The Nobel Prize winning Physicist Niels Bohr famously said “Prediction is very difficult, especially about the future”. Not being either a Nobel Laureate, or a Physicist, I won’t be making any predictions below. However 2020 is but four years away, and whilst Mr Bohr was of course correct about prediction, such a short timescale only demands extrapolation, and that is something I am happy to take on.
“The future is already here, it’s just not very evenly distributed” is a more apposite quotation for discussing 2020, because as William Gibson so eloquently pointed out, technology moves in waves, and what the Innovators are up to today, will be adopted by the majority some years down the line. And for Real Estate, the trends are quite clear.
Society is moving very rapidly from a world of Products to one of Services. We are becoming much less bothered about acquiring more possessions and much more interested in being provided with services, experiences and ephemeral pleasures. So Uber instead of cars, Spotify instead of CD’s, Neflix instead of DVD’s, and Airbnb instead of Hotels. And the number of on-demand services we patronise in vast numbers grows and grows. Takeaways, Dry Cleaning, Household Chores, Clothes, Gadgets etc. We are buying what we need, when we need it; access is trumping ownership. With a 1990’s supercomputer in our pocket, and software that enables gratification in just a few clicks, the technological die is cast. We can have what we want when we want it, and funnily enough, we all like that.
And Real Estate and the world of work will not be immune from this trend. Just as we can buy almost any software we want ‘as a service’, so it will be with Real Estate. Space, as a service, is the future of Real Estate. On demand, and where we buy exactly the features, and services, we want, whenever and wherever we are. The Real Estate industry is moving from being about a physical product, to a service; in essence a provider, and seller, of User Experiences. And the developer that provides the best User Experience, to the largest number of people, will be the winner.
Increasingly the value of a Real Estate company will be tied up in the User Experience that company provides its customers with. The best will be known by the User Experience they provide, and that User Experience will be their Brand. And by 2020 Brand will really matter.
All of this will be pulled into existence by technology, but it won’t seem like it. What will happen is that businesses will find that the actual work they need their employees to do will change, as new technologies slowly, then suddenly, enable much rote work (which exists at all levels) to be offloaded to ‘the machines’. And this will have two major consequences. First, it will unbundle work from being something one has to do in an office, and secondly, and more importantly, will change the type of places we need to spend time in. With more and more value being added through the application of intensely human skills, such as design, imagination, empathy and social intelligence, the workplace of the future will, of necessity, be somewhere that catalyses those skills. Simply put, in a technologically advanced world, what humans have to offer is their humanity, and that only thrives in intensely human environments. I dub these spaces ‘Imaginariums’.
It sounds like a lot to ask for in just four years doesn’t it? The reality though is that this is a trend that has been developing for many years, at least 6, so we are talking about a decade of change, and as is the way with such things it is in the last couple of years that change really takes hold. So many aspects of the world today are changing at an exponential pace, and the Hockey stick shaped growth curve that creates always leads to dramatic ruptures. Nothing much changes year to year but everything changes over a decade. The iPhone is not even a decade old but smartphones truly have changed the world.
For Commercial Real Estate, all this technological change, and resultant behavioural change will lead to groundbreaking developments: the demand is coming for a new product, and that product will come wrapped as a service. And it will be very different from what we have all become used to. In many ways.
The best developers will work much more closely with their customers. They will know more about them, more about how they like to operate, how their space requirements ebb and flow, in scale and in usage, and what they need from ‘the space around us’ to support their business. They will be able to provide core permanent space, and then flexible on-demand space to top up as required, or for specialist uses. They will offer a wide range of services, on top of base rent, that their customer most likely could not procure on their own and will willingly pay a premium for. And on top of all this, they will be building a network of peers that will facilitate knowledge sharing, mutual support and commercial exchange.
In this services world, Real Estate becomes a genuine two sided market, where each side enhances the value of the other. Where we move from a hierarchical relationship to a genuine network. The network is the User Experience, and the User Experience is the Brand.
So in summary, I believe we could be entering a golden age of Real Estate. As technology upends the supply/demand equilibrium of generations, our understanding of what real estate is for, and the form of space itself, it could, paradoxically, be enabling a built environment that better serves everybody.
Now, is that prediction, or extrapolation?