Coffee, concrete and clutter

31 January 2019

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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.

Coffee, concrete and clutter

War of attrition So what happened last night? This morning, sections of the press have been hailing a victory for Theresa May, and relative to her recent performance that may be true. She managed to fend off all but two amendments to her Brexit position, those being: (a) a non-binding statement that the UK should not leave the EU with no deal, and (b) a ‘mandate’ to go back to the EU to renegotiate the Irish backstop. Meanwhile, Corbyn’s more widely posed series of options was firmly rejected (a second referendum is looking increasingly less likely) as were mandatory delays around Brexit in the event of no deal. So, in essence, the route that Parliament has given May is to go back to the EU to negotiate a new deal on the backstop; a route which in less than 10 minutes of the vote yesterday had been unequivocally ruled out by Donald Tusk. So what’s next? It appears that we’re in for another couple of weeks of negotiations that are unlikely to change the status quo; that is other than in one key dimension: time. We really are now in the eleventh hour (58 days to go). May will talk to the EU and revert to a Parliament that she knows doesn’t want a no-deal exit (318 votes to 310), surely to ask them to once again ratify her previous proposal. The original Brexit vote was decided by a thin margin, but as May’s war of attrition with Parliament continues, it appears as if one of the biggest political decisions of our time might come down to just 8 votes.

Analytical gap A significant trend in recent years has been the explosion of data, driven by IoT and mobile internet. However, as the data sets become exponentially larger, how well equipped are businesses to capitalise on these? Not very, according to PwC’s recently released Global CEO Survey. The principal hindrance identified by the report is ‘a lack of analytical talent’, followed by ‘data siloing’ and poor data reliability. Despite the overwhelming majority of CEOs citing data about customers, forecasts, brand, business risk and competitors as ‘critical/important’, the comprehensiveness of this data within their organisations was still sadly lacking. Most damningly, this has changed very little since 2009, highlighting a lack of progress, which in turn has hampered innovation. The challenge around skills highlights an increasing quest from many industries for the same skill set, leading to short supply. In real estate, as brokers, lawyers, designers, investors, lenders and the public sector all seek out new analytical talent, the talent overlaps between each type of business will become greater, and the ratio of those with traditional qualifications and accreditations to the new breed of analysts within those businesses must inevitably shift. Meanwhile, those who possess such talent, will find themselves in an enviable position. It’s never too late to retrain!

A picture paints a thousand words The ability to analyse and interpret the details of a picture has been hailed as one of the big leaps in pattern recognition. The volume of digital photos now held on our phones provides a detailed library of our personal image. Drawing on thousands of such images, an app recently lodged for UK patent by Amazon creates an accurate reconstruction of one’s physique, clothing style and environmental conditions to produce a virtual mannequin, which can be dressed in purchasable clothing suggestions. The potential implications are far reaching. Amazon’s scale and business model allows it to invest in innovations of this nature. As a predominantly online operator, it has an imperative to improve the online experience relative to the physical one. Whilst the key to this is data, the goal is a familiar one to most businesses - understanding their customers better. Despite the potential of hardware initiatives such as sensors, cameras and RFID tags, the physical shop is still playing catch up in harnessing large data sets which people offer freely through their phones, and Amazon’s latest initiative capitalises on this trend. The real point however, is not really the tension between online and offline, but moreover the bifurcation in performance between those large organisations who can afford to invest in this type of development, and those that can’t, who will very quickly find themselves left behind.

Coffee Shop+ For (literally) centuries, the coffee shop has been at the nexus of work and play. The modern coffee shop is not just a place to drink coffee. It is a place to socialise, use WiFi, hold informal meetings and touch down for 30 minutes between locations. A new concept from the We Company: ‘Made By We’ drives this plurality of uses further by combining retail, coffee shop and serviced office in a single format. The retail element stocks members’ products, the coffee shop is run by Aussie brand Bluestone Lane, and the office component features rentable desk spaces and conference rooms. The latter is a bit of a challenge – surely a coffee shop that you don’t have to rent or book is a better option? It depends on what you are trying to achieve, and We has been smart with the commercial model. Sometimes a coffee shop doesn’t provide sufficient privacy or comfort, but committing to a monthly licence can’t be justified. The model here is that you can rent the space by the minute. If 5-year leases still feel short, this changes the game, but it comes at a cost. The pay per minute desk cost ($0.20) would translate to a yearly rate of over $40,000, (incidentally a venti americano drunk over the course of an hour works out at $0.04 pm), compared with say $6,000 a year for a desk in a serviced office in Manhattan on a monthly commitment. The strategy here is targeting a segment of the market that is not attracted by the longer commitment, and is willing to pay for the privilege. The coffee shop plus model is one to watch, not so much in respect of the format, but more so in respect of the data that this might provide on the market price of real flexibility.

Bridging and finance 3D printing is one of those technologies that holds much in promise, but little in terms of concrete delivery. However, this month we see the completion of a (literally) concrete landmark structure using the technology. At over 26m, the bridge built in Shanghai, is a replica of the sixth century Zhaozhou Bridge and comprises 44 printed units. The cited competitive advantages of 3D printing lie in time, cost and fidelity. All three are in evidence here. The costs of the design are reported as 33% less than a traditional construction technique (saving on steel, unused templates and engineering costs). Perhaps more importantly, assuming the 450 hours of printing were continuous, the structure took fewer than 20 days to develop. Bridges are one thing, but houses are another. However, progress is also being made in that regard. New venture: We Print Houses, is launching a system in Texas next month that promises the construction of homes in ‘a matter of weeks’. Using geopolymer concrete, apparently similar to that used in Rome’s Colosseum, the homes are described as earthquake proof, eco-friendly and energy saving. With the cost of finance and speed to market being high up the risk matrix for development, a genuinely mainstream method of housing construction that significantly abbreviates the construction period would have positive impacts on land value.

Spring Cleaning How is your clear desk policy working out? I try my hardest to avoid piles of paper, but my plants and photo of Mrs P. have been permanent fixtures. For those who are more acquisitive by nature, however, a study that made the press this week might give cause for contemplation. The study found that ‘behavioural procrastination contributed significantly to an increasingly larger percentage of explained variance in clutter problems across the generational cohorts.’ Simply put: more procrastination, more clutter. No surprise. More interestingly, the research found ‘differential influences over the lifespan’. That is to say that if you’re old, you’re likely to tolerate clutter less well, with clutter problems leading to a significant decrease in life satisfaction. On 14 Jan our friends in the States celebrated ‘National Clean Off Your Desk Day’, a whole day dedicated to cathartic cleansing of one’s workstation. However, designed for our digital era, I propose a new: ‘National Clean off Your Desktop Day’ tomorrow, intended for anyone who has more than 10 files on their Windows Desktop and is in search of electronic expurgation. If you want to find out more, or check out links to the referenced articles and patents, take a look at the Snippets section of our website here.

© Cushman & Wakefield 2018. This information contained in this briefing is for information purposes only. Accordingly, the information contained herein should not be relied upon or used as a basis for any business decision. Any such decision should be based only on suitable and specific professional advice. This briefing is not directed to, or intended for distribution or use in, any jurisdiction where such distribution or use would be prohibited. To the extent permitted by law, Cushman & Wakefield accepts no duty of care and cannot be held responsible or liable for any loss or damages which may be incurred by any person (directly or indirectly) as a consequence of relying or otherwise acting on the information contained in this briefing.

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