Okay, five, four, three, two, one.
Paul Andrigo here, realestatepodcastshow.com. Today I've got a brand new guest
joining me and I'm going to let her do an intro just because I think that's
always better than me trying to come up with all the things that this person
does or where they're from.
So I'm going to let Nicole introduce herself as to what she does and where she's
from. and then we're going to jump into some really fun and interesting discussions
from there. So welcome to the podcast, Nicole.
Hey, Paul. Thanks so much for having me. Yeah. I guess a little bit about me.
I'm born and raised in Toronto, so I'm a native Torontonian,
and I work at RSM Canada, which is a global accounting, tax, and consulting firm.
We're 64,000 people internationally. We're in 120 countries,
and my role is accounting. I'm an auditor by profession.
And I studied, I really studied accounting to understand the fundamentals of business.
And when we go service our clients, we go by industry so that we can really
understand the operations of the clients that we serve.
So I focused on real estate, public clients, private companies,
all asset classes. Like I love the fundamentals of the industry.
About two years ago, I was accepted into a program within my firm called the Eminence Program.
It's a three-year rotation where we spend our time looking at data,
understanding trends, where the industry is going.
And, you know, for an accountant who spends most of their time looking through
the rearview mirror of what, you know, happened in the industry last year,
it's all about the year-end recap.
It's been really fun to switch the lens to understand where the industry is heading.
Awesome. Well, that's obviously, that's a great start. So born and raised in Toronto, same as me.
What sort of got you from, and this is obviously my first time interviewing
someone in your position,
and we're going to be sort of discussing, I think sort of one of the main points,
I guess, from Noah, who introduced us, was talking about how new and innovative
methods of construction could help ease the housing crisis.
Because of course, there's been this obvious housing crisis in Canada for several
years. I would say a decade ago, and again, I'm not exaggerating here.
I don't think by any means a decade ago, I don't know if we would have,
you know, as much of a conversation to have.
It just doesn't feel to me like in 2015, there was as much urgency as there
is now for what needs to be done.
So let's start off with obviously mentioning, you know, of course,
what you, what your, you know, what your background is.
And is there anything sort of specifically that I guess...
Attracted you to real estate, you know, as far as handling real estate and,
you know, being able to, you know, consult on it for, you know,
for your firm and for others.
Was there anything about real estate in particular that sort of sparked something for you?
For sure. When I started off in accounting, I would audit all different types of businesses.
But what I really liked about real estate is that you can go on a building tour
and there's something like tangible to go and see.
So if you wanted to value a real estate building, you can go and look at comparable
sales, look at a valuation model, revenue recognition. It's kind of straightforward.
There's a lease, there's cash. It all kind of ties together.
So from an auditing standpoint, I was like, okay, the fundamentals of this industry
make sense to me in terms of how it works.
And about a year ago, I was accepted into this Urban Land Institute Kirtner
Urban Leadership Program.
And it's essentially a program for middle level professionals.
And it was a focus on real estate, where I met a ton of people like architects,
engineers, city planners, like not just like the finance folks that I deal with
in my typical day to day job.
And the theme of the program was innovation it's
all about like how to build differently what's working
with our system what isn't working and it kind
of gave me an opportunity to kind of fetch a bit about why it
sucks to be a young person in canada today what why the system is so broken
and how innovation can be part of the solution okay so you know what that's
i think that's sort of enough of a background information obviously and then
that's always like part of these conversations is again,
just to sort of be ourselves and, and have these conversations.
But when it comes to, you know, talking about what your feelings are on construction
methods, you know, innovative methods of construction.
So I'm curious to find out what your, you know, what your feelings are on what is,
what's, you know, you can talk about what might be going right, but also what,
what could be happening that isn't happening right now and, and,
and what needs to change in terms of how we deal with the housing crisis and dealing with, you know.
Endless layers of approvals, buildings that never get built because of so much red tape.
And again, this was all happening 20 years ago, but nobody was paying attention then, it seems.
It wasn't really a topic of discussion. So how do you feel, you know,
like you were talking about new and innovative methods, what systems do you
think might help improve this process?
For sure. Well, I think first it's important to understand like what the crux of the problem is.
The most obvious problem, you know, it's rooted in development charges.
We're seeing no shovels in the ground.
Development charges in Toronto, though they're frozen at 2024 levels,
it's after a 50% increase from 2022.
BC recently announced that you can delay development charges 75% for four years.
But that's just kind of kicking the problem, kicking the can down the road.
It's not really getting to the crux of the problem.
So the red flags are all over here. We're seeing that builders are canceling
permits, margins are thinning, layoffs loom.
And in Toronto, we're seeing it's like the wrong type of supply in the market as well.
Like we're seeing an abundance of condo inventory ballooning,
but nobody's buying the condos and there's no shovels in the ground.
So I think that's the first thing.
The supply and demand is not in balance. And then the second really big issue,
especially for the construction industry, is the labor costs.
And labor, it's not that it's just expensive, it's actually disappearing.
And we're going to see by 2033 that a third of Canada's construction workforce is going to retire.
And immigration alone, it's not going to backfill that loss.
I think really the crux of the problem, the missing piece, is productivity.
It's not just a cost crisis, it's a system failure.
So when we think about how companies can adapt, you know, we had COVID and we
had companies survive COVID, and companies need to absorb the complexity of
their operating environment.
And to absorb and transform, you need new skills, you need new tools,
you need the right partners, and the future of the industry is going to be all
about capital allocation.
So when you think about something like, I don't know, modular,
it's not a brand new thing for the construction real estate industry.
It's just now it's more top of mind. It's more topical.
You know, it encompasses modular, prefab, offsite construction.
Like, it's not a new idea.
Sears did it. Like, I think you could have bought a modular home in a catalog.
But then, you know, the Great Depression came and there was a shortage of lumber
and there were restrictions on construction.
So I think now policy support is kind of growing in the direction that is going
to reward a new entrance into the construction space that embraces innovation.
And that's kind of what's bringing us to the table today, Paul.
Yeah, no, definitely a lot to unpack in that discussion, talking about modular
homes, talking about how, you know, how we're going to get to a place,
which again, this is, it's probably controversial, but only in a certain way
in terms of when we're talking about how housing needs to be built.
For the most part, I'm of the opinion where if you build it, they will come.
Meaning that, for example, if we were going to allow X amount of people to move
into Canada and we did indeed have X amount of properties available, that might be one thing.
But to sort of try to play catch up in terms of the inventory and say that we
have, I'll just come up with a number, let's just say we have 250,000 people moving in and.
They can't build brand new properties as not nearly as fast as they,
you know, and this is government anyways, claiming that they can.
So, you know, we're obviously, as, as, as you're saying, there's a,
there's a lot of, you know, there's a lot of issues that go into the,
the, the supply chain of making it happen.
And, and, and as you mentioned as well, the construction industry being from
that background, actually, for me and my entire family is, is,
is all construction family from, for, for about a hundred plus years combined.
So knowing that that industry has sort of changed dramatically over the years,
especially in the sixties and seventies, when, you know, there was obviously
a lot of people able to build.
And in fact, you weren't even allowed in, and this is just from family telling
me this is that if you weren't coming from Italy, if you weren't actually a
skilled builder, you wouldn't actually be able to get in.
Like you literally have to bring your tools to the table to be able to get into
the country and help build it.
So I'm, you know, I'm sort of torn between the idea of will,
for example, will modular be the way to go?
What's your opinion, I guess, is what would your opinion be on the way the just
sort of the recent sixplex.
Allowance, meaning that of course in Toronto, there are certain,
I think I believe nine areas of Toronto, something like that,
that are allowed now to actually build sixplex properties on their lands.
Do you feel like, do you find that that's going to make, you know,
that's going to help make up the gap?
It's definitely part of the solution. We need more density. We need more zoning approvals.
We need fast-track approvals.
We need to slash the timelines. And I do think that modular,
really, like the promise of modular is to slash the construction timelines and
it's to reduce the errors, the omissions.
I think statistically it's like 20% because you're in that more controlled environment.
And we need to look at what other countries are doing also, because we're not
the first country to face a housing crisis.
Sweden builds 80% of their homes using modular. You can order your house in a catalog.
Singapore did something similar. They wrote it into a national policy.
And it looks like we're kind of pivoting in that direction. Like CMHC,
it's, you know, it's bringing back its post-war design catalog. It's encouraging.
Prefab, we're seeing the funding follow. We're seeing some big players kind
of re-enter the space as well.
And like Mattamy Homes made their big announcement. Assembly Corp bought some
technology from Sweden.
Like it's really exciting to see where the industry is going. Is this enough?
I don't know. It's all about the fundamentals of supply and demand and how the
market kind of interacts and absorbs what we have. Like, are we going to build
the right type of product?
Is it going to be in the right locations? Is this what people need?
Yeah. In preparation for talking to you, one of the things that,
and I've always sort of been sort of a big fan of the idea of,
you know, having ADUs, so additional dwelling units.
I've sort of been a big fan of those, of that building concept.
So being able to add, you know, additional dwelling units to properties.
And it's something that I've researched now in a couple of different areas of Ontario.
And the other problem is, and this is probably falling into the category of,
I guess, whatever you want to call it, paperwork or approvals,
is that there isn't really even one...
Sort of one accepted rule across Ontario for what you can build.
I mean, for example, in Toronto, in certain areas right now,
it's a sixplex that you could build up to, and you could obviously create,
you know, like a mini apartment building.
In Ajax, I believe they have now the option to build up to three or four ADUs
onto your property, including a 12, up to a $12,000 tax credit that you could get towards building.
And again, I'm still trying to find out what it's like in Peterborough,
because these are the, these are the areas that I, that I personally buy and sell homes in.
So I want to be able to at least have a working knowledge, but it shouldn't
be limited to me is what I'm trying to get at.
It should be literally sort of as, as simple as clicking on a page and being able to find that out.
So I think that's maybe, you know, maybe it's not what we're primarily talking about,
about, you know about the main topic about you know
you being here but i think it's definitely something to
do with streamlining the systems right
yeah and for sure it's definitely not my area of expertise but i completely
agree that transparency is really key and we want to understand the system because
if you want to create scalability in a system and that's the kind of the whole
idea of like prefab and modular,
you want to be able to pick up and play in different cities.
Different municipalities, different parts of the country.
And if every part of the country has its own rules and you're not playing by
the same rule book, then you don't have scalability.
And that's really where the efficiencies come in and the possibility to grow.
Yeah, no, absolutely. I think that's, again, and this is why,
as you know, and this is, this is something I like to do is I like to tell people
sort of how behind the scenes of podcasting works.
And you were asking me before we started, if I had any tips for you.
And if, and in case you're listening for the first case, you're listening to
the podcast, this is Nicole's first podcast ever. So my goal was just to try
to make it as conversational and as easy to understand.
And when someone comes at me and I've got, I've got, again, I try to put myself
always in a room where, you know, I've got like the smartest mortgage people,
the smartest lawyers, the smartest lawyers,
the smartest people in finance, just because I want to be able to say that,
you know, I'm learning from them, but I kind of need it at that, you know,
explain it to me like a fifth grader.
I forget, I forget what, what the term is, but I like that if we can,
if we can, you know, in having a conversation just like this,
give people sort of an idea of what's going to be happening going forward.
I think it gives sort of the average person who, you know, for example,
could be a young person, someone that's like, you know, thinking about,
you know, what's their housing situation going to look like,
you know, and I think about it as well.
From my standpoint, I've got kids that are, you know, one 16, one's 20.
So, you know, thinking about them now versus me at that age and what my options
were, it's, it's literally night and day in terms of, you know,
people deciding on, well, you know, I'm in my twenties, I'm going to buy my first place.
It's, it's just not that easy of a conversation. You know, I,
I, you know, and I'm sure, you know, people who were, uh, you know,
going through that as well.
So I'm glad that you were able to join me today, Nicole, is there,
uh, is there anything that, anything else that you wanted to cover before we
sort of wrap up our podcast?
I would say that I think that the future of the construction industry is definitely
going to shift towards a manufacturing model.
And I really think that the more vertically integrated the developers are,
the more control they're going to have over the process and they're going to lead the way.
And right now, the data shows that young people in this country are just not happy.
There's like a world happiness report. And the data was just so crazy.
It showed that if you're over 60 years old in this country, they ranked eighth
globally for life satisfaction, but people who are under 30 placed 58.
So that's a crazy gap because young people, there's not enough jobs,
there's nowhere to live.
And it's really, even if you have the choice of like buying versus renting,
you're not going to create wealth through home ownership the way that past generations did.
So it's a matter of kind of rethinking where to spend your money and what really
makes the most sense in terms of like wealth creation.
Because a lot of young people that are trapped in the renter's market today
and they're upset about it.
But the reality is that like based off of the economics, that seems to actually
make the most sense right now.
So I wouldn't worry too much about your kids future because I think it seems
like we're having more players enter the space, create more demand and more housing supply.
And hopefully, you know, another 10 years once they're moving out and kind of
getting on their feet, we'll be in a different situation.
You know, again, obviously it's, it's really great to hear people like yourself
who've got sort of that, you know, that positive look forward.
And, and that's for me, I, I've, I've even said it before and I've,
you know, I've tried speaking to people who are again, way, you know,
you know, definitely a lot more pay, way higher pay grade than me,
people in government who make these decisions.
I just sort of decided many years ago that I think it would have been a wise
idea to come up with a sort of a 25 year plan, something where they could actually think forward.
And then instead of going, you know, and what it seems like for the last few
years that I've been watching this, it's been very much sort of trying to catch
up to the system versus having a game plan where there, where there's going to be more built.
So it sounds like, you know, we might be getting there, but definitely people
like yourself who are working on it and, you know, out there talking about it,
obviously, I hope that definitely helps things, you know, move along a little faster.
So thanks again, Nicole, for joining me today. Really appreciate you having you on the show.
And if anybody wanted to reach out to you or ask you any questions or.
You know, whatever, what's the best way for them to reach you?
Probably just via LinkedIn.
Okay. Thanks so much for having me all. It was wonderful. Yeah,
it was wonderful having you. Thanks so much for your time.
And you're definitely welcome any time back that you want to,
you know, address some new topics or sort of go over some things that are happening.
Great. Okay. Wonderful. Thanks again.