These four megatrends will lead change in real estate over the next decade
Here are the top trends that will shape the future of real estate over the next ten years.
The ending of one decade and embarking on the next one always seems to lead to reflection on how far an industry has come and where it might be headed over the next 10 years.
It’s often a revealing exercise. Consider for example, that we are exiting a decade to be remembered as the first in history in which the U.S. economy did not experience a recession.
The Great Recession is now 128 months and counting. This fact alone has been enough to buoy the commercial real estate sector in recent years. Example: there was over 400 million square feet of office space absorbed in the U.S. throughout those ten years. But what will drive our industry forward in the next decade?
While it is statistically unlikely that we will soon see the second decade in history without a U.S. recession, we can always hope. However, here are some more sustainable, dynamic trends that I think will change our industry, and the way we work, in the next decade.
It’s a cliché, I know, but technology really is changing the way we live, work and play at a dizzying pace. Think about it: just in the last decade we’ve seen the rise of wearables: fitness and health trackers, watches that double as smartphones, virtual reality headsets, even baby shoes that act as monitors delivering oxygen levels and key health facts in real time to anxious parents.
Consider 3D printing. A few years ago this technology was considered by many to be not only beyond reach but ‘pie in the sky’. Today, it’s widely available, even to consumers, and is considered a popular tool in the ‘maker economy’.
Then there is artificial intelligence (AI). AI ultimately will change every industry in our economy, and enable the creation of new ones. Even commercial real estate will be changed by AI; in some ways, it already is.
Yes, technology is revolutionizing the workplace and the way we work. Connectivity is a big part of that story. Videoconferencing, once reserved for only for boardrooms, is now utilized throughout the workplace creating unparalleled service connectivity. Vendors, employees, even customers don’t have to be near, they can be remote, even far-flung. Many companies already use service providers and employees based abroad, such as in India.
Technology is connecting, bringing the workplace closer together, even while the workforce itself is physically separated by ever greater distances.
Smart monitors, once static switches which impressed us when they turned out lights remotely when we left the room, now also monitor temperature, air quality, lighting and window coverings, adjusting all automatically via pre-programming or through an app. Sensors can also detect how many people are in the room, or using the space. Technologies like these, and the expanding universe that is the Internet of Things (IoT) will continue to develop, making our workplaces more pleasant, efficient, healthier places to work and that will make employees and customers even more engaged – and mobile – both inside and outside the workplace.
Those sensors, even now in test mode, will also rapidly populate our roads and highways, speeding the autonomy of driverless cars, trucks and buses. In the next ten years, such technology should be ‘baked in’ to any new infrastructure projects, especially road construction in this country.
Despite the rise of remote working, commuting is still essential for much of the workforce. It is also undeniably stressful, especially that ‘last mile’ to and from the office. In the last decade, we saw the rise of micro-mobility vehicles, notably scooters, in many downtown business centers, helping to speed employees around congested roads.
Micro-mobility is a trend I see deepening and advancing through new technology adoption in the next ten years. The next iteration may come in the air. Operators like Joby are already close to first mover status in the creation of ‘air taxis.’ A proliferation of air fleets, similar to Uber, Lyft and rideshares on the ground but powered by drone technology, faces tougher regulation but isn’t that far away. Air taxis will unclog roadways to and from corporate headquarters, which will become de facto transit hubs with landing pads on rooftops, in parking lots and outside buildings - a 2020’s techno version of the 1980’s helipad.
Taking cars off the road ultimately creates opportunities for cities to pedestrianize more streets and build more urban parks.
Yes, more parks. Real estate is a business, but it is a business with huge impact on the environment. The built environment is a significant contributor to our carbon footprint. The good news is technology is also helping the real estate industry to become more energy efficient.
In fact, cities like San Francisco have already successfully decoupled economic growth from greenhouse gas emissions. From 2000 to 2017, the city added over 9 million square feet of new office space and increased its total occupied office supply by 10 percent. Yet, through a combination of increasing energy efficiency and greater access to renewable energy, greenhouse gas emissions in the commercial real estate sector went down by 54 percent.
It won’t stop there. The industry can, and will, do more. Technology is also driving efficiency with a goal toward greater sustainability. For example, the development of electric motors to power things like HVAC is enabling landlords and corporate occupiers to further decouple building operations from carbon emissions.
Yet, the real estate industry must be sensitive to more than just efficiency and not solely dependent on technology. Boots-on-the-ground, local initiatives like JLL’s recent venture with Royal Sonesta Hotels to divert from local landfills 18 tons of furniture discarded during the renovation of the Clift Hotel is a model that more commercial landlords, retailers and hoteliers can, and should, be imitating.
These are just four of the megatrends I see moving real estate forward in the next ten years. There are other trends that will transform the way we work, what our workspace looks like, what it means to us and how often we visit it, but all fall roughly into one or more of these four megatrends. Remote working, for example, is made possible by connectivity and mobility and, to some degree, it is helping our overall sensitivity to the built environment by reducing commuting. It’s also increasing productivity, making companies more efficient and helping the bottom line.
So, whether we experience a recession in the next ten years or not, real estate is on a pretty solid footing, open to innovation and new ideas, embracing new technology, faster to react to change (though still not always fast enough), driving for greater efficiency and sensitive to the challenges of the future. Have an awesome decade!