Six Of The Biggest Changes To Happen To Real Estate In The Next Six Years
Technology is changing every sector of business. No more so than real estate.
Blame it on algorithms or millennials. Or how about drones and Airbnb? Whatever it is, there is no doubt that real estate is changing before our eyes. Old ways of business are eroding and maybe history in a few years. We’ll take a look at six of the most dramatic changes due to take place in real estate within the next six years.
There have already been huge changes in home building, with big chunks of property now created in factories and merely assembled on site, like a jigsaw puzzle. Look for that trend to continue with the more hands on professions like masonry and even drywalling and painting now done inside one’s computer controlled robots. The materials used are also likely to change—sustainable, green and engineered as opposed to stone and wood are likely to become more prevalent. This change just isn’t restricted to single-family homes. Modular/pre-fab construction will start to creep into skyscraper construction too slashing costs. Already 461 Dean St at Pacific Park is the world tallest modular construction. Expect more to follow.
It’s not all about millennials. People are living longer and older people need to be taken care of. They generally don’t like the cold, they need assisted living facilities that can keep them out of the hospital and give them a sense of community at the same time. Expect major developers invest more into such facilities, which are impervious to many of the usual fluctuations in the real estate industry.
Street Easy’s recently unveiled pay to play scheme outsources brokering on all properties to any agent who wants to pay for ad space. It sent waves of concern through major NYC brokerages. After all, these middle men/women make millions of dollars by exclusively representing high end properties, forging hard to attain relationships and to have their commissions potentially taken away by a novice in a pair of sweats in their basement is galling. Street Easy’s policy surely marks the start of a major change. The same surely goes showing agents. Sophisticated cameras, drones and more now provide virtual reality tours that allows buyers to stay on the coach with their laptop.
Empty offices and stores in major cities
With remote working becoming more prevalent, the need to live where you earn money will decrease. In many cases, this may mean an exodus from expensive cities to cheaper locations—a concept touted heavily in Tim Ferris’ best selling book, The Four Hour Work Week. Look for empty office spaces in expensive cities to become more prevalent as remote working and the gig economy becomes more sophisticated.
The same goes for stores. High streets are shrinking while Amazon warehouses are growing. Cities are filling their spaces with restaurants and destination experiences (theaters, museums etc). Look for real estate to have to accommodate less office workers and less offices.
Going green as a necessity
According to a recent World Economic Forum Report, the real estate sector consumes over 40 percent of global energy annually, 20 percent of total global greenhouse gas emissions originate from buildings, there is a projected 56 percent increase in building CO2 emissions by 2030, a 7 percent increase in proportionate share of global GHG emissions is expected by 2030, and buildings use 40 percent of raw materials globally.
Needless to say, expect the emphasis on green LEED certified buildings to continue at great pace in conjunction with more sustainable building products.
Traditional lending & finance
Crowdsourcing, private lenders and financial tech companies are already flipping the script on how money can be loaned. Wall Street and traditional banks will have to keep up and drop their fees accordingly. According to Bloomberg, robo-advisers, which use computer programs to provide investment advice online, typically charge less than half the fees of traditional brokerages, which cost at least 1 percent of assets under management.
The times, they are-a-changing.
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