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episode # 316

Breaking New Ground with Marcon’s Nic Paollela

After four decades of shaping urban and suburban skylines, Marcon has earned a reputation for quality, integrity & constant innovation. But this is not only a story of real estate development in an ever-changing city and market, it’s a story about humble beginnings, hard work, family, and incremental growth. This week, Nic Paolella joins Matt & Adam to talk about pushing the boundaries in real estate on every level, challenging conventional investment wisdom, and charting the company’s growth from building barns to becoming a house-hold name. This is a real estate journey that extends beyond most, but the lessons here are for everyone. Level up.

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Episode Summary


 

How did Marcon get started? 

My grandfather was a hairdresser and decided to move out to the Fraser Valley. My dad got his start on farms and began working in construction, so the Fraser Valley became the growing grounds for Marcon. Urban development was just starting to happen at that time, so it was a new frontier. 

The building community south of the Fraser had not established itself yet. Developers were coming out to the Valley looking for building support and my dad jumped at that opportunity. From there, my dad founded Marcon. It was originally called Mark Construction but it needed to fit on a sign, so my dad spray painted “Marcon” and the name stuck. 

Why did Nic Paollela get into real estate?

Sometimes with family businesses, younger generations have to try and fit themselves into a career path that is chosen or destined for them. That can be difficult. My siblings and I have been very fortunate to find our own path and join the family business quite organically. We grew up learning about construction and transitioning into real estate was very fluid.

We grew up building things on the farm and were constantly exposed to what my dad was doing with the company. It was a tight-knit group of people helping my dad to grow Marcon. I was keenly interested in how the business worked and the real estate development side. I began learning the ropes in high school, which was a great leg up. 

For me, it always felt right. I’m fortunate that it always felt like I was on a path to doing what I loved. 

How did Marcon achieve such an impressive pace of growth over the years?

Growing up, we had great access to both of my parents, despite the fact that Marcon was growing. I think that’s due to the great relationships my dad had established with developers in the region. As they grew, we grew. People trusted us to deliver, which led to more partnerships and more growth. 

Scalability is an important thing to be mindful of. Marcon’s growth was incremental over the years, but feels quick looking back on it. We don’t have a maniacal growth plan to do more than anyone else. We just want to do good work. If you have good people, the opportunities spur themselves on.

When we started building towers in the early 2000s, towers were only 18-30 storeys. But now they’re 40-60 storeys regularly. So the building environment is changing, which means the scale of growth is changing. 

People joke that I wasn’t around for some of Marcon’s earlier milestones and issues but even as a kid, I was listening. Having that history and context really helps. 

Marcon is founded in quality. We want to do good work. No one is afraid to roll up their sleeves and get work done. We have an environment with a lot of healthy curiosity and input. 

What has Marcon done right to become a household name in Vancouver real estate development?

Any business needs to be focused on the customer. We look at the foundational legacy our buildings leave. There are a series of choices you make through a development and building process that some people take for granted. 

Our strength has come out of building good product – building something both the current homeowner and end-users down the line will be proud of. We can’t lose sight of that. There’s a resiliency in making the right design choices and delivering a quality product. 

Is the Vancouver real estate development community competitive? How could the Vancouver development industry improve? 

Vancouver has a lot of potential growth. Without our expected population growth, our development community would not be as robust as it is. There are a lot of barriers to entry in Vancouver’s real estate development market, but I don’t feel that sense of competition. 

I don’t know if the way we’ve done things for the last 20-30 years in the development industry matches how a contemporary consumer wants to make their decisions. When you compare development to any other industry, we may be out of step. 

Home-buying, as an end-user or as an investor, is a big decision and requires more support. But I think we have a rhythm in this industry that is actually complacency. Things have been selling well for 30 years so I don’t know how often developers are pausing to figure out what could be different.

At Marcon, we want to make moves to get closer to delivering the information consumers need in the way they want to receive it. 

Where does Marcon get inspiration to improve the customer experience of the real estate process? 

We’re trying to find out how something as complicated as a real estate purchase can fit into simpler forms of communication. I think other industries have done a better job at this. For example, Tesla has reinvented how people buy cars. Before Tesla, there was only one way to sell and buy cars. They disrupted every element of that process. We’ve interviewed people at Tesla to learn from them and they told us that failing fast and recognizing what’s not working is key. They find the problem and they fix it. 

How can Vancouver’s development industry improve? 

We have to ask ourselves, “Are we doing this because it makes sense or because it’s what everyone is doing?” You don’t have to be revolutionary but you just have to find avenues for progress that are better for the customer.

Everyone in the development community wants to bring the best product to market at the right time. But we’re all doing it the same way. In other industries, people are differentiating themselves and that’s what’s missing here. It’ll be fun to reevaluate our norms and crack a different code. 

There’s a feeling in this industry that if someone tries something and it falls flat, no one ever wants to try again. But should we stop there or should we keep going to find a way to unlock that problem and make it better? 

How does customer feedback impact the real estate development process?

I don’t know how robust the customer feedback loop is in real estate development; it feels somewhat elementary. This goes back to the point that because Vancouver is growing so quickly, no one is questioning the process. 

I think we’re just scratching the surface when it comes to optimization. Innovation is almost at the expense of market success.

Compared to other locations, what kind of housing product are Vancouver developers providing to their consumers? 

I do think we’re delivering really good real estate product to our customers in Vancouver. I’m proud of the high standards we have here. There’s integrity in our system with both planners and developers, which flows down to product and design. That’s likely due to our tight real estate market in Vancouver. Our industry has set a high bar for what the average home should look like. 

We’ve been able to assemble a fantastic team at Marcon and I’m so grateful for that. We try to look at our product from a generational standpoint. Instead of fixing everything at once or thinking we have all the answers, we dig in for the long run. And you can’t do that alone – you need the right people with you.

Is Marcon expanding beyond Metro Vancouver? 

Yes, we are looking at markets outside of Metro Vancouver. It comes back to the team. We are building the capacity to have a strong backbone so we can scale. We’re doing our due diligence on markets in North America and looking to see if there’s a reason for us to compete. 

We want to make good business decisions and enjoy our growth. Is there a need for us to go to a certain market? Can we do something better than just compete with everyone else? We’ve spent a lot of time diversifying our work over the last five years. We have condo, rental, office, commercial, etc. We’re trying to be smart with our opportunities and look to where we can be competitive. 

For example, we’ve been studying Toronto for a couple of years. We don’t see a reason to buy tower sites in Toronto because there are a lot of sophisticated players there. If we go right now, we’ll just be part of the mix. So we look at other forms of development in Toronto where we can compete.

We don’t have to jump tomorrow. And we’re very fortunate to be able to commit resources to this market research. We know we have to build the infrastructure first before we can jump and put our best foot forward. 

Have you been surprised at the strength of the Vancouver real estate market over the last two years and through covid?

There’s stability in the growth story of the Metro Vancouver region. But that is not withstanding a major global event, like covid. We did see a dip in immigration, but we’re back to growing now. 

I wasn’t that surprised by the fast recovery of our real estate market. I didn’t have a crystal ball but because people can only pause their lifestyle decisions for so long, I knew our market would pick back up. People want new housing opportunities in order to change their lives. Whether it was a good time or a bad time, people realized they had to move on with their lives at some point. 

The resiliency of our real estate market is something we’ve lived through in Vancouver. We saw it previously in 2008 where there was a small dip with the recession, but it didn’t last long.

Why is Marcon working in both residential and commercial real estate? 

Because we’re in a land-constrained marketplace where many developers have specialized in a certain type of product, they often hit a critical mass. We didn’t want to do that. So because we love this region and believe in it beyond residential opportunities, we decided to diversify and operationalize more growth. Mixed-use is a huge piece of that puzzle for us. 

How does Marcon find real estate opportunities?

Transit-orientation is a big one for us when choosing residential real estate development sites. People are pulled to places for the quality of the lived experience. There’s also access to amenities, like being able to go hiking or kayaking on your front doorstep. 

How do you decide where to develop in Metro Vancouver? What risks do Vancouver real estate developers need to watchout for? 

We have a lot of development activity in Vancouver but we don’t waste our time trying to be the first developers to get into the new hot spot. We don’t speculate ahead of the plan approval. A lot of developers get bitten by overpaying before plans and policies are approved.

There have been areas in Vancouver where inclusionary zoning, meaning mandated social housing contributions as part of condo developments, have burned some developers. Folks have made bets assuming policies will fall in certain directions and those bets don’t always pay off. 

For example, in the West End, sites were rezoned to include a social housing component. But when the policy was actually written, the contribution was set so that 20% of your site needed to be devoted to social housing plus a possible cash payment based on land lift. Some developers had already made plans and purchases based on what they thought the policy would be, and found themselves stuck and unable to afford their projects once the policy was written. 

That’s the nuance with development. How early do you want to jump in? Just because a plan is being talked about or approved, doesn’t mean everything is settled. You have to watch the shifts in policy. Sometimes it makes sense to wait for the dust to settle. 

We’ve had success buying things at the right time but life is too short to go through the anguish of speculation. We can earn our share in other ways. 

How do politics and public sentiment factor into how you perceive building Vancouver into a better city?

We’ve tried to build relationships in the political realm but we try not to go too deep. We’re not taking strong positions or trying to influence anything. The Metro Vancouver region is growing and some communities don’t want to see that change. But that can ebb and flow. So we try not to be too reactive on that front.

There are many sides of politics that we can get really caught up in. We don’t ignore politics and we welcome being in conversation with politicians, but we don’t go too deep. I care more about how we can lift communities into better places, which is a more progressive dialogue. How does the work we do fit into the community’s goals? 

When working with communities, we like to start from the ground up. We want to build good relationships with the folks on the ground. If we don’t have to involve a mayor or director of planning, that’s better for everyone. 

What does Vancouver look like in 2035?

I think the biggest outcome we’ll see in Metro Vancouver in the next 10-15 years will be the maturity of the urban centres that are currently in planning. The scale will be unlike anything anyone has seen in the region. I think there’s a next generation of product that is in a totally different league of complexity and design potential.

These projects that are currently in the planning stages will be game-changers. These will be immersive communities and development will be for the better. There will be more amenities and better services. 

Generally these communities are higher density and higher scale, but sometimes that’s for interesting reasons. The hierarchy of needs is evolving. We’re focusing on things like solar access, pedestrian spaces and how all of those factors intersect. 

There’s less fear about what the commercial components represent in these mixed-use communities. We know now that community-serving commercial space is something everyone needs. There’s more sophistication in that today than there has been in the last 20 years. 

Find out more: https://marcon.ca/ 

 

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