What is Tech? How will it impact real estate?
October 2016
I’m not sure that “Love is all around” but tech certainly is. From the moment you wake up to the moment you go to sleep your life is, believe it or not, shaped by technology.
You tend to only notice the new things, ‘smartphones, robots, Siri, Cortana, self driving cars’, but that is simply because they are shiny and new.
All technology moves through the stages of Genesis, Custom Built, Product, and Commodity (Google Wardley Mapping). Or rather, exciting to boring. DeepMind’s Alpha Go AI machine beating Lee Sedol was exciting (and a decade ahead of what was thought possible) but electricity is boring.
Not much changes year to year but everything changes over a decade. and we are now nearly a decade since the launch of the iPhone, the smartphone that launched an industry that has totally transformed the world. Never before has a technology market been so large. PC sales average 200 million a year, whereas smartphones sell 1.4 billion, and have done for several years. And beyond that, most people update their phone every two years, meaning new functionality is spreading quicker than ever.
Combined with this ubiquity of a ‘supercomputer in every pocket’ we have high speed connectivity, Cloud computing, the Internet of Things, and Artificial Intelligence advancing at breakneck speed towards becoming productised.
All of which has led to us being extremely blasé about incredibly sophisticated services such as CityMapper, Slack, WhatsApp, Spotify, Office 365, Google Docs, Facebook etc. Even though your Oyster Card is actually based on very old technology the layer of services on top of the data it creates is quite extraordinary. And every time you do a Google search or type a predictive text message you are invoking cutting edge machine learning. As William Gibson said ‘The future is already here’.
The subtle point though, is that besides moving from an analogue to a digital world we are moving from a world of products to one of services. Increasingly we value access over ownership, and want to dip in and out of experiences. We want on-demand everything; taxis, pizzas, films, music, information. Why own anything when you can just use it when you want it?
All around us companies are offering us what we want, when we want it. We might pay more for something pro rata, but we don’t care as we are only buying what we need.
And will property remain aloof from all this? Long leases, upwards only rent reviews, fixed space? Not a chance is the answer. And therein lies the biggest change to the real estate market since the first skyscraper was made possible by the invention of the ‘personal elevator’. ‘Tech is all around us’ has consequences.
According to Google’s new ‘Workplace 2020’ survey & report “Flexible working will be the defining characteristic of the future workplace, rising from 4% today to 32% of organisations polled by 2018′”. Amongst larger companies the change is even more dramatic, with organisations employing more than 6000, up from 10% today to 66% in 2018.”
The same report says “48% of respondents are today unable to access all the information they need via mobile devices”. Which means that, today. 52% can. In other words more than half the workforce can work where they like, as they have all the information they need to do their job.
Where then does that leave the office? As a place to do all the things only humans can. Which boil down to three areas. First, anything that is non-routine, that does not involve repeatable steps, secondly, problems that require ‘social intelligence’ to resolve, and thirdly, anything where ‘perception and manipulation are important in complex and unstructured environments’.
Which is why, again from the Google report “The rise of the new generation of connected workers, empowered by collaborative and mobile solutions, will radically alter the shape of the future workforce and workplace.” And by doing this, will have second order consequences for every property type. What is an asset today make become a liability tomorrow.
So ‘What is Tech?’. Well, it is what is going to transform real estate from being a business that provides a product to one that provides a service. It is what will lead to the real estate business no longer being about real estate. It is what will see the High Street turn from being just about retail to being about mixed use live/work/play. Industrial sheds to super high tech, vertical, urban phenomena. Farming to underground. And offices to ‘Imaginariums’ where humans are augmented by machines. Tech will fundamentally change our behaviour and allow us not to do more with less, but more with more.
There has never, ever, been a more exciting time to be in the real estate business. Lap it up.
Antony