Can a Hackathon Revitalize the Real Estate Industry? Popular companies like Airbnb and Uber have revolutionized their respective industries and made the big firms think about how they do business. Strangely enough, real estate hasn't seen its innovation moment yet.
By Chris Porteous Edited by Frances Dodds
Opinions expressed by Entrepreneur contributors are their own.
Innovation is at the heart of all modern industries. Those who cannot innovate usually fade into antiquity. Fortune noted that the global real estate market in 2016 was worth in the neighborhood of $217 trillion, a sum that is much larger today. Yet despite this massive footprint, real estate is facing a crisis that it needs to overcome. Most modern successful startups have come from technological innovation leading to disruptive practices. Popular companies like Airbnb and Uber have revolutionized their respective industries and made the big firms think about how they do business. Strangely enough, there doesn't seem to be an equivalent for the real estate industry.
Not fixing what isn't broken
If we look at how buildings have been constructed, very little has changed over the last fifty years. The design of new buildings follows the same time-tested principles that work and that engineers can depend upon. Materials may have changed, and more eco-friendly systems were implemented to build those buildings, but the core construction techniques remain stagnant. Designs can be done significantly faster thanks to new technology such as CAD and VR, but much of the actual design work remains the same. At least within this space, innovation seems to be a non-starter. Or is it just because we haven't thoroughly explored what can be innovated?
This stagnancy might do okay for other industries, but the property technology industry, collectively known as "PropTech," has been seeing the retraction of investment. In 2008, then PropTech seemed like "the next big thing" for real estate, and investment soared to $20 billion. Forbes notes that in 2018, a mere decade later, the amount had dwindled to one-fifth of that amount. PropTech hasn't slowed, but the going is slow in an industry that is adamantly against embracing innovation. How does a market like that find the right kind of thinkers to jumpstart a tech revolution? They ask the people who enjoy doing it to help.
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The Oxford Hackathon offers some hope
Innovation comes from individuals that think outside the box. Instead of looking at a REIT as an investment opportunity, they may see it as a way to multiple the investors' gains through other means. Innovators are visionaries, and they enjoy a challenge. Oxford Properties gave them just that challenge by inviting them to four distributed company offices to solve some of the most pressing issues the company saw with the real estate market. These individuals were tasked with transforming the company's global real estate development business.
Oxford's Hackathon isn't wholly new; the company sponsored the same event over the past two years in Toronto. This year, however, Oxford extended the invitation to three other offices in Boston, London, and Sydney. The pitches a series of challenges to the people invited to take part in the Hackathon. These included over five hundred startup firms, professionals, and even students, competing to win a prize of $20,000 and a potential collaboration with the global property giant. As far as Oxford was concerned, the goal was to harness innovative talent to help them bring the real estate market into the twenty-first century through disruption. Taking a cue from other industries, Oxford intends to be ahead of the curve when disrupting the global real estate market. The company has the funds to sponsor such an innovation easily.
Focus on construction
The challenge issues to the attendees this year were relatively simple. Oxford noted that, by 2030, the global construction market would be worth $15.5 trillion and challenged the attendees to transform how the firm plans, designs, and constructs these buildings to retain a significant portion of that wealth. Added to the statement was that submissions should aim to challenge the building development process's status quo. To help participants narrow down their ideas, they were given a choice of three broad areas of focus:
Data-driven cost-analysis of materials
Optimizing the design process
Lean vs. agile project management
The final submissions were innovative in their own way. The top idea focused on a user-review database used for managing cost while maximizing user satisfaction based on ideal finishes and materials.
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Using data to fuel disruption
A glance at the modern real estate and land trust market reveals a massive cache of data that issues from thousands of sources. The data isn't the problem. How the companies use the data to gain actionable insights is the issue here. In this way, the construction and real estate industries face the same struggle that technology faces concerning user satisfaction and customer details. There is an overabundance of data, and no one can point companies to the right way to use it. Oxford's Hackathon was designed to allow participants to approach old data in new ways. Disruption rarely happens by coming up with reinventing the wheel. In fact, most innovative solutions rely on established data and then use it in ways that others simply hadn't considered before.
Yet Oxford isn't satisfied with just promoting innovation through the Hackathon. It's only one of the ways the company intends to buy into the future of both the real estate and construction markets. Oxford has already invested significantly in PropTech companies that are finding commercial disruption solutions for these industries. As leaders at Oxford note, no business wants to be the next Kodak: missing the technology boat on an industry they once dominated.
The Hackathon itself provides valuable information for Oxford to delve into. Even though there was only one winner, there were several themes that emerged throughout the competition. Executives from the participating locations met to discuss these similarities and decide which one of these innovative paths the company would eventually follow. By leveraging fresh eyes, the company can benefit from people who are seeing technology and real estate differently from the executives at Oxford. For a company looking for a disruptive way to shake up the industry, these solutions are the best option available.
Revolution starts with thinking outside the box
Companies, both big and small, now understand the power of approaching a problem from different directions. Oxford has the funds and the influence to leverage many people to disrupt the real estate and construction markets. Yet only time will tell if this is enough to stir the industry from its lethargy. There's no cap on innovation, and businesses will continue to experiment and push boundaries. PropTech will change these industries. The question is, how fundamental will that change impacts the industries we know today.
Related: Maximize Your Real Estate Investment Strategy with Mashvisor
