If I were to hazard a guess, the question that industry experts are most often asked about is: “What does the future look like?” Here is Principal and Managing Director of Avison Young’s Global Investment Management practice Amy Erixon take on the future of real estate.
Erixon presented her vision in a webinar titled, “Real Estate in 2030 – Five Exponential Technologies That Will Shape Our Future” for the Urban Land Institute.
Erixon set the tone of the presentation by claiming that, “There is no question that we are entering into a period of unprecedented change and innovation.” Erixon views “technology as a source of potential solution for many of the vexing problems that we have been working on solving for the last many decades.” To that, Erixon identifies that the political and social implications for implementing these technologies are holding us back.
Erixon highlighted five technologies that will shape our urban built future.
First, renewable energy. In terms of renewable energy, the cost-effective of renewable sources of fuels for producing electricity is much greater for wind and solar when compared to coal. Erixon projects that the advantages of using alternate sources of energy will only become greater as time passes. A doubling in demand for renewable energy leads to a 30 percent drop in price. In the last decade, the price has gone down by 80 percent.
Erixon then asked, “What’s holding us back?” “That would be the grid system.” The grid system involves multiple vested stakeholder interests. Erixon predicts that we will move away from a centralized grid to a decentralized smart grid, which looks like multiple, smaller scale source locations that are embedded in the economy more generally.
Second, the Internet of Things. For smart cities, it is about the revolution of sensors and an increase in computing power. Today, there are seven times as many things connected to the internet as there are people on the earth. With the increase in data collection, Erixon sees this technology becoming more efficient, precise, greener, automated, and mobile, which can translate into actionable information into how to operate buildings better.
“This entire arena of technology is going to get substantially turbocharged with the advent of 5G networks.” This new network can carry higher speed, require lower power, and has lower latency.
Cities are going to start looking at buildings as key contributors to smart city infrastructure. Erixon explained that as we bring fleets of electric vehicles into buildings, parking garages will become exchange centers for power. Buildings will also serve as “edge” data centers, which can handle local processing activities for cities if they don’t want to ship out data processing to the suburbs or another state. Erixon expressed that real estate developers have an essential role to play in the smart city infrastructure.
Third, the three mega vectors of change in mobility revolution: transportation as a service, electrification of vehicles, and autonomous vehicles. Citing a McKinsey report, Erixon notes that there is up to a $3 trillion in net economic impact from the continued adoption of mobility services by 2025. From the real estate perspective, the mobility revolution could have an effect on locational preferences because it changes the essential character of commuting.
For cities, it’s an open question whether the transportation revolution will be a boon or end to transit. For real estate developers, we need to think about shifting commuting patterns and locational preferences.
Fourth, radical materials for construction. Erixon said that we are too focused on technology as a service and software and hardware solutions. Interesting developments are happening in the material science for construction space.
Upcoming construction solutions are happening in every segment of the industry from flooring materials to insulative materials to fenestration materials. A recent construction innovation is hydroceramics, which has a cooling effect on building interiors. Another is Breathe Brick, which traps pollutants and then releases the filtered air. Bacilla Filla or “designer bacteria” heals concretes by pulling nutrients from the surrounding and then filling in the cracks.
Fifth, design tools of the future. An example of this technology is what Erixon described as “generative to intuitive design,” which is leveraging artificial intelligence to come up with more creative and innovative solutions. With this technology, we can tell the computers what we would like to see in the development such as lower carbon output or energy utilization. The computer will then look for construction materials that meet the performance spec. We can then match what the computer finds with our cost parameters.
Along the digital visualization continuum, Erixon also believes that virtual reality, augmented reality and hologram can support real estate functions in various ways. With these technologies, we can reinvent the real estate marketing and building compliance reporting process.
Given these new technologies, Erixon envisions a world where by 2030, all new buildings, per code, will be net zero carbon. All buildings, considered class A or B, will have embedded sensors to monitor comfort, lighting, air quality, and noise. Buildings will also be part of the embedded distributed smart city infrastructure. Finally, real estate developers will incorporate and accommodate electric and autonomous vehicles infrastructure into their buildings.