3rd Dec 2015
We propose that the greatest disruption technology has brought to the real estate industry is the perception we have of it and how we judge our requirement for it, and how we are valuing it as consumers. We believe the greatest change thus far has been in the workspace. The anthropology of work has evolved from machine factories, to the office, which turned the human into the machine, to something quite different. Increased WiFi capabilities, 4G invention, and smartphone technology has democratised industries across the world, empowering and educating people at rates greater than ever before. People are no longer programmable machines but crafted and curated powerful minds. With IoT on our doorstep the wider benefits of interconnectivity are not just in the application of machine learning but in the human mind, we are more connected to humanity, gaining greater experiences and becoming more culturally aware, we are gaining the tools to develop better levels of critical thought and empathy. In the workplace we are seeing a period where progressive companies are no longer merely looking at business space as achieving ‘x’ per sq ft through employees performing functions as technology is now for the most part handling those actions. We’re now looking at it being a space where employers curate talent together to be used in a way that Donald Rumsfeld made infamous – to create “the known unknowns”.
In most cities across the world companies and employers strive to attract leading talent. Why? To achieve a competitive advantage over rivals by enabling their highly skilled, culturally aware and diverse staff to innovate and create the unexpected. Technology in general has not disrupted the real estate industry simply via the transactional based technology recently introduced but in fact it’s the opposite – it has shifted a workforce perception of space by primarily asking the question, “how can we make a space more human?” It begs the owner of space to ask how they can make their workspace act like employees, produce outputs that benefit the team and ensure a progressive environment, can a space intuitively work like an HR department, and become a truly SmartSpace?
If anything the rise of coworking has taught us is that spaces breeding innovation should be designed around individuals as opposed to conventional leases to companies and 20th century business models. Developers, architects and property investors need not look further than their own staff to understand how to design on a macro level commercially, culturally, and socially sustainable built environments. Successful developers in the future will design space with occupiers in mind, not just balance sheets and introspective reports. A product built for the buyer is always likely to have the greater level of demand – how long will tenants and companies pay sky-high rents and then have a full fit-out period and demand rent free periods in return? This is a huge market inefficiency – something that disrupters love.
A new field that THECUBE are keen to see develop is how the by-products of consolidated real estate become a market of its own and how value is then placed against them – in both direct values and indirect transactions. Looking at one of the core principles of property – collecting people together – you start to associate value to audience. In retail we’re seeing this change in shopping centres where brands are looking at retail space like a media space and are basing their value over how many interactions they can achieve based on the audience, and the shopping centre with the greatest audience potential has the greatest demand. In progressive stores some of the hardest things to find are price tags. Taking the analogy of audience value, it’s hard to argue that for certain Evan Spiegal had intentions to become a media communications agency with WPP two years into launching an app. Snapchat and Instagram harnessed a worldwide audience keen on experience. As we move into a smart technology era, data is the new currency and those moving the quickest will “bank” the most. At THECUBE we predict that brands will move into the wider real estate industry as large consumers not of space but on the outputs created. This opens the question of “do I build just for the inputs (leases) or the outputs (the intangible benefits)?”
Technology is shifting a change in the occupier and end user of property and making them more powerful. At the same time, the rapid advancements we’re making in business and society begs the question of “Is it worth leasing this building for 15 years, what if things change?” A huge problem being faced at the moment is how lenders/valuers/banks fund developments with no guarantees, such as a landlord looking to operate potentially lucrative coworking or retail pop-up models. When you look outside of the original inputs of property to base the value and look at the outputs in the new data driven industries you start to add a huge value to space and the built environment, and can start to develop an industry built around being ‘antifragile’.
In summary, technology like in every industry is not the true end value, it’s what humans do with the power given to them. Technology will not destabilise the industry in the form of humanless transactions but create new opportunities based on the change in its associated value and inversely make the industry and buildings more human.
by Josh Artus, THECUBE