I've just finished listening to a fantastic PropertyShe podcast by Susan Freeman interviewing Brendan Wallace of Fifth Wall (the episode is here ). It was wide-ranging 45 minute discussion on the current state of our industry and its relationship with technology - it really got me thinking - especially Brendan's view that real estate is largely undervalued.
When think of real estate (or property if you’re reading this in the UK) we tend to think of houses, offices, shops or factories. We see them as places people go to live, work, learn or relax. Static objects that change slowly and require great effort to reconfigure, rebuild or renovate. Our system of valuing property is largely one of deal comparison, with locality being the defining characteristic. One person's office lease transaction is another person's comparable data point to justify an investment valuation. A grade A office in a great location has a higher value than a grade B office in a peripheral location. It's how property economics and valuation works.
But what if the drivers of value change because of technology? What if the grade B office (which can be a fantastically chic, earthy, wonderful place to be by the way - see Shoreditch, London 7-8 years ago for example) is suddenly in demand because it has scooter charging points, a drone landing pad, a huge space for rechargeable supercapacitors or a convenient booking system that allows it to be occupied and productive 24/7 for differentiated uses and by different cohorts of people? What if the leaky, creaky old building has better air quality than the hermetically sealed glass and steel box and people value wellness higher than location? Most of all, what if the periphery is where people want to be to avoid the hassle of travel to the centre?
"In business, when you become successful..., you think you know the future, but usually the future just finds you."
Brendan Wallace, Founder, Fifth Wall
Suddenly, location may not be the defining characteristic of the valuation process. Convenience, technology and capacity uptake may rank higher. People willing to pay more for grade B than grade A because it is just more productive overall may change our view on what valuable space looks like. Valuers will need to adjust their models to take account of air rights, charging points, landing pads, energy storage capacity and energy generation potential. While this might seem fanciful, I believe it is not that far away.
So, to answer the question posed in my title - yes, I believe technology can and will reimagine how we monetise physical space.