At a recent ULI Chicago event, speakers addressed the disruptive technologies that are having an impact on today’s lifestyles and shaping our vision of the future city. What is a reasonable projection of the near future in real estate, and which investments will enable the industry to profit and cities to prosper?
Jacques Gordon, global head of research and strategy at LaSalle Investment Management, set the stage for presenter J. Walker Smith by asking whether our technologies and individual life aspirations are pointing us toward a leisure city, a green city, a dystopia, or something in between.
“The future is now,” Smith said. “By 2020, there will be 6 billion smartphones on earth, roughly one for every adult. In other words, everyone will be set up with the exact same experience in technology.”
Smith, executive chairman of Atlanta-based Kantar Futures, warned that consumers increasingly have brand fatigue from years of escalating direct-to-consumer marketing, and are not so easily sold on a material lifestyle; instead, cultural consumption is the new priority.
We are in a “live large, carry little” generation, Smith said, in which “people want to live bigger than ever, but without any of the baggage. No debt, no obligations, fewer possessions, and more on-demand services. This is the technology experience affecting aspirational outlook.”
The consumer experience of change is the key to predicting the future in real estate, said Smith. Fundamentally, this change is shaped by investments that push technology further into primacy: robots to stock grocery shelves; services that fetch, clean, and return your laundry folded; and services like Amazon Prime Now, which can time an order of printer ink to arrive at your door right as you run out. The view of the “good life” evolves as you reclaim your Saturdays from the tyranny of to-do lists, forgo that second car, and even pass on owning a washer/dryer.
This shuffling of priorities, informed by tech and the sharing and free economy, means that people are buying fewer appliances and other home products, while consuming all types of culture and entertainment at minimal cost. Millennials especially are trying to figure out what they can get from their fixed asset-free lifestyles without mirroring their parents’ decisions. In a 2013 survey of younger adults, only 11 percent identified the purchase of a large, expensive home as top sign of success, down from 25 percent in a 1995 survey.
Young people have richer communities and lead more social lives than many give them credit for. Citing the Atlanta BeltLine in his own city, Smith said, “We didn’t know that people were just dying to run out of their houses and enjoy this reclaimed open space.” The same can be said for New York City’s High Line and Chicago’s 606, where in both cases use has greatly outstripped projections. Civic and business leaders are coming around to the notion of innovative green space as the next big public amenity in our cities.
With all of these lifestyle savings, where are people sinking their money? Increasingly, the answer is rent, health care, and “phone services.” Questions of how we organize our lives then arise: How much storage or parking space do tenants or owners need? What about a laundry/utility room? What sense does a home office make when all work takes place on a phone and a laptop? Developers, particularly in the multiunit rental sector, are responding to younger renters who say they want creative on-site amenities and lively communal space more than large private space with prescribed use. This trade-off is evident in much new market-rate construction.
A desire for flexible layouts at home and work will stick with people as they age. “Their needs and preferences will change,” said Smith, “but they want the freedom to set them.”
As to why demand for warehouse and self-storage space continues to soar in the face of massive reprioritization, Smith said that people still don’t know how to rid themselves of stuff.
For the retail sector, Smith counseled quick adoption of technology for the in-store user experience. “We tend to misinterpret technology,” he said. “It doesn’t necessarily promote social isolation. [Retailers should] use technology to further social engagement in their stores.”
Moving into the Q&A portion of the program, the audience pressed for a clearer picture of the future built urban environment.
When asked specifically about the spatial impact of driverless cars, Smith ventured: “They will unlock a great deal of land and resources devoted to parking facilities and road infrastructure.“ Households will go from owning two cars to owning one, and the possibilities of harnessing driverless cars for shuttle service could bear huge implications on urban land use. Already, parking garage revenue is down 15 percent in Chicago and 10 to 12 percent nationwide by virtue of a focused shift toward walkable, transit-oriented communities.
Concentrate services and culture, and reduce the reliance on private cars on a large scale and a probable future for urban real estate is thrown into sharp relief.