The Future of Real Estate
We’ve already seen how information, communication, goods, capital and transportation industries have been transformed by tech platforms — think Google, Facebook, Amazon, etc. The future of office and living space is being revolutionized by technology as well. Based on my work helping corporations innovate and reimagine their business for growth and scale, I expect the real estate industry's transformation will be substantial.
I advise my clients that there are six technological developments that must change the way we conceptualize and monetize real estate.
1. The world is more connected. Private satellites are covering the earth, from SpaceX and OneWeb to Google, which is trying to connect over 4 billion people to the web by floating balloons 20-50 km off the ground. And 5G is being rolled out.
2. Intelligence is being democratized. Everything is becoming intelligent as a result of the cloud. It means that the average user now has access to all their data, anytime. They can experience unlimited computing power.
3. The internet of things (IoT) is prevailing. Sensors can collect data about our physical space and use this to develop virtual reality and spatial planning tools for living and working spaces. We’ve seen examples of IoT applications for space with Nest (acquired by Google), eero, Sonos and Ring.
4. Our work/life distinctions are changing. The tech developments referenced above support a shift in the way we understand the traditional work/life distinction. Superior connection and computing power come hand-in-hand with the rise of the gig economy, freelancing and crowd-tasking. Workers no longer need to commute to offices to get the job done. As a result, employers have access to a geographically wider-reaching talent pool.
5. Fewer brick-and-mortars are required. This as automation and artificial intelligence (AI) developments alter how we work and consume products and services.
6. The platform economy has emphasized a shift from products to services. And the way we understand ownership is changing. From ownership, we're now seeing a shift to rentals. For example, you can catch an Uber instead of owning a car.
The Creation Of A New Business Model: Space As A Service
I predict these six tech developments are indicative of how the real estate business model will evolve. This new model will be founded on the notion of "space as a service."
We’ve already seen space as a service play out with firms like Airbnb, Common, WeWork and Clutter. They decouple the services you expect from real estate asset ownership but still monetize the physical space.
Real estate companies can learn from this model and reimagine opportunities ahead. The future of space lies in the clever servicing of it — not, it would seem, its ownership. To thrive in the future, I believe companies would be wise to learn to monetize space. Physical assets do not need to be purchased in these models, making them highly scalable and capital-efficient.
More information on this topic in the full version of this article on Forbes.