Real Estate's Four Great Challenges - Part 4
View of Delft - Johannes Vermeer - 1660–1661 - Mauritshuis Museum, Netherlands
This is part 4 in a series of 5 posts looking at the four great challenges facing the real estate industry on the road to 2030.
Part 1 is here
Part 2 is here
Part 3 is here
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Challenge No 4 is:
How to Reinvigorate our Cities?
In combination, the first three challenges add up to challenge number 4. How are we to steer our cities through all of this change?
The challenges come in three buckets: Economic, Real Estate, and Social.
Economic challenges: With the rise of remote work, there are fewer people commuting to the CBDs each day, leading to a decrease in spending in the area and a potential decrease in business taxes related to buildings. This can lead to a reduction in revenue for businesses and the city itself, which could result in budget cuts for essential services and infrastructure. Potentially starting a vicious circle, a doom loop.
Real estate challenges: The potential obsolescence of office buildings is a major concern for cities, as they are a significant source of revenue and employment. If these buildings become less relevant due to the rise of hybrid, distributed and remote work, it could lead to a decline in property values and a reduction in the city's tax base. Additionally, there is a growing need to decarbonise real estate, which will require significant investment in retrofitting existing buildings and constructing new buildings that are energy-efficient.
Social challenges: The rise of remote work could lead to a reduction in the sense of community and social connection that is often associated with cities. This could lead to a decline in the quality of life for city residents and a potential decrease in civic engagement and participation.
As with obsolescence, challenge number 3, you can view this situation as Good News or Bad News?
This is the Bad News Perspective:
‘These challenges threaten to undermine the economic vitality and social cohesion of cities, and may lead to a decline in public services and quality of life for residents. Without bold action and strategic planning, cities may struggle to adapt to these changes and remain competitive in a rapidly changing global economy’
Sounds plausible doesn’t it? Maybe cities have had their heyday. And it’s all down from here. After all, such cycles have repeatedly happened throughout history.
But there is a Good News Perspective
What about if we looked through this lens:
‘there is an opportunity to create more liveable, sustainable, and human-centric cities by embracing technology, investing in smart infrastructure, and fostering a culture of innovation and entrepreneurship. By prioritising initiatives that support public health and well-being, promote sustainability and resilience, and enhance quality of life, cities can attract and retain talent, stimulate economic growth, and create a more equitable and inclusive urban environment.’
Genuinely, we could go both ways.
So I thought the way to approach this might be to think about what would success feel like?
What should it feel like to live and/or work in a great, human-centric city?
If we try and envisage the output we desire perhaps we can work back to what inputs are needed to make it happen?
Once again I’m going to recall the great line from Steve Jobs from 1997 when he said:
“You've got to start with the customer experience, and work back to the technology.”
And just think about what customer experience do we want for everyone in our cities and then work back to the technology, processes, policies, infrastructure and systems we’ll need.
So here are some ideas about how it would/should/could feel to live and/or work in a great City?
A great, human-centric city should ….
‘make you feel safe and secure, with well-lit streets, reliable public safety services, and a sense of community that fosters trust and belonging.’
‘make you feel connected and engaged, with opportunities for socialising, learning, and pursuing your interests.’
‘make you feel healthy and happy, with access to affordable and nutritious food, clean air and water, and green spaces that promote physical activity and mental well-being.’
‘make you feel inspired and creative, with a dynamic and supportive environment that fosters innovation, entrepreneurship, and artistic expression.’
‘make you feel empowered and included, with opportunities for all residents to participate in the decision-making processes that shape their communities’
With these as our outputs what do we need as inputs? And who provides the inputs.
In terms of provision, investors, developers, city governors, and technologists all have a major role to play. Public and private sectors have to work together, as do technologists and the wider business community. No-one can go AWOL with this project.
And in terms of actions to take there are not surprisingly many, but they fit into one of four categories.
First, Sustainable Development.
1. Prioritise sustainability: Make it a key priority in all development projects, focusing on reducing carbon emissions, promoting renewable energy, and increasing energy efficiency in buildings.
2. Promote active transportation: Encourage the use of active transportation, such as walking and cycling, by investing in infrastructure and amenities that make it easier and safer for residents to get around the city without relying on cars.
Secondly, Community and Inclusion.
1. Encourage remote work: Embrace the trend towards remote work by investing in technology and infrastructure that makes it easier for workers to work from home, while also providing incentives for workers to visit the city centre for meetings and social events.
2. Foster inclusion: Ensure that all residents have access to the benefits of urban life, including transportation, and public services, and prioritise the needs of marginalised communities in all development projects.
3. Create policies that support affordable housing: Develop policies and incentives that support the creation of affordable housing, such as subsidies, tax credits, and zoning regulations that encourage the development of affordable housing units.
4. Foster community engagement: Promote community engagement by encouraging residents to participate in cultural events and supporting local initiatives that promote social interaction and civic engagement.
5. Prioritise accessibility: Ensure that cultural and hospitality offerings are accessible to all residents, including those with disabilities and those from marginalised communities, by investing in infrastructure and providing financial support to local organisations that promote inclusivity.
Thirdly, Innovation and Technology.
1. Embrace technology: Leverage technology to enhance urban resilience, improve efficiency, and promote innovation in all aspects of urban life.
2. Enhance public safety: Develop programs and initiatives that enhance public safety, such as community policing and neighbourhood watch groups.
3. Emphasise accountability: Establish clear metrics and evaluation criteria to ensure that development projects are delivering value for the community and meeting the needs of all stakeholders, and hold developers and investors accountable for achieving these goals.
4. Foster entrepreneurship and innovation: Promote entrepreneurship and innovation by supporting startups, incubators, and accelerators that can contribute to the growth of the local economy and the creation of new jobs.
And fourthly, Culture and Recreation.
1. Create mixed-use developments: Encourage the development of mixed-use projects that promote walkability, social interaction, and economic vitality.
2. Create green spaces: Prioritise the creation of green spaces and public amenities that promote health and wellbeing, and help to create a more human-centric urban environment.
3. Foster collaboration: Create partnerships and collaborations among stakeholders, including government agencies, businesses, and residents, to promote innovation, enhance sustainability, and address community needs.
4. Support local artists and cultural institutions: Provide financial and logistical support to local artists and cultural institutions, such as museums, theatres, and concert venues, to promote a vibrant and diverse cultural scene.
5. Create public spaces for cultural events: Invest in the creation of public spaces that can be used for cultural events, such as outdoor concerts and festivals, and encourage partnerships between artists and local businesses to promote economic vitality.
6. Promote local cuisine and hospitality: Encourage the development of local cuisine and hospitality by investing in food and beverage infrastructure and promoting partnerships between local businesses and cultural institutions.
Once one starts thinking about all of this as a massive system problem to be solved you start to see not only the complexity of the human task but the enormous range of technologies that would be needed and also how they might need to interlink.
Maybe the biggest challenge for the PropTech (and wider real estate) sector will be learning how to build for a system rather than a silo. The ‘job to be done’ here necessitates design and system thinking. None of this will happen without a large amount of great tech that works together; the industry needs to demonstrate it is up for this task.
Can we get all of this working together?:
Building Management Systems
Digital Twins
AI (including LLMs providing a natural language interface)
Augmented Reality
Virtual Reality
IoT
Collaboration tools (Zoom, Teams etc plus Built World specific)
Crowdsourcing platforms (talking to and with the community)
Intelligent Transportation systems
Geographical Information Systems (GIS)
Integrations with mobile apps and platforms - Citymapper etc
Smart Infrastructure (Cloud/Data/Traffic/Energy)
3D Printing
Drones
Autonomous vehicles
Smart City Platforms (collaboration, data sharing, engagement)
And then integrate them into all of the inputs required to create a great, human-centric city?
Quite a challenge isn’t it?