|[August 09, 2018]
Will Robots Take Over Commercial Real Estate?
Robots Take Over CRE?, a report released today by Cushman
& Wakefield (NYSE: CWK), examines transformative technologies and how
they will impact commercial real estate over the next two decades.
The report is the first in a four-part series that focuses on
auto-related technologies such as electric and autonomous vehicles and
ridesharing; distributed ledgers such as blockchain and cryptocurrency;
and technologies transforming supply chains such as drones, 3D printing
and autonomous mobile robotics.
Will Robots Take Over CRE? focuses on structural factors that may
drive adoption of these technologies and evaluates transformative
advances that will affect them, all within the context of safety,
security and acceptance; ability to converge with other technologies and
infrastructure; and scalability. Each technology is evaluated on a
"Hype Cycle" curve that gauges its likelihood of being adopted. Real
estate and infrastructure assets are expensive, built for longevity and
do not lend themselves to flexibility. Therefore, in order to embrace
any change, players in CRE markets must be convinced that the technology
will be widely adopted.
The report also addresses the impact of innovation on future employment
and identifies cities and real estate asset types best positioned to
withstand the change.
Today, technology is a net job creator. Looking forward, certain sectors
are at risk, especially manufacturing. A 2018 study commissioned by the
Organization for Economic Co-operation and Development (OECD) puts the
number of jobs at risk of automation at 14 percent. In the U.S., that is
an estimated loss of 13 million jobs. Yet, one study has estimated that
one additional job in the technology sector generates about 4.9 new
non-technology jobs in the same city (three professional and two
nonprofessional positions), as new jobs create additonal demand for
"Despite all the doomsayers, new technologies have created more jobs
over the last century than they have eliminated," said Revathi
Greenwood, Cushman & Wakefield Americas Head of Research and lead author
of the report. "Even so, certain job functions are being decimated by
technology, and in some cases robots are indeed coming for your job."
But not yet, as most of the technologies under consideration are at
least a decade away from widespread adoption. Whether that is perceived
as a short or long time depends on how ready one is to cope with the
aftermath. Of course, many of these technologies will be adopted on a
use- or case-specific basis with limited functions and in select
geographies. They are unlikely to materially affect CRE in the short
term. Once a technology is widely adopted, there is likely a lag in
terms of the impact on real estate.
"This lag should not be viewed as a 'wait and see' period. Rather, the
early adoption cycle should be used to determine impacts and possible
remediation strategies," said Sandy Romero, Cushman & Wakefield Senior
Analyst and co-author of the report. "The risk to CRE is that, should
underlying patterns of human/business behavior change more quickly than
the real estate or infrastructure can adapt, a technology could lead to
weaker CRE performance."
Going forward, cities that invest in training will also be better suited
to weather technological shifts. However, once adoption becomes
widespread, cities with technologically proficient workers - such as San
Francisco, New York, Washington D.C., Boston, Austin, Texas, Los Angeles
and San Jose - will be in a better position to benefit from the economic
impact associated with these technologies.
For commercial property, successful real estate offerings are likely to
straddle uses. CRE players will need to focus on flexibility and
efficiencies to adapt. Assets positioned to evolve along with technology
will outperform others that do not keep pace. However, such flexibility
may be costlier.
Real estate categories likely to see growth include data centers,
manufacturing centers for new technologies, remote parking and
recharging stations and cybersecurity. Successful real estate offerings
are likely to be those that offer multiple/diverse uses: for example,
office/hospitality hybrids that offer concierge services, single-family
rentals and conversion of retail into office and industrial. Most
at-risk categories include gas stations, bank branches, non-experiential
retail and garages.
"The only way for CRE professionals to adapt to changing paradigms
brought on by technology advances is to focus on flexibility and
efficiencies - around asset use, lease and services and supply chains.
However, flexibility does come at a cost," Greenwood said.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services
firm that delivers exceptional value by putting ideas into action for
real estate occupiers and owners. Cushman & Wakefield is among the
largest real estate services firms with 48,000 employees in
approximately 400 offices and 70 countries. In 2017, the firm had
revenue of $6.9 billion across core services of property, facilities and
project management, leasing, capital markets, valuation and other
services. To learn more, visit www.cushmanwakefield.com
or follow @CushWake
on Twitter (News - Alert).
View source version on businesswire.com: https://www.businesswire.com/news/home/20180809005649/en/
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