How the real estate industry is innovating from the ground up
The disruption of traditional legacy business has been the driving force behind many of the most successful startups and tech investment of the past 15 years. The list of disruptors is endless: Expedia and Kayak in travel, Airbnb and HomeAway in hospitality, Uber and Lyft in transportation, as well as the direct-to-consumer brands shaking up retail markets in everything from eyeglasses (Warby Parker) and shaving (Dollar Shave Club) to mattresses (Casper) and luggage (Away).
Lagging behind has been the giant global commercial real estate industry. Although it may be worth trillions of dollars, the way buildings are designed and constructed has barely altered during the past century, and has only recently begun feeling the impact of 21st-century innovation.
Back in 2008, Property Technology—or PropTech—firms attracted about $20 million annually in investment, but a decade later that figure is hovering closer to $4 billion. The race is on, both for startups and established power players, to place the right bets now in order to be industry leaders in the next 10 to 15 years. It’s the reason why hundreds of people crammed into four Oxford Properties offices around the world on a mid-September weekend, brainstorming to find practical, scalable, and innovative ideas to help transform the global real estate company’s development business.
For the past two years, Oxford hosted the hackathon in its Toronto offices, but this year they expanded the event to include Boston, London, and Sydney. The company invited more than 500 startups, students, and other professionals to tackle a series of industry challenges. At stake for the participants: the opportunity to win $20,000 and a potential collaboration with Oxford. For Oxford, it was about harnessing the innovation of local tech and entrepreneurial talent.
“Oxford has a hundred million square feet all around the world, in every sector of real estate,” says Dean Hopkins, Oxford’s global chief operations officer. “The global real estate industry is a $10 trillion industry that has yet to be disrupted by technology. We’re only now seeing the early kind of nibbling away at impact, but it’s starting to come because the other industries that have been disrupted have reached a point of maturity, and now people are asking, “What else should we disrupt?”
The challenge issued was simple: “The global construction industry is projected to exceed $15.5 trillion by 2030. With that massive scale comes a massive opportunity to innovate, and Oxford Properties challenges you to help transform the way we plan, design, and construct buildings. How might we design for Oxford to capture a significant share of that $15.5 trillion in the next 10 years by challenging the status quo of the building-development process?”
Participants were offered three areas of focus in which to approach this challenge: design process optimization, data-driven materials cost analysis, and agile versus lean project management.
“We’ve developed about $40 billion worth of real estate projects all over the world during the past decade, so we’re repeating this process over and over again,” Hopkins says. “If we can make that even 5% or 10% better or more efficient, that’s a substantial moving of the needle. So when we put this together, we said, ‘These are the areas in that development process where we think there’s the most latitude to understand what potential solutions are.’ ”
Across the global contest, the top five ideas from each city were invited to pitch in front of the panel of judges comprising architects, tech entrepreneurs, and real estate executives. The top ideas included:
an AI-enabled design platform that uses information from past construction jobs to boost efficiency in new projects;
a materials-recommendation engine to improve cost efficiency;
an AR-powered building-management system that allows maintenance crews to locate and see the mechanical equipment behind walls;
a Wikipedia-like database for architectural designs;
a virtual collaboration tool;
and a user-driven review database to boost both cost and user satisfaction around specific materials and finishes.
In the end, the judges chose the latter as the winner in Toronto. In Sydney, an AI-powered materials-cost management tool that automatically notifies users if a design meets building code triumphed. London’s winning team created an agile project-management system to help real-time information flow between contractors and developers. Boston’s winners pitched a solution that analyzes all the building cores that Oxford has created to automatically generate sample core layouts that are currently built from scratch each time.
DATA AS BUILDING BLOCKS
Like many industries, real estate and construction are inundated with an abundance of data. The trick is to find the best ways to analyse and use that data in ways that help improve the business.
According to Hopkins, the dominant theme that emerged out of the hackathons was the potential in finding new ways to use old data. “What I learned is there’s a huge amount of room in development to use past information to inform future projects,” he says. “Whether it’s recommendation engines or looking at the most efficient [building-design] cores we have, these are things we don’t do today. In the past, it’s been hard to capture all this rich data from past projects, but now it’s something we can use and clearly something we should be doing.”
The underlying theme here is one familiar to many legacy businesses, where larger companies like Oxford are working to stay ahead of the innovation curve—no one wants to be the next Kodak. Startups including Roofstock, Built, Bungalow, and Holobuilder, are part of a new generation of companies looking to innovate on traditional pain points in real estate and construction.
Hosting hackathons like these is just one of the bets Oxford is making. Oxford has invested in several PropTech companies, such as Honest Buildings and VTS. Another was the hiring of Hopkins, the former CEO of Toronto-based scale-up innovation hub OneEleven. Oxford President Michael Turner believes there is a dearth of C-Suite-level tech experience across the real estate industry, and Hopkins brings this invaluable expertise to the company.
Handing out the golf tournament–sized checks to the hackathon winners is just the beginning. Now Oxford’s strategy is to study the common themes and solutions that emerged across the four cities, then meet with development executives and their teams to determine which ideas they’d like to pursue in the coming months.
“We’ll look and see how many of these we can now start [implementing into] our global processes,” Hopkins says. “Then we’ll build that into our roadmap and ask, ‘Do we want to engage some of these people? Use these ideas and run with them?’ And then we’ll start building that into our work going forward.”