Last night the London Business School hosted a conference which contained a panel on ‘How is technology set to further shape real estate’? As @emily39 couldn’t tweet as she was moderating the session, and @propertyshe (probably the No 1 real estate tweeter) wasn’t there, ‘sociability’ was not high. In fact no one else tweeted anything. This is after all the property industry.
So I thought I’d have a go at answering the questions the panel were asked. @lbs did not mention a timescale but I am going to base my thoughts on the next 10 years. After all we know that we tend to overestimate the speed of technology adoption but underestimate the impact over time.
So in the spirit of only fools try to predict the future, here goes:
1. How will technology change the way investors, occupiers, and managers look at real estate?
For investors I suspect the key point is that they will have much better data to work with. Through the internet of things the built environment will become a throbbing mass of datapoints and investors will know, in real time, the performance of their physical assets. How much energy is being used, how much is being spent on maintenance (and through predictive analytics how much future costs will be) and all other variables will flow through to cloud based software stacks that will guarantee hitherto unheard of financial and operational transparency.
Future datasets will build on the sort of ‘real’ information provided today by Telefonica’s Dynamic Insights group. They ‘collect mobile data, anonymised and aggregated, to understand how segments of the population collectively behave’. This sort of information makes traditional demographic analysis seem a very blunt instrument. This is what people are actually doing, not just guesswork as to what they might be up to.
Combine this data with availability and stock databases, and throw in Land Registry information (which will become open) and retail planning, for instance, starts to be much more a science than an art.
For investors technology will have a big impact. Though they may find themselves replaced by machines altogether.
For occupiers it seems clear that space requirements will change. Offices, for example are not going to primarily be places where you go to do individual work (for technology will/does free you to do that elsewhere). Rather they will be the place you go to colloborate with others. We are human after all and we DO feed off each others ideas, attitudes and beliefs. But you cannot brainstorm all day, every day; so for most people the office will not be your home from home 5 days a week. Seth Godin sums this up perfectly in his post ‘Goodbye to the office’.
The industry is currently awash with research forecasting ever greater requirements for office space but I cannot quite square this with the ‘Second Machine Age’ as written about by Erik Brynjolfsson and Andrew McAfee or indeed the report from the Oxford Martin School on The Future of Employment which predicts 47% of US jobs are susceptible to computerisation. Go figure….as they say.
For managers (I’m presuming this refers to property managers) there will be less of them (tech/robots WILL remove the need for many), but they will be better educated and better paid. Their job will be to run the technology and make their occupiers happy. Quite what that entails is hard to say but will revolve around removing the friction in day to day activities.
2. What have been the effects of recent online channels (including ‘Click and Collect’) on retailer’s property strategies?
Click and Collect HAS been a big success (British Land say 25% of all visits to their retailers relate to it) but I worry that the property industry is making a mistake in thinking this has let them off the hook and the future of retail property is rosy. I believe the reality is that SOME retailers really get it and know how to co-opt technology in such a way as to actually enhance their retail offering. One thinks of John Lewis or Burberry or NEXT. But many/most are pretty rotten at online, offer little that is not, or cannot be, commoditised and do not have the scale or skills to provide a retail experience that will endure in tempting people away from their smartphone or more likely tablet.
Conversely online retailers are getting better and better at providing stimulating, immersive, addictive shopping experiences. Only the best retailers will be able to compete long term. Maybe, perhaps inevitably, that will result in much better retailers but either way it most certainly will hit the economic viability of many and the knock on effect on the overall retail market surely will not be benign.
3. How is technology impacting the demand for logistics assets?
Not really my field but demand has to be growing, though perhaps not in the way many expected. With the rise of click and collect, the move of the supermarkets back into town in smaller convenience stores and the consumer demand for same day delivery (something Amazon are really gunning for) then I imagine logistics centers will pop up on the edge of urban areas instead of/in addition to a few massive ones dotted strategically across the country.
Whatever happens, expect for deliveries to be SAME DAY in the near(ish) future.
4. What are the impacts of flexible working practices (remote access, hot-desking, business lounges etc) and cloud technology on the commercial office sector?
This was covered above (do read that Seth Godin piece) but in essence mobile technology, in concert with cloud computing and ubiquitous connectivity mean everyone has the freedom to work whenever, wherever and in various ways that is what will happen.
In the world of TMT some of these ‘news ways of working’ are already manifesting themselves and developers like Derwent London say that such thinking is informing their developments, such as at The White Collar Factory.
Whether the attractions of hip, cool, naturally ventilated, high ceiling, tech enabled offices will be able to counteract the already huge rental increases seen in the likes of Tech City over the last couple of years remains to be seen.
Personally I think they will. What they won’t enable though is a start up wonderland to compare with Silicon Valley. This will be mature, knowing, moneyed hipster land.
That’s enough guesswork.
What isn’t guesswork though is that between now and ten years time the key technology trends already underway will be transformational and will be highly disruptive. When it really kicks in I don’t know, but whilst I believe in the sunny uplands of technological progress I am certain that those who do not get to grips, as users, with modern tech are likely to meet a not so bright future.
Now who wants to know how to tweet?