Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 735

I have said this before on the blog, but one of my favorite tall buildings is the Mira tower in San Francisco by Tishman Speyer (developer) and Studio Gang (architect). Now that it's pretty much complete and residents have started to move in, John King , urban design critic for the SF Chronicle, has published this review of the building . It's behind a paywall, but you should be able to at least see all of the photos, and below is an introductory excerpt.

Even with today’s grim need for social isolation, San Francisco’s most eye-catching residential tower wants to pull you close.

From the Bay Bridge or the Embarcadero, the 39-story Mira at the corner of Folsom and Spear streets is a flowing stack of tightly wound white metal bays, frozen in motion. Fragmentary glimpses from nearby blocks defy expectations, whipsawed slivers amid the stodgy norm.

Finally, there’s the view straight up from the sidewalk — a crisp commotion of stacked angles, precisely arranged but seemingly ready to fly out in a dozen directions at once.

Though Mira has been in the works since 2014, the architectural show still feels fresh as the first residents begin to unpack. But this 392-unit residential complex was also conceived as a celebration of triumphant urbanism — a far cry from the mood of this troubled summer.

Condo developers are merchant builders. They build a project and then move on. Because of this, there's a belief that there's little incentive to build for durability, in comparison to say purpose-built rental buildings where the developer might continue to own over an extended period of time. While it is true that putting on an operations hat will make you hyper-focused on everything from garbage collection to how you're going to manage all of your suite keys, there are a few things to consider in this debate.

One, as developers we certainly think and care a lot about our brand and our reputation, both with our customers and with Tarion (warranty program). We ask ourselves: "What will our customers think if we do this?" Irrespective of the tenure we're building, we want our projects to be carefully considered. And in the case of condominium projects, we would like our customers to feel excited and comfortable about buying in one of our future projects. That's the goal. This is no different than any other product that you might buy that doesn't come along with some sort of ongoing subscription.

Two, there's often a spread between condominium and rental values. For example, let's consider a brand new 550 square foot condominium in a central neighborhood of Toronto and let's say it would cost you $1,300 psf to buy it today. (Obviously it could be more or it could be less depending on the area and the building.) Now let's start with a rent and back into a value, using some basic assumptions.

Unit Size (SF)	550
Monthly Rent	$2,400
Rent PSF - Monthly	$4.36
Rent PSF - Annual	$52.36
NOI Margin	72%
NOI	$37.70
Exit Cap	3.75%
Value PSF	$1,005

Here I'm assuming that same suite would rent for $2,400 per month. I'm converting that to an annual PSF rent. And then I'm assuming that if you were managing a whole building of these kinds of units, your operating costs might be somewhere around 28%. Crude back-of-the-napkin math to get to a Net Operating Income (psf). Finally, I'm capping this NOI at 3.75%. We can debate my assumptions and if this were in a development pro forma you might "trend" the rents. But I find this comparison helpful. Here we are getting to a value of around $1,005 per square foot. Less than our $1,300 psf above.

The point is that the margins are tighter, which helps to explain why for a long time we saw very few purpose-built rentals being constructed in this city. So even though you might argue that the incentives are in place to build for durability, you do have to weigh that against the realities of what you can actually afford to build. Development is filled with all sorts of these tradeoffs. But if you and/or your investors really want a consistent yield, this strategy can work just fine. Personally, I'm a fan of the long-term approach.

Three, rent control policies can have an impact both on the feasibility of new projects and on people's ability to actually perform maintenance. If you have a scenario where your operating costs -- everything from taxes to utilities -- are rising faster than your allowable rent increases, then you're in a bad situation and you have zero incentive or financial ability to actually invest in the building, despite being a long-term owner.

Finally, there is nothing stopping a purpose-built rental developer from also being a merchant builder. i.e. Selling the entire rental building once it is done and it has been stabilized. So you could argue that we're right back at my first point. Whether you're selling to individual condominium owners or the entire building to one entity, you as the developer have to sit back and ask yourself: "What will our customer(s) think if we do this?"

I noticed this week that Google has started to overlay augmented reality-type place markers onto Street View. The markers are designed to help surface the kind of local business information that you might otherwise find in search -- phone number, hours of operation, and so on. Apparently not everyone is seeing them, but the feature is starting to roll out in certain cities. Above is a photo of Dundas Street West in the Junction.

This transforms Street View into even more of a wayfinding tool, but it also offers up a glimpse of how the world might look with augmented reality. But to make this ultimately happen, you really do need to figure out how to get people to start wearing smart glasses. Lots of companies, including Google and Snap, have been trying. None of their products have really stuck -- though Snap's Spectacles are easily the best looking ones.

However, last month Google did announce that it had acquired Canadian smart glasses company, North. I was invited to try out a pair of North Focals 1.0 glasses, which I wrote about over here . They were exceedingly cool, but definitely not ready for mainstream and daily usage. The sides were thick and you had to wear a ring joystick in order to navigate through its menus. Too much work. Too nerdy.

But that's okay because Google didn't buy North for the Focals product. They bought them for talent, patents, and for probably a bunch of other things. They bought them to help Google invest in its " hardware efforts and ambient computing future ." The little markers you might now be seeing on Google Street View are likely part of that.