Data scientists aren’t usually on the payroll of real estate companies, but they are at Oxford Properties. “They help us look backwards to move forwards,” says Oxford Properties head of development, Ian Lyon.
Oxford Properties, the real estate arm of OMERS pension fund, only entered the Australian market in late 2018 after its $4.5 billion acquisition of Investa’s office fund.
One of Canada’s largest institutional investors, working on behalf of OMERS’ more than half a million members, Oxford Properties has since broken new ground on some exciting projects in both development and data.
Among the game-changing projects on Oxford Properties’ books are Pitt Street North and South towers, which are set to soar to 39-storeys above Sydney’s Pitt Street. The office tower, designed by global architecture powerhouse Foster + Partners, will sit over Sydney Metro’s new Pitt Street Station. Next door, Sydney CBD’s first build-to-rent building will offer 234 state-of-the-art apartments.
“What makes any development work is very simple: cost and value,” Lyon says. “These are the two drivers and providing you get the right balance, you make a return.” Simple it may be but having the right information to make the best decisions is not always so straightforward.
“When I started my career, everyone was focused on their current project. As soon as that finished, we put all the documentation into cardboard boxes and archived them. Years of information was never looked at again.”
But successful development is all about “looking backwards to go forwards,” Lyon observes.
“When we start the development process, we look at what we put in previous buildings. Did that provide a return? Not just a financial return, but did it deliver the savings on carbon, electricity, water we thought it would? And if it didn't, why, why not and what can we do about it?
“Sustainability isn't something you can see or touch, you can only judge it by the performance of the buildings – and the only way to do that is through data,” Lyon notes.
Today, Oxford Properties’ development team can “put a problem to the data science team and they’ll work out an answer”. Take Project Alpha, which started with a question: Which targeted investments would deliver the biggest increases in asset value?
The project, a partnership with Investa and artificial intelligence problem-solving platform SparkBeyond, compared building and location attributes in Sydney, Boston and Toronto. More than 10 million questions were posed to understand which investments create the most value.
“When we say AI, many people think of Terminator, but what we are doing is using AI to validate the viability of a hypothesis by leveraging real world data and expertise across our teams.”
Project Alpha is a far cry from the days when Lyon’s team “thought Excel was high tech”.
“We had huge Excel models that were at best cumbersome and were too big to send by email.” Then three years ago, a new chief operating officer, Dean Hopkins, joined the team. This was a “masterstroke,” Lyon notes. Hopkins, a long-time entrepreneur and technology consultant armed with fresh perspectives on real estate, was an “absolute zealot of seamless systems”.
Among those seamless systems is Procore’s financial portfolio management tools, which support every step of the construction process – from approvals to allocations, budgets to bidding.
“Buildings are really expensive things to buy and build. Pitt Street is costing about $1.5 billion dollars, so an investment in technology is relatively small compared to the asset size. Technology now punches well above its weight because it governs everything we do,” Lyon says.
There’s still a long road ahead, Lyon admits. “We still have people inputting information from 50 reports from 50 different buildings and linking them together. We’ve got much better at collecting data, but rather than sort through a big pile of papers, we open up a big directory and sift through the data on a screen.
“But that’s one of the reasons we like working with Procore. They see this as an exciting challenge not a nuisance.”
Oxford Properties is “running a million miles an hour,” Lyon adds. “We are still developing our systems and borrowing from other markets. But we haven't got any legacy systems holding us back. Everything is new. It gives us a great opportunity – a greenfield opportunity.”
Find out why Oxford Properties uses Procore's financial portfolio management software to do everything a spreadsheet can't.