While innovation and technology are not new to real estate, in 2019 PropTech has become a powerful, succinct word that embodies the optimism of the 1920s. It has enabled our imagination and made us feel like anything is possible. Unfortunately, the unbridled enthusiasm of the early 1920s was also a contributing factor in the stock market crash of 1929 and the Great Depression.
Over the next decade, transformation in the real estate industry is inevitable. This transformation will come from both disruptive forces from outside the industry (technology, climate, political, regulatory, economic) and innovation from inside the industry. It’s an exciting time to be in real estate, but if we want 2029 to be different from 1929, we need to take disruption and innovation very seriously. Because over the next decade, you’ll either become the learner or the lesson.
Winning & Learning at R-LABS
In 2019, we partnered REALPAC and PwC to conduct a survey with top leaders in Canada’s commercial real estate (CRE) industry to understand innovation adoption in our industry. Our whitepaper revealed that in Canada, CRE invests less than 1% of revenue in research and development (R&D) while the global construction industry invests less than 0.5% of revenue. Comparatively, electronics invest 8-9% of revenue annually.
All values above are global, except for CRE which was determined through the survey.
It is clear that venture is filling the void created by decades of low levels of industry R&D, but when we looked at the existing business models, we found that not all companies were created equal. 95% of today’s ventures could be explained through the equation of an entrepreneur with a technology, meets money with ideas – and you’re either at one end of that equation or the other. Unfortunately, 80 to 90% of those fail. While venture building only represents 5% of companies, its focused approach has led to far better results. With this in mind, we used our mantra of “winning and learning” to fine-tune our platform and focus on purpose-driven venture building.
In 2019, our two ventures made great progress in solving major problems for the industry. OneClose has officially solved the problem of interim occupancy interest in Ontario’s new condominium market through their breakthrough platform solution for purchasers, developers and lenders. They’re also brought in new strategic investment partners, expanded its team and is now operating in its own office space. R-Hauz Solutions is helping address the missing middle in Toronto through their unique housing-as-a-product solution. Their products are environmentally responsible, energy efficient, smart, affordable and tailored to the needs of urban families. R-Hauz is in the process of building four six-storey buildings on Queen Street – all of which will be completed on a turnkey, prefabricated basis in just a few months.
Expanding Our Innovation Muscle
Innovation inside of large corporations is very difficult – which is why R-LABS was formed as a partnership of large organizations. By taking an entrepreneurial approach to real estate innovation, we’re able to do things on the outside that can not be done on the inside.
We are growing in 2020 and teeing up to tackle more industry problems through the science of venture. In the Lab, we’re introducing our Entrepreneur-in-Residence (EIR) program to enable entrepreneurs to discover their strengths, objectively look at the major problems affecting our industry and access the resources they need to launch successful ventures. But our biggest strength has been our ability to help entrepreneurs find clarity of goal and clarity of role.
People are at their best when they’re doing what they love and working with others whose strengths are their weaknesses. Our objective to bring that out in entrepreneurs and innovators. Success in this space means knowing who you are, what problem you want to solve and what role you want to play.
Our 2020 Outlook
Transformation over the next decade is inevitable and that will have major implications to our industry, companies and you. We therefore need to think about our thinking because our mindset, choices and actions we take as today will have a profound impact on how we end the decade. There’s a quote on the R-LABS’ wall by our friend, partner and director, Michael Turner, that sums up our approach very succinctly:
“We choose to do the difficult things today that no one else wants to do so that we can do the impossible things tomorrow that no one else can do.”
Michael Turner, President of Oxford Properties
So, as you kick off the year, think about three things:
Who are you? What are your natural strengths and unique ability?
What problem do you love and want to solve? Is there something you’re prepared to commit to for 25 years? Some problems may take that long to solve.
What role will you play? Nothing truly great can be done on your own. Know where you excel and when you need to partner.
Remember that the best way to predict the future is to help create it. The R-LABS Team is here and ready to work with you in 2020 to solve major problems and build great companies together. We hope that you will join us on our journey.
