year (public staff report, here ). There was no change to the tower and and no change to any of the key setbacks or stepbacks. But the overall FSI did go down!

Will anyone notice or care about this lower ratio? I doubt it. Which is why I think it's silly to try and plan our cities around them. It feels like design by spreadsheet. Thankfully, I think many people recognize this.

Photo by Thibault Penin on Unsplash

https://youtu.be/P6qg0sKJJKM

Here is a short video by Dave Amos (of the YouTube channel City Beautiful) about the splitting of Berlin into two. What a fascinating urban case study. I just recently discovered his channel, but he seems to cover some interesting topics , all of which are related to cities and city planning. When Dave is not making YouTube videos, he is a professor of city and regional planning at Cal Poly. He also graduated with a Master of Architecture at some point before getting his Ph.D., so presumably he knows a few things about buildings and cities. I guess that also makes him an imposter architect , like me.

Over the weekend I learned about a unique feature of South Korea's housing market. It's called jeonse . And the way this housing contract works is that, instead of tenants paying a monthly rent to their landlord, they pay a huge lump-sum amount up front. Usually this "key money" is equal to somewhere around 50% of the value of the home, but oftentimes it's even higher (60-90% range). In 2014, the average cost of a jeonse deposit in Seoul was somewhere around US$300,000.

In exchange for this huge lump-sum amount, jeonse tenants are able to live in the property for a period of time (usually 24 months) without having to pay any rent. Because what they are actually doing is paying via the opportunity cost of having their money tied up during their occupancy. Jeonse landlords are free to invest these lump-sum deposits however they see fit. The money they make from investing is their "rent" on the property. (The deposits are secured through a lien on the home, but of course that isn't without some risk.)

At first glance, this seems entirely counterintuitive. If you have hundreds of thousands of dollars available to you, why not buy? Why hand it over to a landlord so that they can go invest in things? Well, usually when there's a marketplace for something it is because both sides stand to benefit. And in this case, the jeonse system supposedly emerged as the country was developing and people were rapidly urbanizing. Credit wasn't widely available and so the jeonse system grew to help both tenants and landlords.

For tenants, it was cheaper than owning a place outright and the "rent-free" period allowed them to more easily save up so that they could eventually buy. And for landlords, it was access to low-cost capital and the opportunity to invest in other money-making stuff. Some even credit the jeonse system with being instrumental in South Korea's rapid rise in the second half of the 20th century.

But is it still relevant today? Good question.

The data suggests that it could very well be on the way out. Jeonse deposits have been declining for years and, based on this , it was overtaken in 2012 with more people choosing to pay rent on a monthly basis. As of 2019, it had grown to over 60% of tenancies in Seoul. And so it feels like the end could be near. But if any of you have first-hand experience with renting in South Korea, I would love to hear from you in the comment section below.

Photo by Cait Ellis on Unsplash