Over the past year, we’ve spent quite a bit of time examining the intersection of technology and real estate; the topic has dominated real estate sessions at ULI meetings, inspired Institute publications and articles, and come up in informal member-to-member exchanges. It’s an intriguing area of focus for ULI, with huge implications for how, what, and where we build.
In participating in these discussions, I’ve found that they often tend to focus on transportation technology, specifically driverless cars. That alone is a fascinating topic: just as automobile manufacturing changed urban growth patterns in the 20th century, use of autonomous vehicles will surely change how urban areas grow in the 21st century. However, another aspect of technology that I believe is of equal significance is the way it is transforming civic engagement.
What we are seeing today—in technology that summons rides, finds parking spaces, reserves restaurant tables, confirms grocery delivery, even schedules pet grooming—is radically and permanently changing how we negotiate and navigate civic life. However, use of technology to make cities more livable is not a 21st-century phenomenon. It can be traced to the 1970s and 1980s, when soaring crime rates in U.S. cities sparked the creation of a new, data-driven approach to policing that matched crime statistics with mapping technologies to more efficiently allocate law enforcement resources.
The leader in this technology was New York City, using a system called CompStat (short for Computer Comparison Statistics). CompStat and similar systems had an unprecedented impact in improving the delivery of public services. Downtowns became safer places in which to invest, to build companies, and, most important, to live. It’s fair to say that these systems catalyzed an urban revitalization movement that is still going strong: it’s no coincidence that there is a direct correlation between a decrease in crime rates and an increase in building permits.
Today’s version of CompStat, in terms of changing both the reality and perception of urban living, could be a combination of three enabling technologies: 1) mobile networks and ubiquitous online connectivity; 2) location and mapping software that allows people to find and track services and products; and 3) millions of measuring devices and sensors that are connected to the “internet of things.” These technologies combined have changed how we manage and use urban environments by efficiently matching users with surplus capacity.
For instance, Uber connects someone who needs to go somewhere with someone who has spare time and a vacant passenger seat in his or her vehicle. Airbnb connects travelers with those who have a spare room. WeWork offers flexible and short-term office environments for new and growing companies. All of this is part of the sharing economy, which is wringing out surplus capacity and changing notions of ownership.
This improved efficiency of services is increasing demand for greater efficiency from fixed assets. And while some cities are realizing great success from embracing the sharing economy, others are struggling to find a coherent response. One key challenge is the impact on planning for urban growth. For generations, there have been quite predictable relationships between growth in office use and employment and the resulting demand for office space, and between growth in household incomes and retail spending. In the sharing economy, those rules of thumb have become highly variable and much less predictable.
One consequence of this unpredictable environment is the erosion of traditional planning standards, which are being replaced with less-rigid policies such as those pertaining to parking-space minimums or zoning. As more cities incorporate flexibility into the planning process, the greater the opportunities for the real estate industry to innovate and adapt to new demands and preferences for space.
Among my favorite quotes about technology and the future is from Bill Gates: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.” This is important for us to remember as ULI continues to explore the connection between real estate and technology. In this time of rapid technology advancements, real estate remains a long-term business, and we should not get so overwhelmed by what’s happening today that we are not prepared for tomorrow.
As futurist Paul Saffo observed at our Fall Meeting last October, there are two types of technology—technology that has not been introduced yet, and technology that is obsolete. In the time it takes to construct a building, technology is created, becomes outdated, and is updated many times over. As we build projects and cities for the 21st century, the best course is to stay flexible because so much can and will change so fast.
Two recent publications from ULI, Technology, Real Estate and the Innovation Economy and Disruption—Buzzword or Reality?, examine how the real estate industry needs to become more adaptable to thrive in this new environment. Both remind us that building for permanence means building for change—providing space that is adaptable to easily accommodate whatever is coming next, and what’s next after that.
We look forward to continuing the conversation on technology and real estate at our global convenings this year, starting with our Spring Meeting in Philadelphia, a city that exemplifies how the urban experience is being transformed by tech advancements. And while each new discussion will remind us that the unknowns outnumber the knowns, what we do know is that disrupters are going to get disrupted, sparking new companies and yet more innovations requiring even more flexible space. The notion of technology as a feeder for urban development holds great promise for our industry and our Institute.
