I had the great pleasure to moderate a number of exciting industry panels in the past year. In particular, two sessions stuck out for me, both centered around the concept of how technology is transforming our use of and demand for real estate.
These two diverse panels from different segments of business, finance and technology companies offered vastly different views on how fast technology is moving, but no one could deny the long-term impacts to our urban form, primarily through changes in employment and building usage.
Some of these key thoughts resonated with me and resulted in some predictions of my own. As I close 2016, I’d like to offer some futuristic reflections on the state of technology and its impact on real estate and human endeavors.
AUTOMATED CARS AHEAD
By far, the most universal impact of technology on real estate in the coming 50 years will be experienced based on changes in mobility, particularly human mobility.
The early days of the automated car have now commenced. The long-term social impact of automated cars will be both wrenching and liberating; wrenching because the transportation industry professionals will have been automated out of a job, and good jobs today are hard to find.
But automated vehicles could also liberate a significant component of our household discretionary spending, allowing us to divest of machines that cost money every day whether you use them or not. Think about the amount of time you spend daily in your car, and yet most people spend 20-30 times as much money on their car than on their mattress, even though we probably spend 50-100 percent more time every day on our mattress.
I predict automated vehicle adoption will start in the luxury car segment for the next five years, but mass production and adoption will follow 10-15 years thereafter. By 2030, automated cars will dominate our urban landscapes where travel will come at a fraction of its historical cost.
In the meantime, centralized dispatching of manned vehicles through systems like Uber and Lyft will serve to provide us a transition away from two- and three-car families. Changes in freight and long-haul transport adapt much faster than the 20 years needed for mass consumer adoption of automated vehicles.
These changes to machine-driven mobility will have far-reaching impacts on our economic base (think long-term decline in vehicle sales), but will also determine our future needs for parking facilities in every end-to-end location. This will reduce our building footprints to provide parking, but will also increase the need for locations where automated vehicles can be serviced, recharged and sit waiting for peak demand.
All of the automated mobility options can only be enabled by the proliferation of smart phones. As we enter the 25th year of mass cell phone adoption with internet-enabled phones everywhere, we need to acknowledge how critical smartphones are to technological changes in real estate usage.
Fiber optic access and internal building wireless accessibility are becoming critical building systems like plumbing and power.
The second big wave of building technology is now upon us, and it relates to advances in machine-learning systems. Machine learning is advancing rapidly, and our ability to impose intelligent pattern management into building systems will be transformative.
Think about the cost savings in your own house when your home’s central computer can monitor consumption based on your presence and patterns of usage. Your hot water heater, heating and air conditioning, and other building systems would be available when you need them, but idle during periods of inactivity.
Now take this concept out to hotels, office building, airports and apartments.
By 2040, I predict a large segment of our building inventory (residential and commercial) will be communicating real-time usage data in the background to our infrastructure systems to self-manage everything from security and life safety to operating efficiencies. The data from these systems will assist in future design decisions by making building design more data-driven based on how and when we use the buildings we occupy.
IMPACT OF ROBOTICS
The third major impact to real estate form will be advanced robotics. The U.S. has spent the past 40 years working on robotic automation, reducing the human time and work necessary to manage repetitive and labor-intense activities. This has resulted in automated warehouses, toll processing, semi-autonomous waste collection and sorting, improved manufacturing and more advanced construction automation.
The next 10-year trends in robotics will drive the healthcare industry. From telemedicine to robotics-driven operating rooms to robotic caregivers who can lift and move patients safely, robotics will start to accomplish higher level tasks in healthcare.
As the cost of deploying advanced robotics comes down, road and building construction will be the next phase of complex work tasked to robotics. I predict robotics adoption will take longer as a result of higher deployment cost, but expect by late mid-century, we won’t be having labor disputes about moving jobs overseas, we will be debating the ethical merits of robots completing otherwise human activities.
In all of the promises of an advanced, robotics-driven, interconnected mobile society, I feel compelled to ask the question, “What do we tell our 10-year-olds to study so that they have a viable career 25 years from now in light of all these changes?”
Certainly, the easy answer is to pursue advanced STEM education (science, technology, engineering and math), and those that do so successfully will be richly rewarded in a more automated world.
But the other path to long-term relevancy will be to specialize in humanities, honing the skills of human interaction and creativity: psychology, behavioral science, ethics, education, communications, art, music, design, writing. For all the advances in technology, humanity cannot be replaced by objects that are not human. We are still more than a century away from creative technologies.
In the meantime, expect the long-term demand for real estate to fundamentally change. Buildings that are intelligent will be less likely to become obsolete. Our next challenge will be to envision construction techniques and design that allows our built environment to creatively adapt over its life cycle.
A building that starts out as an office building needs to be able to adapt over its 50-60 year life cycle to accommodate other uses. Public buildings such as government offices, schools, libraries, even museums will be integrated into our privately owned spaces to enable increased utilization.
By designing reusable building components and planning for adaptive reuse, we can unleash massive savings in capital investment and recycling of fixed resources to meet our future challenges.
The coming 50 years will be an exciting and transformative time in the real estate business. The key to success in all business is creativity and the ability to adapt. The challenge for real estate professionals will lie in our ability to adapt and create a built environment that suits our humanity.
▪ Graziano is a monthly contributor to the ‘Broker’s View’ space in Business Monday. This piece reflects the view of the writer and not necessarily of the newspaper. Got a ‘Broker’s View’? Realtors may submit columns for Broker’s View of 700 words to to rclarke@MiamiHerald.com. This feature is intended primarily for residential brokers, who will be given preference, but pieces about commercial real estate will also be accepted as space allows.