BIG INTERVIEW: Ivanhoé Cambridge
Having announced a strategic partnership with Fifth Wall earlier this year after investing $85m in four of the VC firm’s funds, Ivanhoé Cambridge is a company determined to grasp the digital future of real estate. But for François Lacoursière, the company’s senior vice president of innovation, it’s not specifically a question of tech.
“We shouldn’t be obsessed with tech,” he says. “We should be obsessed with understanding our stakeholder needs and how they evolve. Then the tech will follow.”
Ivanhoé Cambridge, a Canadian institution with C$60.4bn in real estate assets under management globally, is in the midst of an evolution, finding new ways to solve problems for its occupiers. The company has invested in MetaProp as well as Fifth Wall and is now piloting about 30 different products in its properties. But Lacoursière refuses to rush into backing any one idea or startup.
“My role is to foster a culture of innovation,” Lacoursière says. He doesn’t reveal any specific platforms that excite him, because it’s too early – and getting overexcited about a product can lead to mistakes.
Instead, working with chief investment and innovation officer Sylvain Fortier, his priority is what he calls “phase one” of a cultural shift: making innovation systematic within the wider business. But how does a company the size of Ivanhoé Cambridge do that?
Develop a system of innovation
Every single business unit at Ivanhoé Cambridge follows a process to integrate new technology, first identifying pain points, zeroing in on specific issues (such as air quality or appraisal) and speaking to Fifth Wall about those.
Given the scope of Ivanhoé Cambridge’s portfolio – a mix of office, residential, retail, logistics, healthcare and leisure – Fifth Wall helps by scanning the market and finding appropriate platforms, whittling down potential products to trial. From there, Ivanhoé Cambridge will do demos and pilot them in its offices.
Having that external expert advice also helps cut down the sheer amount of tech options out there. Lacoursière says: “I could spend every single hour of my day meeting with new tech – and you could go nuts very quickly, because they’re all similar and you want to understand and choose the best, and then you end up doing nothing.”
The company’s pilots are concentrated in a handful of properties in Montreal, including the company’s own HQ, and soon in another building in Chicago yet to be announced. By using its own HQ as a “living lab”, the company gets first-hand experience in how effective a bit of tech is, combining that with experiences from occupiers in its other buildings.
“Once we have our own story with our own experience, then the idea is to share with our tenants and participate in that discussion with them,” Lacoursière says.
Ignore FOMO, focus on tenants
“The fear of missing out is very present in the industry,” he says. Companies have a habit of getting excited over the next big thing without considering what problem that big thing brings to their portfolio – but a tech ‘solution’ is only a solution if it solves something.
Ivanhoé Cambridge takes a granular approach to innovation, speaking to individual tenants to understand specific problems they have and what might help, rather than taking a sector-wide approach. “We don’t need to solve retail as a category. We need to solve it for our own tenants,” Lacoursière says. Those needs can vary wildly from occupier to occupier and from building to building. “Every property is a snowflake: they all look the same, but as you know, they’re not.”
This comes back to taking a systematic approach – an idea Lacoursière refers to repeatedly. If the company thought about tech first, rather than its tenants, it would not be able to solve any of their problems; the company would simply be stuck in meetings all day. “What I tell the team is when we meet everyone when they want, we’re executing their business plan, not ours.”
Agility is key
With more than 22m sq ft of office space across 37 buildings in Ivanhoé Cambridge’s portfolio, the future of the workplace is an ever-present topic for the innovation team. “An office is still a good product to have, but the product needs to evolve,” Lacoursière says. But he adds: “The toothpaste is out of the tube.” The idea that you can choose where to work depending on the job or having task-driven spaces is not going away.
Understanding this is one thing. Actually realigning how offices work is another – and it’s not going to be easy. Lacoursière returns to the idea that solving problems in real estate will require a tenant- and property-specific approach. Different people have different needs, all of which it needs to cater for.
“When you have surveys and you see an average, that doesn’t exist. What exists is multiple sets of people with multiple sets of needs,” he says. Offices will need to be aligned, one by one, to their tenants’ needs. Some will need more time at home; others will prefer to be in the office. And if those tenants decide that more flexibility is the solution, it needs to accommodate for that, too.
“Even if you want to reduce your footprint, we’ll do it together. For us that’s not an issue: reducing footprint you’ll have more tenants and more flex,” Lacoursière says.
Unsurprisingly, Ivanhoé Cambridge is now developing its own flex product: a ‘white label’ flex space plan for enterprises in its buildings. One reason is to give tenants a seamless tech experience for both the building and the flex space. Instead of using two apps – one from the landlord and one from a third-party co-working operator – users will have one app with all the services they will need for the building.
But regardless of how office flexibility pans out in the long-term, the plan now is “to be very humble and listen” and be ready to react to changes. After all, Lacoursière points out, some businesses that made long-term decisions about whether or not to adopt flexible working at the start of the pandemic have had to backtrack. Offering too much “clarity” now – by, for example, dictating that people have to be in the office three days a week – is a trap, he says: we are still living in a remote world, and hybrid working will be very different.
Be mindful of ESG and privacy
Ensuring that your portfolio is sustainable is essential for asset managers. “Our belief is that you will be penalised if you don’t do it,” Lacoursière says. Property has a responsibility to provide solutions for energy consumption, building materials and occupiers’ own emissions.
He says that making a return and pursuing sustainability are not mutually exclusive. If it’s good for the community, it will have value, he argues. However, piloting sustainable measures has the benefit of strengthening the case for pursuing ESG goals: “You get closer to that level of trust that the returns are there.”
In a similar way, taking a systematic approach to innovation helps ensure that projects aren’t derailed by privacy concerns. When considering new technology, it has to first go through legal, compliance and reputation checks to ensure it’s viable. “You don’t want to get stuck with the compliance discussion when you’re ready to press play,” Lacoursière says.
The challenge, as Lacoursière lays it out, is that while privacy is crucial, so are the potential benefits of smart cities – from automation to accessibility and sustainability. Finding the right balance is a “live discussion” but it’s something that the industry needs to solve because we don’t want to create bigger problems than the ones we are trying to fix.
“Privacy and security are at the top of our priorities… a project pilot could be killed in a second, not because of the actual technology but the perception of the technology,” he says.
The perception of something being invasive could put a stop to innovation, as could a heightened risk of security breaches, which is why any tech rollout will need communication and transparency.
That is another reason Ivanhoé Cambridge uses its own HQ to trial new tech: in creating a living lab, it will give its employees access to the data they collect in their trials. People in the building can view the dashboards, be part of the conversation around how their data is used and see what the company does with it down the line.
Become a tech business
Whatever the asset class, the line between physical and digital space is blurring and, with that, the role of developers is also evolving. Lacoursière says: “You need to see yourself as a tech company and then things become a lot easier.”
That doesn’t simply mean adopting tech – that’s something Ivanhoé Cambridge and most other major developers are already doing, especially in new developments – it’s about a wider shift in how the company operates.
Although Ivanhoé Cambridge has invested heavily in Fifth Wall and other VC firms and has a clear blueprint for how to adopt tech across its mixed-use portfolio, the company sees itself in “phase one” of its tech journey. Eventually, we might see the company have more centralised labs, complete with the required infrastructure, to work with AI or data. But for now, Lacoursière and his team are fine-tuning the processes to make Ivanhoé Cambridge a systematically innovative company. For them, this is the beginning.