October 29, 2015
Having recently celebrated the anniversary of the allied victory at Waterloo, perhaps we should also remember that it marked the end of the Industrial Revolution. Today we are in the middle of a second revolution, a digital one, due to the exponential growth in technology and processing power doubling broadly every year. Real estate is one of the few laggards in this revolution, with relatively little substantive progress, but this may be about to change.
The greatest technology trends today are probably artificial intelligence, advances in robotics and the digitisation of data – which means that while data remains expensive to produce, it is very cheap to reproduce or repackage. The pace of change is both liberating and alarming, and the key is to understand what’s changing and how we should react.
So, here are five technology thoughts:
1. Automation will make many industries redundant in this generation – commercial vehicle drivers, call centre workers and estate agents are all in the top 50 roles at risk of automation, according to Oxford University.
2. Information will become ubiquitous and we will increasingly have access to better data from which to make decisions, with the central point being the organisation of knowledge – IDC estimates that from 2011 to 2012 the amount of global digital data increased by 50%.
3. Data will work both ways, with all of us being active information providers as much as users – users of Waze and Google’s Traffic know that it is the automatic uploading of location and traffic information that allows other users to plot the quickest route and helps them to avoid repeating your routing mistakes.
4. Technological interaction will lessen the requirement for physical interaction, with Skype being just the first step in a long journey.
5. The speed of physical processes will increase to match the increased pace of technology change – modular construction is commonplace but in China companies are 3D printing houses on site.
What does this mean for the property sector?
Corporates will want to be in the better-quality, flexible, more intensively utilised and better-located offices. New office stock will need to encourage and maximise the potential for physical communication with co-workers and customers, and to allow for upgrades to reflect technological changes. It is likely that poor quality stock will continue to be changed to residential, or risk following the path of tertiary high streets across the UK. Palmer Capital is looking at the offices we own or develop to ensure they meet these standards.
The layout of the UK’s logistics and manufacturing infrastructure will change as automated transportation and online purchasing (around £50bn a year is spent online) continue to grow. It may be too early to accurately predict the layout and location of the logistics market, but manufacturing processes will move closer to the point of use. Palmer Capital and Wrenbridge have seen strong demand for smaller units in our Chingford and Belvedere sites in London, as they are near population hubs.
The development of city residential living will continue, driven by technological demands – as the city is one of the few places where physical interaction can complement online interaction. With their growing populations, cities will be preferred owing to the availability of politically acceptable development land. Palmer Capital and Cubex are developing residential in Finzel’s Reach, Bristol, as part of a wider “place-making” initiative, which mixes city centre offices with hotels and bars and ensures roperties easily connect to the transport and retail infrastructure.
In short, we face changes and challenges in the real estate world. As Star Trek fans know, resistance is futile, so today our strategic planning should be based on the inevitability of ever-accelerating change occurring in our industry.
Author: Alex Price, CEO at Palmer Capital