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Power, parking and privacy

11 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.

Power, parking and privacy

Attempt 2 After the Parliamentary vote pre-Christmas, the New Year starts with a ‘guarantee’ from Theresa May to reschedule it for next week. However, has anything changed between then and now that might change the expected outcome? Not really. The DUP remains intransigent and hard-line Brexiteers have no reason to volte-face on May’s proposals, despite her plea to not ‘let the search for the perfect become the enemy of the good’. Perhaps May hopes through a series of votes to wear down the resolution of all concerned as the time (now being measured in weeks) ticks away. This concerns many in the centre, who don’t have the appetite for a second referendum, but are concerned about the prospect of a no-deal exit arrived at through effluxion of time. In a show of opposition to the no-deal route, the Government was defeated yesterday on an amendment to the Finance Bill. No big deal in its own right (it obliges further recourse to MPs on tax changes in the event of a no-deal), but more significantly, a shot across the bow that there are sufficient numbers in Parliament to stop a no-deal exit. Meanwhile, a cross-party group of MPs have banded together to propose ‘Common Market 2.0’, a Norway+ deal that would keep the UK in the single market whilst tightening up immigration controls and reducing contributions. This won’t curry favour with Brexiteers (or for that matter those adamantly for a People’s Vote); however, with options running out, it might yet find the middle ground support in the house to make it a viable political solution.

Poor planning The debate over the suitability of open plan offices for modern business activities continues with the publication of a paper by Harvard researchers. Despite being the dominant format for offices in the UK, and having been shown to increase employee activity levels, open plan layouts have been criticised for lack of privacy and a reduced ability to concentrate. Published late last year in Frontiers in Psychology, this latest research surveyed employees of an architectural practice. In open plan environments, the report found ‘significantly more unfavourable working conditions’ in terms of: (1) acoustic privacy, (2) workplace effectiveness, and (3) the perception that ‘the physical space where they worked embodied the values of the organization they worked for’. This, the researchers found, translated to lower job satisfaction and engagement; however, there was no causal relationship with health and wellbeing. The authors conclude that the intended benefits of open plan offices (better communication, enhanced performance, talent retention) were not only not realised, but in fact negatively offset. They propose the optimum solution of a mix of open (increased interactions and knowledge sharing) with private space (fewer visual distractions and crowding and better one-on-one communication).

Plugged in Whilst rarely seen as an exciting technology, battery power is essential to most modern appliances and certainly those that can’t stay permanently plugged in (e.g. phones and cars). Driven by new commercial applications, significant gains are now being made in this area. Graphene, Aluminium Air and Solid State batteries for instance allow longer range and fewer charges. Another benefit of batteries is the ability to store cheap energy and use it at a time when that energy is more expensive. There are a number of examples of this in the home; for instance Tesla’s Powerwall, which charges from solar during the day and outputs at night. However, commercial application is not far behind; a recent example being the installation of a 5-tonne battery in Whitbread’s Premier Inn in Edinburgh (the first battery powered hotel in the UK). This allows the operator to sell energy back to the grid, eliciting an annual saving of £20,000 and reducing its carbon footprint. Battery storage works best when the main supply of energy is erratic (e.g. where there is significant reliance on renewables such as wind, which doesn’t always blow). However, as battery efficiency and solar power improves, so the days of reliance on a live feed of mains electricity might be numbered.

We’re listening In sales, empathy and feedback play important roles. However, if you’re selling in an automated store with no shop assistants, how do you achieve this? In summary, the stores themselves need to get smarter. Amazon has been quick out of the blocks with its Go concept, which uses sensors and cameras to track the movements of its customers. Analysts believe that these bring in 50% more revenue than standard convenience stores and are already predicting that Go could grow to a billion-dollar business in its own right. Walmart is the latest into the fray with a patent granted before Christmas called ‘Listening to the Frontend’. Using sound sensors the system ‘listens’ to conversations between customers and employees, ‘to decrease costs for a shopping facility as well as increase guest satisfaction’. This can for instance track the number of items bought (scanner beeps), the number of bags used (‘rustling noises’), the length of the line (distance between rustling sounds and sensor) and whether the customer was suitably greeted (conversation data). This is used to automatically create performance ratings for checkout staff. It is a short leap from here to artificially intelligent stores that can make suggestions based on customer interactions with products. Next step: intelligent offices based on the same principles?

Parking and pricing Whilst AVs might hold the promise of a future with much reduced need for car parking, that future is not here yet. In the meantime, city centre car parking in our large conurbations is often insufficient to meet demand at peak times. Combined with the fact that such parking is largely controlled by underfunded local authorities, this creates upward pressure on pricing. A recent piece of research suggests that pricing of Council owned car parking has risen at a CAG of 4.4% over 5 years, significantly beating inflation. Meanwhile road related spending has fallen, indicating that LAs are using the additional receipts to cross-subsidise other shortfalls. Car park charging is a finely balanced debate. Retailers and many businesses would understandably prefer to see free car parking, and various studies have shown the positive effect that this has on city centre commerce. However, this is counterbalanced by a social objective to discourage car use in city centres (we see further debate this week on Sadiq Khan’s Ultra Low Emissions Zone for London) and the associated decrease in public revenues. As an economic principle, charging a market rate for any service encourages use by those that will derive the most utility from that activity and allocates resources efficiently. The challenge comes when there is a monopoly (in this case public sector) supplier, which has other drivers and motivations.

January Jackpot With short days, cold weather and a zero against one’s annual financial targets, it is perhaps no surprise that January is the most depressing month of the year. With ‘Blue Monday’ (the most depressing day of the year) around the corner, the mood across the country is typically low. However, new research by McGill University reveals how that could all change. Using analysis of a big data set of Twitter posts, the researchers looked for correlations between unexpected events and mood. They found that a sunny day after a string of inclement days was found to lift sentiment (although in those climates that are usually sunny and so as expected, there was little effect). Furthermore, there was a statistically significant correlation between one’s local sports team winning and the mood of the entire city the following day. This all plays well for my home town of Hull, where sunny days and football victories are always unexpected. That’s not where it ends, however. When the Twitter mood was elevated in this manner, there was also an empirical correlation with the number of tickets purchased in the national or State lotteries. The conclusion is that unforeseen sunny days can elevate risk taking. An alternative conclusion is that to increase your odds of success, you should only play the lottery when the weather is poor and England loses at football.

I’m pleased to have narrowed that down for you. Links to referenced reports can found on our website under 'Snippets'. Take a look 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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