11 March 2021
A personal view of the evolving role of real estate in a world of technological, social and business change, by Richard Pickering, Chief Strategy Officer, UK.
A fork in the path: fulfilment and function
Welcome to this week’s blog. If you’re not much of a reader, good news… I’m trialling the alternative format of a podcast here, in which you listen to me narrate Futures /Cut in my dulcet Hullensian tones. Let me know what you think. Enjoy!
The real estate of the past was about keeping dry and safe, and the design of today’s building and cities largely reflects this. The future of real estate will be split between function and fulfilment, and it is with this in mind that we should differentiate our buildings and arrange our cities of the future. In today’s blog, I set out why this will be the case, what ‘fulfilment’ means in this context, and what this might mean for the design and operation of real estate in the future.
Firstly, why? In previous blogs I have spoken to the following vitally impactful technology trends:
Painted together, a picture emerges of a future society where the functional elements of work are automated, where the frictions of life are gradually removed, where we have more free time and choice, and where the principal accumulated asset will be personal fulfilment. These principles will apply to everything we do, and importantly, how we work, how we shop and how we live our lives. Let’s be clear, we are already on this path, and have been for centuries. For most (not all) in the West, gone are the days of working all hours to simply feed your family. However, as the quality of technology improves exponentially, the speed of progress will hasten significantly.
One potential incarnation of this future is the 15-Minute-City, which I addressed in my last blog; a high-density mixed-use community full of amenity uses. Its promotor, Carlos Moreno, arrives at this vision because it eliminates wasted travel time, which he rightly identifies as the most significant source of removable friction in our lives. There is a lot to like about this future vision. However, there are also failings in the approach (see last week’s blog). Critically, he omits an alternative way of removing travel time, by travelling virtually, which could present a very different future scenario for our cities.
This alternative is one where we double down on distance; where we put all of the exciting uses in one place, treating them as a luxury to which we travel infrequently, and where we fully decentralise the functional uses, using virtual communications technology to join the dots. In many ways, I see this as a more readily adoptable future scenario, because the physical and economic change required is much more achievable. So, let’s work through what this might mean.
Functional pursuits
As the name suggests these are activities that serve to deliver something functional, or task oriented. The aim is to complete the defined task as efficiently as possible. This principle could be applied to many everyday activities: from writing a report to collecting an item from a shop; from picking up your lunchtime sandwich to growing crops; from transferring a pallet between vehicles to completing your tax return.
In this basket of activities, the focus is on speed and cost. Consequently, the venues in which such activity is carried out need to be cheap and utilitarian. ‘Cheap’ in a real estate context denotes two things: (1) a comparatively low specification, and (2) somewhere when demand for land is low relative to supply (not city centres). ‘Utilitarian’ in a real estate context means favouring function over form, and from a practical perspective, that the space is arranged in a way that first and foremost supports the task. The classic example is a warehouse. These tend to be located in areas of low land value. Physically, they are boxes, which are unlikely to win many A’Design awards, but have instead been designed with task optimisation in mind, rather than other more human factors.
In fact, in the future humans will increasingly not be involved at all in some forms of real estate. For instance: fully automated warehouses and factories, driverless farms, till-less shops, and automated vending rooms. Or what about data centres? The workers of the future in some industries are likely to be microscopic chips, and formless algorithms. It doesn’t take much vision to see an increasing class of real estate that is built for robots. And for the reasons above these functional properties are unlikely to be found in our city centres. So, what about the city centre?
The end of experience?
If it isn’t functional then what is it? Imagine a world where everything that you needed to do was done; what would be left? The refrain from the real estate industry is ‘experience’. Sticking pins in your eyes is an ‘experience’, but not one that I’d recommend. So is eating 50 bowls of unflavoured gruel. The problem with ‘experience’ is that the term lacks any quality (type), direction (good/bad) and specificity, such that it is becomes entirely useless as a descriptor, and completely negligent as a brief to the designer of our future real estate. No doubt someone, somewhere originally coined this term in a real estate context with a sense of what they meant. However, Chinese whispers, groupthink and laziness have made it a pervasive and unhelpful word that is now repeated and accepted without thought. Hands-up; I’m guilty – maybe you are too? But it should end here. I petition for a ban on the word ‘experience’ and in its place the insertion of something more helpful. …but what?
Maslow’s Theory of Motivation suggests that once physiological and safety needs (the functional activities) are met, then humans increasingly seek out: (1) belongingness, then (2) accomplishment, and finally (3) self-actualization. Putting this into more common terms: ‘belongingness’ might be associated with human-to-human connections (the ‘social animals’ we have heard so much about recently?). Accomplishment might mean feeling that you’ve made a difference or witnessed something or ticked something off. And self-actualisation means finding your purpose in life. As you move through these, they become increasingly less functional and less economically useful. It is the privilege of those unburdened by economic concerns that they may seek out their life’s purpose; be that a rich person who has everything they need, or a monk who desires nothing. Maybe in the future we will all be so fortunate.
These in my view are more helpful words than experience. Collectively they are about personal fulfilment, rather than fleeting fancy. This gives us a clearer sense of how we need to transform our real estate.
Firstly, Belongingness – An easy deduction to make is that there is no point designing the real estate of the future in a way that promotes separation. This for instance means no more office cubicles (you have your home office for quiet time). However, anyone thinking that the job is done by sticking everyone into an open plan office is much mistaken. How many of those working in this way really believe that they have a sense of belonging with their colleagues? Studies have found 6 determinants of ‘belonging’ in the workplace: (1) open interaction (tick), (2) effective conversations, (3) support and encouragement, (4) a shared vision of work, (5) common values, and (6) the structure of leadership. These are mainly about deep organisational culture, but the physical environment can serve to create nudges. For instance, if your work vision and values are about fun and innovation, then get rid of the desks and introduce areas to play – people don’t need to be sitting at a desk or in a meeting room to create ideas. If your company culture is about prestige, then make sure that your reception and shop floor materials are aligned. Beyond this, real estate operations and customer experience initiatives have a strong role to play. Employ a community manager, organise building events, and create shared spaces for different tenants to mingle.
Secondly, Accomplishment. Historically, accomplishment was measured by the accumulation of wealth and status. Whereas these remain relevant, the accumulated assets of today are activities - the more stimulating and rarer the better. Keeping up with the Joneses now means, back-stage access, adventure holidays, celeb spotting and Instagrammable moments. Superficially, conspicuous enjoyment is enough (people taking pictures of themselves having fun has become more important than having fun). If that’s the case, then create beautiful and unique places where people will travel to take that picture; ensure that you deliver interesting public art and rotational displays. For the shopping centres of the future – already mid-transition to becoming advertising venues - forget lots of large shops and instead stage events. Create excitement and exclusivity, fireworks and fun. This is what will create the footfall that drives value for brands; customers can physically collect their purchase somewhere else or have them delivered. If you own a shopping centre, take lessons from Disney – you’re now in the events business.
Thirdly, Self-Actualisation. This is the trickiest of the lot, and it’s perhaps arrogant to suggest that we in the real estate industry can resolve this; however, we can help. Self-actualized people have a strong sense of purpose, a growth mindset, a focus on creativity, develop deep relationships, have good moral intent and are the most personally fulfilled. One could argue that technological progress will enable each of us to give more focus to these activities; however, this will only work if combined with greater equality. Increasingly I believe that the undercurrent of social change demanded in the world will manifest in our cities, and this will be for the benefit of society at large. Societies where the income gap between rich and poor is low are empirically the happiest and most fulfilled societies. Housing and transport are the two biggest categories of household expenditure in the UK, and big determinants of net income (more so for the poor). By building more, high-quality affordable housing, and by reducing travel, either through the 15-minute-city design or through virtualisation, we give ourselves a better shot at creating an equal society in which we can focus on the things that matter more.
In summary, the future of real estate is an exciting place, where we will make the efficient more efficient, and where we will make the rest more human. Virtualisation is not the enemy of real estate; it is a vehicle through which we can create this separation, through which we can commoditise functional activities and ultimately through which we can live more fulfilling lives.
© Cushman & Wakefield 2021. This information contained in this briefing is for information purposes only. Accordingly, the information contained herein should not be relied upon or used as 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.
