07 November 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.
Property.com 50 years ago this week the internet was invented. 30 years ago saw the launch of the world wide web. What started with a two-letter message between a professor and his student (it should have read ‘login’ but in an omen of things to come, the system crashed and instead it read ‘lo’) has become a cornerstone of modern society. The effects on real estate markets and the operation of our industry have been significant, but ones of greater impact are perhaps in prospect. At its heart the internet has allowed us to share information in a way and on a scale that was previously inconceivable, ushering in the Information Age. Creating a world where data and processes can be distributed across remote networks has in turn enabled us to carry out activities, such as purchasing and working, remotely from the point at which these activities had historically be centred. The benefits of proximity have faded, and the penalty of distance has reduced significantly; the effects of which are already manifest in our cities but have further to go. Meanwhile, the ability for third parties to tap into others’ networks and exchange information has created new business models that could otherwise not exist. The recent and seismic shift towards two-sided marketplaces which join up producers and consumers is the manifestation of this, and includes Uber, Netflix and the App Store among its members. Most of the world’s biggest companies, such as Amazon, Google, Facebook and Microsoft were created in the internet age and have the internet at the core of their business models; whereas incumbent industries such as banking and finance have been transformed by the ability to share information (and hence make transactions) instantly without human involvement. Most equities trades are now bot-to-bot and mobile internet banking is becoming the dominant retail channel. In aggregate, this single invention explains most of the occupational change and demand drivers that we see in today’s office, retail and industrial sectors. Inexplicably, however, it still has a very limited bearing on how the property industry works. Aside from productivity gains associated with moving from letters to emails, and the ability to market online, the way in which real estate is transacted and managed is still based on processes that existed before the birth of the internet. However, looking ahead most of the envisaged disruption on the horizon comes from internet enabled technologies, be that IoT enabled workplaces, trading platforms, or an array of big data and mobile data tools that have the potential to reshape the nature of the industry. Attention is rightly focussed on how these will play out, and how that will affect fortunes. Equally exciting, we should be looking for the next experiment and innocuous breakthrough that might herald in the next 50 years of progress. #technology #internet
Issues and trends Ipsos Mori has published its latest findings from its ‘Issues Index’ which charts popular opinion on which of the issues facing the country are the most important. Perhaps unsurprisingly, Brexit is the clear winner across all demographics, regions, genders and age groups. More interesting is the look back over the trend line to understand how these issues cycle in and out of the public conscience. We can see for instance that the rise of the EU as an important issue is as recent as 2016 (its highest since 1974); before that it languished well behind many other factors. Its rise coincided with a strong rise in the previous year of ‘Immigration’ as an issue (with border controls having just been relaxed for Romanian and Bulgarian citizens); which may offer an element of explanation. Meanwhile, several other trends have been tracking downwards, including the Economy (less important every year since 2010). Some issues are very spikey, including Terrorism (sharp peaks around terror attacks, quickly forgotten) and historically the Environment (sharp peaks around freak weather events that subside; but bucking that trend a steady climb since 2017). Another trend that has been steadily growing in recent years has been Housing, which coincides with a rise in the issues of Poverty and Inequality, to reach a figure not seen since 1974. #report
Perspectives on coworking Whilst some have questioned the sustainability of returns from coworking, the demand and sentiment around the sector from occupiers remains undeniably strong. This is echoed in the results of our recently published survey of global CRE executives. 63% of surveyed organisations are currently using coworking in their portfolio. The attraction it seems is driven by flexibility and cost; with those 1/3 of organisations that deliver cost saving through its use being more likely to respond positively. EMEA respondents were twice as likely than their American counterparts to cite the ability to network with other companies as a benefit and scored highest against the potential to attract and retain employees. Only 1 in 10 respondents had a negative perception of the sector; a figure which would have been lower if those who don’t utilise coworking were stripped out. Whilst in the median company only 3% of employees currently use coworking on a regular basis, this is expected by respondents to grow fivefold in the coming five years. Interestingly, the principal concern over the use of coworking was not security or privacy (both listed), but rather the impact on company culture and cohesion. Download your copy of the report here. #coworking #occupiers
Turning up the heat As technology starts playing a bigger role in how we run our real estate, the options to create personalised environments increase. However, with customisation comes challenges and tensions among those with competing priorities. A frequently cited example of this is the temperature of the workplace, based on varying opinions of what constitutes comfortable. However, in the home setting this can be even more of a sensitive subject, especially when payment of the bills comes into play. This week a post on Twitter regarding this subject has gone viral. The landlady of a flat in London (presumably also the bill payer) had apparently entered the property and installed a large, locked Perspex cage around the newly installed Nest thermostat, leaving the tenant unable to adjust the temperature, but allowing the landlady to adjust it remotely using her mobile phone. The Twittersphere has been quick to offer support to the aggrieved tenant. Helpful tips have included: changing the Wi-Fi password, pouring frozen peas into the cage, and strapping a frozen fish to the box. Others have questioned whether it is the landlady’s intention at some point in the future to rent out the cage as bijou studio flat. #weirdandwonderful #housing All referenced reports can be found on our website under 'snippets'. Take a look here.
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