Developers, investors and policy makers need to start planning for the impact of digital disruption on the real estate industry if they are going to survive the changes, according to an industry expert.
Plummeting costs of technology and the emergence of new business models are set to transform the way people work, do business and live their lives in the future.
Richard Pickering, Cushman and Wakefield’s head of future strategy, believes the property sector must plan for the shift to a digital economy in the same way as it plans for competition and near-term market movements. He said that only those proactive about the opportunities ahead would survive.
Speaking at Cushman and Wakefield’s Yorkshire Property Outlook in Leeds, Mr Pickering predicted that in the future shops would change from a sales to a marketing function and businesses would start re-onshoring elements of manufacturing as the use of robotics became more prevalent.
He also predicted an expansion of the size of our city ecosystem, driven by transport innovations and virtual working.
Mr Pickering said: “Developers, investors and policy makers should plan for the impact of digital disruption in the same way as they plan for competition and near term market movements.
“With change there are always going to be winners and losers and the greater spread of potential outcomes provides opportunity for those willing to be proactive about the change ahead.”
The breakfast presentation, held at The Met Hotel, revealed that the property market faces unprecedented threats and opportunities in the coming decade.
Darren Yates, head of retail research and insight, discussed key trends in the commercial property market across the main sectors.
Economic and political uncertainty over the last year have made business planning extremely difficult, particularly for sectors like banking and the car industry. However, last year also saw the second highest volume on record for commercial property investment with around £60bn worth of deals, driven largely by the industrial sector.
Mr Yates said: “We are seeing a longer term trend which is the growth in industrial, leisure, alternatives and mixed-use, largely at the expense of retail. We’re also seeing an increasing shift towards mixed-use and a blurring of the traditional sectors.
“A more recent trend has been the slowdown in the shopping centre investment market, which reflects investor concerns around the structural changes going on in retail, particularly the secondary market.”
Public and private sector partnerships are the only way to deliver development and regeneration in uncertain times, the event was told.
Angela Barnicle, chief officer asset management and regeneration at Leeds City Council, said: “As a city we have witnessed significant development over the past decade which has been achieved through working in partnership with the real estate sector.
“It is only this partnership approach which will allow us to achieve our potential as a city as we collectively identify and embrace the market disruptors in achieving inclusive growth in the next decade.”
Vivienne Clements, of Henry Boot Developments, added: “Developers are experienced in dealing with uncertainty in the UK property market. This being said, the current challenges, particularly Brexit and the impact of escalating digital disruption, will require a whole new approach and great flexibility to secure delivery and value over the longer term.”