Editor's Choice: Yet another messy revolution

ULI Europe's annual conference in Paris is always good for provocative one-liners and the latest edition this week did not disappoint.

As we followed in Jules Vernes' footsteps and did a virtual tour around the world in just over eight hours rather than eighty days, we learned that a 'toxic mix' of immigration and populism is threatening European stability and that we are living in the best of times and worst of times, to quote one of the speakers who in turn was quoting British author Charles Dickens.

And, we learned, there are several revolutions going on at the same time.

To start with the bad tidings; there is every reason to feel alarmed about the state of the European Union, according to British author and Sky News journalist Tim Marshall. In a brutally honest and refreshingly open inaugural panel session on the global geo-political and economic outlook, he argued that there is a very real threat of more nation states rising within the EU alongside the ongoing risk of a Brexit. ‘Unless somebody sorts it, the EU will potentially fail,’ he warned.

In another somewhat sobering voyage around the world, Britain’s softly spoken starchitect Richard Rogers showed us why compact cities like Milan and Barcelona are successful and why sprawling places like Atlanta are most definitely not, at least in terms of density. On a more uplifting note, Rogers told us that this is the Age of Cities and that cities are the way forward in the further development of mankind.

To get the point across - and the weight of responsibility on the shoulders of the conference attendees - Rogers ended his keynote speech with a glimpse into the minds of the rulers of Ancient Athens. More than 2000 years ago, the Athenians had an oath for someone who was about to become a citizen, he said in his concluding remarks. ‘They had to swear that 'I shall leave the city not less but more beautiful than I found it.'

Sprawl is the norm
Unfortunately, as cities expert Greg Clark aptly noted during an engaging discussion on the topic, ‘sprawl is still a norm from which we are trying to reverse’. But there is hope, New York-based urban developer and Aecom head Chris Choa said during another lively panel on the topic of technology and real estate.

Commenting on the impact of internet technology, social media and artificial intelligence, he argued in his introductory remarks that this is the first time in history that we can have more in common with people thousands of kilometres away than some of our closer neighbours. There is more good news: ‘We complain about human nature all the time,’ he said, ‘but we are deep down collaborative creatures, even when we are in conflict.’

So what are urban developers collaborating on? Too much to mention here, but global leadership fellow Alice Charles from the World Economic Forum provided a succinct and fascinating insight into the fourth industrial revolution and how technology is blurring the lines between the physical and digital space. Indeed, technology is a tremendous facilitator in our evolving urban landscape where space within cities can be reprogrammed and used more efficiently so that a car park can not only accommodate a yoga club by day but also a night club by night.

While more people are leaving work to get work done and more employers are embracing mobility, back in the real world of office space, a second wave of smart buildings like The Edge, Deloitte’s headquarters in Amsterdam, is ushering in a new way of working, Coen van Oostrom, CEO of Rotterdam-based OVG Real Estate, told the conference. Indeed, more sophisticated sensors, big data and other innovative technologies like driverless cars are creating a revolution, he said. ‘There are many big disruptors and we have no doubt that there will be new business models in 10 years.’

Real estate tech renaissance
Mark Gilbreath, founder and CEO LiquidSpace, foresees a fundamental shift within the real estate space in an even shorter time frame thanks to companies like his own which put simply, is the Airbnb of the office space world for the US, Canada and Australia. By 2020, 50% of office transactions will happen online, he predicted during the final keynote speech of the day. 'That genie is out of the bottle. There will be a dramatic shift towards smaller spaces and online demand.’

The traditional real estate model doesn’t work for startups and a growing number of teams, Gilbreath argued. Moreover, tech companies like LiquidSpace as well as a host of others like Floored, Compstak, Hightower and Honest Buildings are creating yet another revolution as they ride the commercial real estate tech renaissance. ‘Some time in my professional lifetime, we will see a transition from an asset-driven approach to the landscape to a shift into a great era of unbuilding,' he said. 'User-centric development strategies are the driver.’

A number of attendees scoffed at the idea that a relatively small disruptor like LiquidSpace could fundamentally change the long-established real estate brokerage business. But commercial real estate technology is rapidly becoming an understood portfolio category with 75 new ventures launched in the past five years alone with the likes of Blackstone, CBRE, JLL, Tishman Speyer and Starwood injecting some $2 bn into these ventures.

Given the growing number of disruptors in every dimension of our physical and virtual world, Gilbraeth may be forgiven for comparing the current real estate tech renaissance to a ‘messy revolution’ like the fateful storming of the Bastille in 1789. Dismiss the warning at your own peril. Change has come quite fast and does not seem to be letting up at all.

Indeed during my research of the companies Gilbraeth cited in his keynote speech, I came across a whole host of others. The commercial real estate industry may have been slow to catch on to the technology craze, but I am now convinced that a wave of new innovation is hitting the sector in a big way.

My humble advice: don't lose your head, but stay alert. And if you're interested, read about the top real estate tech startups you need to be paying attention to: Bisnow's top real estate tech startups

Judi Seebus
Editor in Chief