In a panel discussion I sat in on yesterday, diverse real estate industry speakers talked about how disruptors of automation and urbanization have been enhancing the real estate market as we know it. This change isn’t always easy to approach, however. Firms with their eyes on the future’s implications for today can think proactively about what’s to come.
With the shift of more people moving back into urban areas comes an increased per capital income from population density. Although people are often reluctant to change, the concept of “Pace Layer Thinking” describes the speed at which factors of society change, affecting the choices people make—and the real estate in which they work, live, and shop. The layers of Pace Layer Thinking consist of:
• Fashion (fast to change)
• Nature (slower to change)
All of these areas change at different speeds, however the conflict between these areas allows a healthy civilization to achieve balance through a push/pull system. Each level works at its own pace, and the slower levels are vitalized by the faster. This concept demonstrates the need to be adaptive in our real estate decisions, as preferences are always shifting. Thus, ephemerization comes into play.
Ephemerization refers to organizations doing more with less—in today’s commercial real estate picture, this can be seen especially within office spaces. Currently in the Philadelphia market, some big trends include telecommuting, outside contractors, and provision of solely a locker to new employees, instead of a large space and desk in an office facility.
To illustrate further, in 1960 AT&T was a top telecommunications company and had 1 million employees. Today, Apple can be considered a top similar company and they have 135,000 full time employees. Company needs are changing.
There is a large shift in ownership vs. accessibility taking place in not only today’s commercial real estate sector, but also basic consumer behavior trends. From companies utilizing WeWork spaces, to more people leasing rather than owning (homes, cars, etc.), a “sharing economy” has becoming the norm. With shared spaces and open concepts becoming a popular option, more technology has been made available that upholds these formats while adopting attractive tech.
A few new popular integrations properties are incorporating include:
• Wireless electricity with encrypted passwords to activate
• New augmented reality applications
o Jim Lee of StratFi coined the term “public collective hallucinations” when describing some of the new AR applications underway. He encouraged attendees to imagine you’re in a new city and you’re unaware of any good restaurants. Through the use of AR glasses, users can walk down a street and look at a restaurant through the lens and see all Trip Advisor ratings upon looking at it in that geo location. While at a networking event, LinkedIn can be used with AR through the lens by identifying a person’s name from their profile as they’re in front of you so you can remember without discontinuing a conversation. Pretty crazy to think about.
• Solar Power Waste Bins
o These have been integrated in Philadelphia. On public streets, there are trash cans that report to the city when they are full through weight sensors.
• Smart Vehicles
o Some of the images shown of driverless automobile concepts in development by Mercedes Benz were amazing. In 2025, intensive testing is planned to begin. For now, there are areas in Toronto that have completely devoted roads for experimentation of the automation. These vehicles allow for smaller roadways, and completely transform a driving experience. The interiors of driverless cars resembled living rooms without the need for forward facing seats.
Eventually as more cities adopt these tech developments, it will be increasingly important for areas to cultivate what makes them special. While certain sectors lose popularity (eventually retail may have no need in certain areas), real estate should be easily adaptive to easily convert usage. For instance, in some areas where retail doesn’t fit any longer, “after school enrichment centers” are established.
Overall, convenience, personalization, and experiences will always be paramount. We have to customize through technology and allow tools to help guide understanding of consumer needs.
Thanks to the ULI for putting on such an informative and enjoyable event—I look forward to the next one.