Ten technology changes impacting real estate

Let’s just stop for a moment. And think. What matters? Amongst the incessant bombardment of fact, figures, opinions, ravings and rantings that we all endure, what is worth bothering with? What, if any, rules, principles or precepts should we really take to heart? Yes, really take to heart; not just play lip service too, but co-opt as fundamental ideas, actions, beliefs and behaviours that will shape our lives.

Here are a few things about technology and property that I think are really worth your consideration. And why.

You should assume the office really is dead. Why?
Because only by embracing the fact that technology has removed the need for an office to undertake work, will you reimagine the office as somewhere that does have a real, enduring purpose.

We used to need an office because that was where we could access the technology, data and people we needed to get our work done. This is, barring a minority of companies, no longer true. And anyone who still thinks ‘water cooler’ moments make it all worthwhile clearly isn’t living in the real world of social media and streaming, anything, anytime information.

Do believe the hype, the robots ARE coming and they will take 30-40% of todays jobs. And most of those will be the jobs that people do in the office right now. Any work that can be codified will be codified, and thereafter automated.

So what then is the point of the office? Well, to understand that you need to focus intensely on what is is that we humans can do, that computers can’t. And that boils down to things that cannot be codified, are unique, require social intelligence and are an amalgam of disparate, unstructured inference and intuition.

Then, and only then, will you be able to see the future of the office. It has one, but not as most of us currently know it.

Machine learning is a double edged sword. Why? 
Because a big difference between computing today and just a few years ago is that, whilst the notion of computers as being sentient is currently fanciful, they can now do things off their own bat that previously required human instruction. Think of it like a game of ‘if this then that’; where once the ’that’ needed to be pre-defined for the ’this’ to take effect, computers today can infer or induce what the ’that’ is. The machine can learn from the data it has to hand. It can deduce that if X occurs the next thing to happen will be Y. In effect machine learning means machines can build their own decision trees. And therein lies the rub. The positive is that we can enlist the help of the machines with complex analysis or the development of predictive analytics. The negative is that the bar is being raised as to what the machines can do without our help.

You need to assess what questions the machines should answer themselves, and what ones you need to work on together, in partnership.

The ‘Death of Distance’ will return. Why?
In 1997 The Economist’s Frances Cairncross wrote a much lauded book, The Death of Distance. It posited the idea that communications technology would free people to work wherever they wanted to, and that people would gravitate to the places that suited them most, safe in the knowledge that they could work anywhere. Well, much to the delight especially of technology naysayers, this hasn’t come to pass. In fact people have gravitated en masse to already successful cities, and clusters of like minded companies have formed in crowded, urban city centres.

But the death of distance is a real phenomenon and will re-assert itself in the years ahead. If you think of Netflix, or Apple TV, or streaming music service like Spotify you just take them for granted. But ten years ago none of these things could have existed, as the technology required simply did not exist. Whilst many scoff at the companies that went belly up in the Dot Com crash of 2000, the fact is most of the big failures were simply ahead of their time. It is a question of what behaviour is enabled by technology. To date, distance has not died as people need to be near each other because the tools and infrastructure they require are not universally available.

However, this is an evolutionary process and as demand grows so does supply. So we now, for instance, have multiple ’Silicon Valley’ type tech centres around the world; London, Berlin, Stockholm, Tel Aviv etc. And a world is developing where every talented coder does not have to move to San Francisco to partake in the technology industry. And the connectivity, and hardware/software, to genuinely be in multiple places at once, is now becoming commonplace.

Like e-commerce, the point is not to aggregate figures across the whole market and infer minimal impact, but to look at those areas where sizeable numbers of people or companies are starting to work in a different way. Disruption is when something not as good as, but dramatically cheaper than the incumbents starts to gain traction. Like the lily pond analogy, not a lot happens for a long time and then suddenly everything changes.

So consider that Automattic, who make WordPress which powers a quarter of all the worlds websites, is an entirely remote company, without even a token HQ. Or the dispersed, networked nature of companies like AirBnB, or Uber, operating in hundreds of companies largely through online collaboration. And the plethora of on-demand companies springing up to provide you with what you want, wherever you want it, at the press of a button.

All of this involves the death of distance. People connected by technology, not place. And it is growing.

There is no such thing as Work/life balance, and that is good. Why?
Because, when you can do your work anywhere you do not need to parcel your life up in this way. Work is becoming more and more about getting things done than being present, at your desk, for a set number of hours each day. At the heart of smart working is judging progress by what gets done, productive collaboration and developing ones business in an agile, iterative way. And this does not necessarily involve a contiguous number of hours. Or presence in one place. So for those lucky, or smart, enough to have jobs that they enjoy, that have purpose and that enable them to demonstrate their skills, the whole notion of work/life balance is old hat. Work/life is a blend, not an either or.

Assume everything is mobile. Why?
Because with 4 billion people across the world owning a phone, and replacing it roughly every two years, the mobile is increasingly the first screen people use to access anything. In the western world, where smartphones are de rigeur, each of us has a 1990’s supercomputer in our pocket. And we have this with us almost all the time. So first point of call has naturally migrated to our mobile. If your business does not present itself appropriately on a mobile device you deserve to go out of business. Simple as that.

The Cloud rules. Why?
And part of the reason your smartphone is so powerful is because it can access pretty much anything via The Cloud, and can offload complex tasks to server filled data centres via The Cloud. In practice you have the total computational resources of the world in your pocket. If you are not serving your employees, suppliers, partners and customers via The Cloud you are missing out on an huge opportunity.

Connectivity matters. Why?
Harnessing the hardware power of your smartphone and the resources available via The Cloud requires good connectivity. Wallis Simpson once said ‘You cannot be too rich, or too thin’ – if she were alive today she would add ‘or have too much bandwidth’. It matters.

Work is being unbundled. Why?
So much office work is a process of aggregating data from different people, in different departments, and then organising this for reporting or presentation purposes. Once aggregated and distilled, in all likelihood any facts and figures included are a static snapshot of a moment in time.

This process is a construct of the analogue, non networked, age and will disappear in the digital one. Such work will be unbundled, in the sense that distinct processes, applications and API’s will be developed that tie together all this information, via pre-defined (or on demand reprogrammable) templates into real time data feeds that short circuit the whole panoply of manual tasks currently required.

Much of the work that is currently performed via Excel spreadsheets will transition to Cloud based applications, either automatically supplied with data points or supplied via mobile or tablet interfaces.

And with real time, contextual and analysed data to hand, it can be both more widely distributed (hence the flattening of hierarchies) and more valuable and responsive to human designed interpretation and decision making. Companies will have more people working with more accurate data more quickly than ever before. Together with the vast amount of time freed up through not having to manually handle data, one would hope smart companies could be more effective and productive than they are today.

Software is on-demand as well. Why?
If you look at the way large successful startups are using software you’ll see that the old ‘as long as it’s Microsoft’ days are over. Where it would be typical to run a one supplier stack of applications across your whole business it is commonplace nowadays to meld together, via public API’s and Cloud hosting a wide range of services from 3rd parties specialising in their own particular area. So, if you take Uber as an example they use Google Maps to locate you, Twilio to text you, and SendGrid to email you. With this sort of approach, where software is considered on a modular, plug and play basis, you can concentrate on delivering an exceptional customer experience, and deliver this at speed and with great flexibility.

In addition, with all these services available off the shelf and on-demand, you can be as powerful in a tiny startup as the largest multi-national. The difference, of course, is that you’ll be more flexible in your business modelling and a great deal faster to market. Execution is key, as ever, but today the playing field is pretty much level.

Property must change. Why?
With all of the above going on I hope it is clear that the work we do, and how we’ll do it, as well as the environments that will enable this, will change in the years ahead. On top of this of course, you need to layer the UK’s housing crisis, especially the insanity of the London market.

I see the following coming to pass:

The young will continue to congregate in either ever smaller apartments, or flat/house shares (or purpose built new blocks mimicking University life) in the city centre. If you cannot afford your own place then renting right in the heart of the action makes sense.

They will make the most of this but there are limits to how much of their salary people will be prepared to pay in rent. As has been said before, London could eat its own creative class.

At some point the allure of city centre living will meet the harsh realities of cost and increasing numbers of people will leave the capital. Primarily for city centre locations in 2nd, 3rd tier UK cities. This is of course a gradual process but a tipping point will be reached. For London this will be game changing, but for the UK as a whole it will be positive as regional centres up their game and attract/offer higher paying, higher skilled employment.

Pure dormitory locations will suffer badly, as they offer neither good jobs or interesting lifestyles.

The zoning of areas will break down, as it becomes increasingly anachronistic to think of places as somewhere you work or somewhere you live. Cities will become dotted with local communities where housing, office space, retail and leisure uses are mixed up and people move around different environments as the need, or urge takes them.

Many of these areas will redefine existing High Streets and turn them into multi purpose communities, rather than single purpose retail destinations.

It will become commonplace to find purpose built apartment blocks incorporating working space as well as retail and leisure uses.

In major city centres large buildings, that once would have been single purpose office buildings will follow the same pattern, becoming vertical villages.

A large percentage of offices, perhaps 40-60%, will become variants of the co-working spaces we see sprouting up all over the place today. These 3rd spaces, will be sort of hybrid work/home environments that are much more pleasant to spend time in than most people are used to. And because the nature of work will have changed so much, emphasising human skills augmented by technology, they will need to be as smart thinking requires the right kind of stimulation.

Central London will be reserved for weekly get togethers, with a continuation of the trend for less but longer commuting journeys as people’s circumstances change and the need for some decent space increases. The flip side of this will be a growth in live/work purpose built communities, in and outside historic market towns.

Property owners will morph into full stack service providers as this world of ‘office as a service’ takes hold, and the demands and requirements of occupiers increases. Those who do it right will be rewarded with more customers spending less time overall in their properties, but paying significantly more on an hour by hour basis.

All of the above will be underpinned by a wave of exponentially developing technologies that will provide extraordinary tools for developing exceptional customer experiences, great human relationships and meaningful, prosperous businesses.

Something to aspire to I think.

Antony

It's Trends not Fads that matter

July 2015

Do you remember when everyone used to go on about ‘cyberspace’ and the ’information superhighway’? These terms sound daft today don’t they? Well, within a few years you will react in the same way to ‘Big Data’, the ‘Digital Economy’ and ‘Digital Marketing’. Why? Because they are just faddish names masking an underlying trend. The ‘Big’ and ‘Digital’ are superfluous; as standalone entities these things don’t, or won’t, exist. In business there is only data and marketing, and we all work within the same economy.

By conjuring up a parallel world the property industry is falling into a trap. Every week we hear about the rise of TMT occupiers, MediaTech and the particular office requirements of the tech industry. How these companies have special needs, how they can only be found in particular areas of the city, and how these locations are in various ways ’special’. We even have a new breed of agent to deal with them, where suits are banished and awesome and disrupt have to be inserted into every other sentence.

Unfortunately all this talk is missing the point. This not a new market at all; it IS the market. This small sector (real tech companies don’t employ many people) is but the shouty end of a fundamental trend that is seeing every company become end to end digital. We are told that this new sector requires interesting, well designed and engaging space. That they want space that is suited for collaborative activities, but with quiet zones, and touch down areas, and meeting rooms, and lounges, and perhaps stand up sit down desks. They need great connectivity, decent kitchens and somewhere to park bicycles. The bottom line: they want a decent place to work that isn’t grey. Well, show me someone who doesn’t.

These people deal with ‘Big data’ it is said. Normally by people who have no idea what is meant by this. The important trend is that companies are starting to pay a lot more attention to making decisions, throughout their operations, based on data rather than hunch or gut feel. But this is nothing special; all companies will follow the Google mantra ‘In God we trust, everyone else bring data’.

And the same applies with ‘Digital Marketing’; it is just a subset of marketing, not a standalone function. The trend is that marketing embraces more digital channels, and pays more attention to data analysis, but this is the case for everyone. Everyone knows that print, if not dead, is a dead end. The Economist has lost 46% of their print advertising income since 2012; their response has been to become ever more digital. And so it will be across all business.

The trap to avoid is following the fad and treating tech companies as somehow different. Or non tech companies as ‘old school’. Every company is a tech company. Or soon will be.

Antony

This appeared in Estates Gazette 11th July 2015

Essential tech for real estate: Online courses

July 2015

We all know the property industry has an ongoing love affair with print. Endless brochures, property details, research reports and miscellany are lavishly printed on glossy, heavy paper.

All very well, and paper does have a part to play, but the reality is that digital is the starting point for most people today. If you want to know something, read something or buy something then a screen is the place you start. Increasingly this is a mobile screen, be it a tablet or a smartphone.

Unfortunately a large percentage of data outputted by the industry is either still in print, in pdf’s formatted for print, or on websites that aren’t mobile formatted. One of the biggest surveying firms in the world is still a closed book to mobile users, being unusable on a small screen.

So things have to change. And to help this happen there are two online courses I recommend as many staff as possible are encouraged to take. The first is Squared online (paid), run by Google and formed of five modules that guide you through the digital landscape and theory and practice of digital marketing. Made up of online lessons, background reading and collaborative projects it would suit any property marketer.

The other course, the Digital Business Academy (free), is run by Tech City UK in collaboration with University College London. It is designed for people who want to start their own online business but many of the lessons would benefit almost anyone looking to develop their digital skills.

Antony

This appeared in Estates Gazette 11th July 2015

Real estate developers, investors and technology; staying competitive in a changing world

June 2015

“Only when the tide goes out do you discover who’s been swimming naked” as Warren Buffett memorably put it in 2001. Well, in the property world we’ll need to wait another year or two to find out, as the next downturn can’t be that far off. This is the property market after all, and boom markets always turn to bust. For now though everyone looks brilliant, as particularly the London market just keeps on rising at many times the rate of inflation or growth. Beneath it all though, big change is underway and the fundamentals of what it means to be a developer, especially a large one, are changing with it. From a tech perspective here are four areas (amongst others) that the successful companies need to consider.

First off, the four tech megatrends (Mobile, Cloud, Connectivity and Internet of Things) mean that all companies need to rethink their digital infrastructure. What worked five/ten years ago just doesn’t work well enough today. Back then life was simple; just buy everything Microsoft were selling. But whereas five years ago Microsoft had over 90% of the market for all internet connected devices, today they have about 20%. And that is dropping. ‘Mobile is eating the world’ (as the VC’s at Andreessen Horowitz say) and Microsoft have missed the boat. Years late to the party Windows Phone is barely more relevant than Blackberry in the new world owned by Apple’s iOS and Google’s Android. In tech ‘Every dog has its day’ is an ineluctable truth. You cannot pick a long term winner, because none will ever exist.

However, the beauty of buying Microsoft (for which of course you paid a high price) was that everything connected to everything else. And that is something you still need. What you don’t need though are systems that only talk to each other, that ‘don’t play nicely’, as they say, with everyone else. Which explains why so many of today’s rising tech companies opt for a digital infrastructure where different products and systems from multiple vendors (or increasingly the Open Source community) can all be set up so they can exchange data with any other product or system. Largely through API’s, in the jargon. The key now is being able to mix and match technologies, so that you use the ones that best suit a purpose and not getting hung up on requiring one monolithic structure. So if you want to use Microsoft Excel, and Google Docs, and an iPhone app, with some data in SqlServer and some in MySql then just do it. Just ensure everyone can talk to everyone else.

Secondly, if you are looking to innovate, and who isn’t, then you need to place your innovators on the edge of your company structure. If you think that you will create new products, with new business models, and new value propositions by bundling everyone together in the IT department then please think again. No disrespect to IT departments but in the standard corporate setup they are on the ‘cost’ side of the equation, and not thought of as ‘assets’. As such the vibe, the mood music, the operational imperative is all wrong for engendering innovation. This will change in time, as IT itself starts to be rethought as not a corporate silo but rather a function that is embedded in each and every area of the company. IT departments will cease to exist; rather the availability of technological skills will be embedded within every member of staff and in operations across the board. Amazon already works like this, they do not have an IT department.

As well as being separate from IT, your tech innovators need to have access to anyone within your company but must not form part of the organisational structure. They need to be entwined but standalone. If not then their thinking will fall too much into line with the existing ‘company way’, they won’t be exposed to enough third party influences and influencers, and the natural politics that no company can avoid will act like a break or vice on new ideas.

Thirdly, you do have plans for Smart Working don’t you? Rearranging how you think about desks, and working hours, and putting in the hours, and where your people work, and how they are judged, and focussing on results not presence. Etc, etc. Being end to end digital, and rethinking why you do what you do, and considering whether there isn’t a better way. It is commonplace to dismiss the civil service as bureaucrats, but in the UK at least large areas of government are a long way down the Smart Working road and have transformed how they work, where they work, the costs of how they operate and the property requirements that all this entails. Their journey can tell us in the private sector a lot about how work and the workplace will change. With the London market being so perky not much of this is being thought about too hard, but you can be sure that when the next downturn hits this process will catch fire, not least of all because, done properly, you can cut a lot of property costs whilst increasing productivity and keeping your best staff happy.

And finally, in property we are set to rethink who the customer is. Contrast the old school developer/investor, who considers the customer the person who they send an invoice to four times a year with how WeWork (who sub let space but have a $5 billion valuation) approach their market. To them property is subordinate to engendering community amongst their occupiers (who are treated as individual customers). They have created a new way of working, through very careful branding and an intense focus on user experience. At the personal level. People are queuing up to pay a mighty premium for a space to work.

As co-working, Smart Working and other non traditional ways of occupying space take hold, as they will, the compact between a landlord and those who use their spaces fundamentally changes. We are entering a world where ‘Office as a Service’ will become the norm for many. What percentage is hard to guess, but I’d not be surprised for it to be 30+% within a few years, if not more. People will not be chained to a single desk five days a week; they will use this or that space, in this or that location, on a random basis. And will gravitate to those ‘brands’ that they come to trust as providers of the best service that suits their requirements. It is estimated that 40% of the workforce will be contingent by 2020 (freelancers, contractors or part time); where are these people going to work? All over the place is the answer, and ‘Office as a Service’ is what they will require.

These two trends will grow in tandem. And to a large extent they will become the new customer of the big developer/investors. And in so doing the mindset of the industry will change. The real estate industry will no longer be in the real estate business; it will become, as I’ve written before, part of the imagination business, offering up great space, with user experiences that encapsulate their brands, on demand, and supported by great services.

So these four areas cover a lot of ground but are at the heart, I believe, of what a great and successful development/investment company will become. Different from today, and most definitely challenging, but so full of promise, opportunity and growth for those that really embrace the zeitgeist.

Now, who’s not wearing their swimming costume?

Antony

3 questions 6 answers

June 2015

“I pull in resolution and begin
To doubt th’ equivocation of the fiend
That lies like truth.”
Macbeth

I’m not given to equivocation, preferring to nail my colours to the mast, in the certainty that a wrong decision is better than none. But today I am having a Macbeth moment. Certain questions relating to property, where we work and the work we’ll do are troubling me. Each can be answered in differing ways and how we do so makes all the difference. The answer that is correct today may well be wrong in the, much more important, long term. And if you (we, society in general) get these wrong, there will be a price to pay. And as Daniel Kahneman has shown, the pain of losing far outweighs the pleasure of winning.

To what do I refer? Well, these:

40%+ of the workforce being contingent is a good thing?
It is now widely believed that by 2020 40% or so of the workforce, will either be self employed, or contractors or part time. Is this a good or bad thing? Well, it entirely depends how things pan out, and how society adjusts. On the one hand this could be because, in essence, companies are saying ‘screw you’ to their workforce and taking advantage of circumstances to offload staff, put them on zero hours contracts or in some other way abrogate their current responsibilities. We’ll pay you just for your time, as and when we need it. Benefits? Sort that our yourself. Alternatively it could be companies coming to realise that big is not beautiful, that size suffocates and it would be much better to encourage people to set up on their own, beef up and enhance their skills, and then sell those skills, at a price that compensates for these differing circumstances, to as many clients as they can. In doing so, each person can become the master of their own destiny, have a real and meaningful sense of fulfilment, and manage their own life/work blend (balance is the wrong way to look at this); all the while providing the hiring companies with better quality, more insightful work.

If the answer is no we will end up with a barbell economy where one end earns all the money, those in the middle get squeezed, and those on the other end get royally screwed. If the answer is yes then the whole of society will gain as the big boys get what they want, there are but a few shuffling along in the middle, and the large number of contingent workers on the other end lead better rewarded, more fulfilling lives.

My answer? I think yes is an attainable answer that we should all strive for, but no is what most will end up with. For the highly skilled and educated this world will work; the societal imperative will be making it work for all.

The robots are coming, will we all find new jobs to do?
I’m not sure all that many people realise just how fast, and how powerfully, the robots are coming. It has been said so many times before, and not a lot has changed, that the consensus seems to be that not a lot will change all that fast. This though is a dangerous delusion. There are a whole series of technologies that are at the base of the uptick in the hockey stick graph that marks out exponential change, and so change is about to become very rapid indeed. Robots and computers will stop replacing just the dull, dreary low skilled jobs and rapidly move up the value chain. And in doing so replace a lot of people. Millions upon millions across the western world.

Now we are used to this. It has been ever thus. Agriculture used to be the occupation of 98% of the population; and we survived and prospered as that declined to but a few percent. But this time really might be different. Just ten years ago if you had asked the worlds best computer scientists could we build a self driving car they would have said no. Just too complicated, too many confounding variables. Yet here we are in 2015, with the Google self driving car having clocked up more than a million miles on the Californian highways.

So maybe history suggest the answer is yes but then, as Henry Ford said, ‘History is bunk’.

My answer? Yes we will find new jobs, in abundance, as technology enables billions of people to join the global economy, but there will be a lag. And this lag will see unemployment spiral. So society as a whole needs to realise what is going on and take remedial action. Now. This is a good start.

Is it culture and leadership that leads to change, or technology?
This is a bit like the ‘do we have free will?’ argument. One would like to agree but is it really tenable? Is it really the case that wise, strong and decisive leadership moves society on and determines how we behave? Or is it really that new technologies become available, which give us new capabilities, and in so doing crafts the way that we change? Is it up to us to decide how we work, where we will do it and what exactly we do? If it is, then deciding how the use of property and spaces will change is more a case of monitoring and responding to human pronouncements than thinking much about technology. Are we the masters of all we survey?

My answer? I think I am in the minority here but I strongly believe keeping track of technology will tell you a lot more about how property and space will develop than listening to what people say they want to happen. Just one example: look at how the rise of the smartphone has fundamentally altered human behaviour in just the seven years since the iPhone was launched. Now factor in cloud computing, ubiquitous connectivity, 3D printing, machine learning and the Internet of Things. It is these that will shape the built environment in the next ten years; culture and leadership will follow and adapt as required.

So we have three questions. For each one there are two plausible answers. The problem is that how you answer leads to an entirely differing set of requirements for the commercial real estate industry. Imagine that a 40%+ contingent workforce leads to a very high/very low pay barbell economy, where the robots have taken over middle class jobs, and the majority have worried more about culture than technology. How will the space requirements (both commercial and residential) vary from a world where an enlightened approach to reformatting employment, an embrace of robots in a controlled manner, and an intense focus on keeping up with technological developments has become the norm?

Map out in your mind the quantity, form and location of property types required under these two scenarios. Different aren’t they? The problem is if you end up owning and building the solution to scenario A, and scenario B transpires. Alternatively you make the correct assumptions and plan accordingly. Zero – meet hero.

Hence my Macbeth moment.

Antony