17 October 2019
A personal view of the evolving role of real estate in a world of technological, social and business change, by Richard Pickering, Head of Futures Strategy.
Bricks, brews and beats
Sentient workplaces As the industry becomes more customer centric, the offices of the future need to better anticipate the future of those that work in them. A recent study by Futurelabs and Nespresso, which interviewed a number of industry experts, tracks a series of work trends and makes predictions for a ‘radical transformation of expectations’ for the office by 2030. The four highlighted social drivers are: (1) the rise of ‘Location Independent Digitals’ (people who work untethered to a fixed location), (2) ‘optimised self’ (the use of tools to optimise personal performance and wellbeing), (3) post growth society (a world that looks for more than financial returns), (4) a focus filter (achieving productivity in a world of unlimited information). Arising from this is a series of proposed new office concepts, that range from ‘lo-co’ (localised high street drop-ins), ‘the work mall’ (repurposed community hubs), ‘work dorms’ (project specific live-work venues), ‘worktels’ (hospitality inspired flexible hubs) and flagship offices (tech enabled spaces for collaboration). The uniting theme coming from the study is the increasingly complex and multi-faceted nature of work, the evolution of which we can already touch; and hence the pluralised nature of where we will work looking forward. For many years, office investment has benefitted from the safety net of homogeneity, with competition taking place at the margins of specification. However, with a greater emphasis forming around the fundamental nature of what is an office, the opportunities for competition (and also getting it wrong) increase.
The Vault The path of e-commerce has not trodden equally on all types of physical retail. Some forms of retail such as grocery shopping have escaped relatively lightly, whereas information goods like music, highly susceptible to digital substitution, have suffered particularly, with ~70% of sales now moving to digital downloads or steaming subscriptions. This has a knock-on obsolescence impact to other products which rely on them. Just as cassette players have disappeared from mainstream stereos, CD players are now dwindling, in turn putting more people off buying CDs. And so, the vicious spiral continues downwards, making it easy to bet against the future of the record shop. However, bucking this trend is news that the resurrected HMV is to open the largest such store in Europe this week. Situated over ground floor and basement levels in Birmingham, the new owner’s proposition ‘HMV Vault’ is to focus on community, service provision and live entertainment in store. E-commerce relocated an element of the value chain from an expensive location (the shop) to a less expensive one (the shed) and changed the customer proposition to one focused around convenience and choice. HMV Vault has similarly rebased the real estate costs (in this case way from the Oxford Circus flagship), and also changed the consumer proposition to one which focuses more on being a lifestyle destination, and less reliant on passing trade. By responding to the changing customer need, they may yet breathe life into the format.
Underline 10 years ago the High Line linear park opened in one of the few underdeveloped areas of Manhattan. Since then it has achieved universal acclaim as both a green amenity and as the catalyst for unlocking the regeneration of Chelsea and Hudson Yards. Wind forward 10 years and a new linear park is attempting to do the same for Miami. The ‘Underline’ follows a 10-mile stretch of similarly raised rail track; however, there are a couple of differences. Firstly, the park will, unlike its NYC equivalent, run under the tracks. Secondly, following the receipt of a recent grant, the project will look to integrate technology into the core of its design and provide the ‘connective tissue’ to drive engagement with the park. Linear parks have found favour in recent decades, perhaps as the opportunities to create large open parks has significantly diminished, whilst at the same time disused rail tracks from a bygone era have offered up opportunities. Beyond rail tracks (e.g. The Goods Line in Sydney, and Chicago’s 606), opportunities have been found around watercourses (e.g. the Lee Valley, London, and Mittellandkanal, Hanover), and walls (Berlin’s Mauerpark, Krakow’s Planty Park). The benefit of going linear is the transportation of people from an (established) neighbourhood to one which is less so. A grade level route like Miami, is porous and allows multiple entry points, whereas the High Line creates nodes of activity where the park comes to ground.
Briggo and Trigo Luxury brands tend to create their value through intellectual property, marketing and engagement. With a few notable exceptions, the grocery brands create value through efficient operations, bargaining power over suppliers and dominant distribution channels. For this reason, whilst the future of some shops might be experiential, most supermarkets will for the time being continue to focus on scale, efficiency, convenience and cost leadership. In the modern age, this inevitably requires consideration of robotics and digital automation. There are two recent and different examples of this. Firstly, Tesco has disclosed an investment in Trigo Vision. Trigo uses ceiling mounted cameras to create a 3D image of the shop floor, which maps the movement of every object in the store. Neural networks then identify those items, allowing the shopper to check out without check-outs, a la Amazon Go. As the number of propositions build in this space, the areas currently dedicated to checkouts will quickly become redundant, along with any staff performing those functions. Meanwhile, Whole Foods has announced that it is rolling out a different type of automation. In partnership with Briggo coffee, they will be installing a ‘Connected Coffee’ robot barista proposition in their Houston Midtown store. The robot can apparently brew coffee to exacting standards, made to order; attitude is optional. The 160,000 baristas in the UK might rightly feel concerned.
Bricks and clicks In a world that is going off plastic, where construction is a key contributor to global warming and where sustainability is rising quickly up the corporate agenda, the idea of creating buildings that typically only last minutes using non-recyclable plastic bricks doesn’t quite fit. That’s a bit of head scratcher for LEGO, which basically does just that. However, the ingenious Danes have a target to make all bricks sustainably by 2030 and are reportedly cooking a plan to move into the circular economy using a rental model. Once one gets beyond the practical challenges, such as returning the bit of someone’s head that fell down the back of the sofa, there could be a much wider application. The case for building with modular components that tesselate perfectly with each other and can be constructed, deconstructed and reconstructed with ease feels eminently sensible to scale up to bigger projects than a miniature version of the Millennium Falcon. Proof of concept comes from a gentleman in Surrey who in 2009 created a life-sized LEGO house including a working shower, toilet and bed, and a 114 feet tall tower in Milan built by thousands of children. With over 4 hundred billion LEGO bricks in existence, could their reapplication to real life structures provide a boon to the global construction market? On the plus side there would be millions of children worldwide who would happily provide their labour for free. On the flip side, the planning authorities might have to get used to the idea of rainbow coloured buildings.
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