Is the real estate development industry facing its Uber moment?
PropTech crusader and entrepreneur, George Carras, recently opened an Urban Land Institute (ULI) Toronto symposium with two photos: one of an airline pilot and the other a construction worker, each from the 1950s. Imagine, he asked, if they were cryogenically frozen and brought back to life today and sent back to work? The construction worker could expect to draw a paycheck in a couple of weeks, but the pilot would be unemployed, facing a technological environment completely foreign to them.
Our pilot could be replaced with any range of professionals and skilled workers whose jobs have been transformed beyond recognition by technology and innovation over the years. And while the building and construction industry has felt some of the impacts of tech and innovation, another recent ULI Toronto speaker joked that construction is second last only to the hunting and fishing industries in its adaptation to modern technology.
All this is changing quickly and out of necessity. Pressures are mounting as global warming and affordable housing are forcing an old industry to accelerate the adoption of new and better ways of doing business. The real estate and development industry is finally experiencing its Uber moment.
A recent ULI Toronto program called “Early Adopters” showcased a range of increasingly standard practices for the industry, from the industrialization of construction in offsite factories to the digital twinning of buildings. The Internet of Things (IoT) is washing over all aspects of real estate from construction to the management of the commercial or residential tenant, driving greater opportunities for efficiency and cost reductions, while delivering a better experience for the end users.
Smart windows aren’t just adaptively tinting to sunlight conditions, dramatically reducing energy consumption: they are evolving into 5G antennas and new profit centres for commercial buildings. Customized commercial interior fit-outs can now be envisioned in virtual reality, quickly installed, price guaranteed, and move with the tenant at the end of lease.
Mass or Tall Timber, a typology already considerably advanced in other jurisdictions, is poised to explode into the Toronto market, with the city’s first significant development—Hullmark’s 80 Atlantic—ready to open in the coming months. In addition to the carbon negative benefits of wood (including pine beetle-infested lumber!) such a typology could have enormous economic spinoff to Canada’s challenged lumber industry. Sidewalk Lab’s 3.3-million square foot vision alone would push Canada’s mass timber lumber product capacity to its current limits.
Modular construction, another typology that is more advanced in other jurisdictions, including British Columbia and Québec, is also poised to make a deep impact on the industry. Modular construction has the ability to drive down construction time and costs, to dramatically lower greenhouse gas emissions, and improve building quality, all while delivering excellence in design and architecture. It even has the capacity to be temporary and moveable, opening up exciting opportunities to deliver critical at-risk housing by utilizing lands that are not ready for longer term development.
Interestingly, organized labour is often driving the adoption of innovative construction practices by proactively developing a workforce to participate in these new frontiers. Long-time modular construction leader, Boston-based Tocci Building Corporation, credits the Carpenters Union for their city’s 20-year lead in modular construction. Toronto’s own Carpenters Local 27 has already graduated the first class of mass timber students who will further fuel the expansion of the market.
Wellness is yet another major tsunami hitting the industry. Demands for more sunshine, natural building materials, human-centered design, active living amenities and more are increasing exponentially in both the residential and commercial markets. Driven by basic economics, like the fact that as salaries and benefits amount to 90 per cent of an employer’s overhead, modest productivity gains through fewer sick days can easily outstrip any other business efficiency measure.
Toronto should take the opportunity to be the global PropTech and urban innovation leader. Domestically, innovation leadership offers the only hope to delivering greener and more affordable residential and commercial real estate. Internationally, our city has the potential to make PropTech an exportable economic commodity fueled by our exponential growth and our advanced technology assets. First mover advantage is ours for the taking if we seize this Uber moment.
Richard Joy is Executive Director of ULI Toronto. Previously, he served as vice president, Policy and Government Relations at the Toronto Board of Trade, and was the Director of Municipal Affairs and Ontario (Provincial Affairs) at Global Public Affairs.
Follow him on Twitter @RichardJoyTO or email at [email protected]