How the Physical, Human and Digital are combining to transform and change our relationship with, and for, the built environment in a world that is focused on People and their interaction with their environment. We look here at the changes and challenges faced by the built environment, and for us as professionals in it, as we look to the past, present and future for our sector.
It is a truism that change is the only constant in life; we live in a world that is in continual flux, and where the pace of change is accelerating. As built environment professionals we need to adapt to that change, as the world around us changes, and our role as creators and influencers helps shape the world of tomorrow.
As the role of our cities still remains the economic powerhouse of our nations, here I wanted to set out my thinking for the future built environment in terms of:
- The global context forcing Our Changing World – the Physical and Digital, and what impact this will have to the Human of the PhD. Communities are more important than ever for us as individuals, as organisations and for our clients;
- Urbanity – looking at the increasing importance in the role of cities, defining the key elements to the people within them;
- The changes impacting the corporate real estate portfolio as we look to 2040; and finally
- Consider briefly looking to the future beyond 2020
So what do I know? Well for the last five years I have been looking at Futures and, as some form of built environment clairvoyant, thinking about the transformational change that lies ahead.
Our cities today are facing major challenges driven by rapid population increase, climate change, automation and globalisation, as they themselves become the economic drivers of change. The way we plan and evolve our cities today will be the defining factor to their future success.
5 years of disruption
It is interesting looking at change in the context of events that have happened since 2015 when I helped developed a report for the Royal Institution of Chartered Surveyors (RICS) called Our Changing World: Let’s be Ready.
- the Greek government’s debt crisis that heighted in 2015 when it became the first country to fail an IMF loan repayment;
- the UK’s decision to leave the EU in June 2016, and the impact as it does so in 2020;
- November 2016 saw Modhi wipe out 86% of India’s cash overnight to tackle corruption;
- then there was the impeachment of Brazil’s President in 2017;
- there is what colloquially has been called ‘the Trump effect’ on international trade;
- but very little prepared us for 2020, the Covid-19 pandemic that has swept the world off its axis, sadly so many have died from it, and so many more have been affected by it through the impact it has had on family, friends and businesses. Our world has literally been transforming rapidly before our eyes.
The unpredictability of what is happening around us impacts global markets, our business and our clients, whereby continuous disruption is now the new normal.
Digital and technology
The other norm in our lives today is technology. The number one concern of professionals from the report was – how do I remain relevant in such a changing world?
Radical transformation is happening to Property, People and Place with the interaction at a city scale supported by data and powered by new technologies focusing on bringing the Physical and Digital orientated around Human (PhD).
We already have with us technological possibilities through BIM, digital twin, smart sensors, IOT, AI, 3D printing, MMC, off site manufacture, PropTech, and more.
Looking ahead, there are technologies and concepts we know about today that might not have yet been fully tested or made it to being viable just yet – but we do know about their potential – hyperloop rapid transportation for example.
We as built environment professionals have a responsibility to prepare for these changes and adapt accordingly, because the pace is increasing.
Another major trend is urbanisation. In 1950 30% of the world’s population lived in urban areas. Today it’s 54 per cent … and by 2050 the UN predicts we will be an almost exclusively urban species with 80-90% of people living in cities.
In 1970 there were two mega cities – Tokyo and New York, today there are 23, and by 2025 there will 37 – 13 of these will be in China, with China also building a conglomerate of cities equating to 100m people : Jing Jin Ji.
50% of urban population growth in our cities will be in just 7 countries – India, China, Nigeria, Indonesia, USA, Pakistan, and the Democratic Republic of the Congo.
By 2100, according to the Global Cities Institute, the biggest cities will be Delhi, India 57.3m at No. 5; with Mumbai, India 67.2m; Dar Es Salaam, Tanzania 73.7m; Kinshasa, Democratic Republic of the Congo 83.5m; and at No.1 will be Lagos, Nigeria 88.3m
Fastest growth, however, will be in the smaller cities of 1-5 million people – with India building a city the size of Chicago (2.5m people) every year for the next 26 years.
– and remember half of India’s population is currently under age 25, and Latin America’s average age is as high as 29!. The median age of Nigeria is just 18, and its under 20 across all Africa’s 54 countries!
By 2030, the OECD predicts that the global middle class will double in size to 4.9bn people demanding more homes, cars, travel and consumer goods.
Construction output is having to increase by 70% in the period between 2015-2025 to meet demand – with just 7 nations accounting for that growth, with the US, Canada, China, India, being amongst the leaders.
The Belt and Road – if it happens – will raise global GDP by 9%.
Resources : Cracked Earth
BUT - We are short of resources – by 2030 the world will need at least 50% more food, 45% more power and 30% more water than it did in 2012.
There is a shortfall in infrastructure $57tn needed by 2030 (McKinsey)
Age demographics in our cities are changing and overlapping as people live longer and work longer (we now have 4 generations in the workplace!); households are getting smaller, and technology is changing how we live…. and work.
We will have to focus more on addressing the impact of climate change and climate emissions from our buildings, with reports suggesting this ranges between 40-55%, and in their construction, where in the UK alone, 1 in 6 houses ends up in landfill.
And again, the story of people and technology is intertwined.
Geographic mobility is increasing, plus 4.66bn have internet access today (around 60%) and mobile phone use is increasing from 2.2bn in 2012 to 5.2bn this year (75% of the population, of which 1.5bn will be in China and 1.1bn in India). Providing accessibility to information, and data, like never before, with six social media platforms confirming use by 1bn people a day.
Data is, and will become, increasingly significant as the digital oil. Half of the world’s data was created last year alone, and only 0.8% of it was analysed.
Technology is simply not just a nice to have – it is an essential part of modern day living….. and working.
The role of Cities and Place
So, with all that change and challenges ahead, what will make cities resilient and successful?
Cities are literally taking on nations – Shanghai’s population of 25m is larger than that of Australia. The mega cities of the future will be larger than many of the nations we know today.
Economic power too is shifting as the global middle class grows – with people being attracted to cities as the rate, according to the UN, of 3 million people a week.
But we know that success is no longer purely about size. Aspects such as innovation, liveability, and an ability to transform and adapt to a changing socio-economic landscape, are becoming increasingly important.
We need cities that are resilient and that can face the challenges the future will throw at them.
Urbanity – the art and science - of bringing Cities and people successfully together through placemaking is essential for future city living – and without it urbanisation will fail.
CBRE completed a research report on the future of UK cities, called Our Cities, which identifies three overarching areas that are prerequisites for success: governance, innovation and culture
Governance is the most obvious factor in creating a thriving city; it requires strong leadership based on a clear vision and aspirations, underpinned by the ability to make, coordinate, and fund decisions about how the city is going to evolve.
Innovation is again perhaps an obvious driver of growth and success in today’s cities. But this goes beyond just the impact of technology; it also includes the ability of a city to attract and retain the brightest minds.
Those cities that have the critical mass required to support the highest quality educational offering will lead the pack in attracting top talent.
Culture is perhaps the element of a buzzing city that is most overlooked but is possibly the most beneficial to happy and healthy citizens. Art, music, food, architecture, and museums all contribute to the good life and bring a vibrancy for the next generation.
If our cities can successfully balance the unique interplay of governance, innovation and culture, they will become economic drivers for growth.
CBRE’s undertook research looking at Portfolio 2040, which when combined with our recent European Occupier Survey, uncovered four distinct themes around the future of real estate. The Report was written in 2018, but it is incredibly interesting to consider this in the context of what the future holds for the built environment and how fast we have moved towards the predictions as a result of the Covid-19 global pandemic:
- The Age of Permanent Disruption
In the next 20 years portfolio planning cycles will become shorter, with a stronger focus on flexibility in terms of space and leases, and rapid adaptation to changing business drivers around Talent and Agility that puts the emphasis on combining user experience (Ux) and technology (Dx).
Businesses will need buildings that allow them to move in and out, grow and contract, changing working environments incredibly quickly. Where not normal becomes the new normal.
Change will be a permanent fixture for business, but it will disruption without the friction – AI and digital technologies will enable better alignment between supply and demand, based on consumer data, allowing businesses to flex much more readily than they do today.
Our survey identified that 56% of occupiers across Europe see serviced or furnished offices as the preferred format to deliver their space requirements.
Most companies, even large ones, will act like today’s start-ups – they will be flexible, and responding directly to consumer demands. Yet we identified that 63% of businesses have no formal user experience (Ux) strategy.
So, what does this mean for the built environment?
Manufacturing and distribution centres will be more sophisticated and located closer to the customer.
For all companies, there will be a stronger focus on flexibility in terms of space and leases, and rapid adaptation to changing business drivers.
- The Rise of the Sharing Ecosystem
By 2040 the age of ownership will be over. Unless occupiers absolutely need to own a building or asset, they won’t. Instead, they’ll move towards sharing, leasing and using on demand.
Companies will adopt an asset-light approach – they won’t want to be tied down by large portfolios, or a particular location, because their business will be changing rapidly.
The HQ as we know it will still have a place, but it will be much smaller, more luxurious and more attractive – a trophy workplace which is seen as a reward by users – connected to a wider network of smart flexible spaces where people come to collaborate with colleagues.
Buildings themselves will become fluid to mirror the ever-changing businesses within them. Even today we’re seeing some companies using temporary, mobile walls to create and dismantle entire new workspaces within hours. In the future, we think smart buildings will do this themselves, using AI and robotics to design and create the space depending on users’ needs.
So, what does this mean for the built environment?
With a shift in occupier attitudes, there’s a massive opportunity for investors. The developers and landlords who can build in this new age of flexibility and agility within their buildings, will be the ones who succeed.
- Talent Transformed and Enabled by Virtual and Digital Technologies
Finally, by 2040, companies will buy talent on-demand globally, where and when required. More than 50% of employees will be contingent workers, with job descriptions that no longer specify a location, with the focus on talent, enabled by technology.
Data scientists and more generalist, consultant-type roles will outweigh specialists due to their ability to flex across different industries.
Will we be taken over by robots who can deal with the vast amounts of data 2040 will bring?
On one hand, data will be king because it enables better business decisions. But on the other, the fundamental motivation will be better knowledge and better decisions – those are still human functions.
Holograms and avatars won’t be things of the imagination – they will be everyday aspects of corporate life and go some way to helping solve the skills crisis.
Exoskeletons will be commonplace in manufacturing environments. Technology will be even more pervasive in 2040 than it is today, but AI and robotics will enhance and augment human working and decision making.
But what is the role of a building in this new world?
With such a large flexible workforce, how a company creates a workplace experience and sense of community for its people will become one of the biggest challenges companies face in the next 20 years.
People will still crave authenticity and experience. The space a company occupies, will be more about offering an experience than being a physical asset where work is done, because work can be done anywhere.
2040 IN THE CONTEXT OF 2020
Reflecting on the Portfolio 2040 report, in many ways it seems the world in 2020 has almost jumped a decade or more towards the predictions set out in the report as a result of the Covid-19 global pandemic.
The future for the built environment is all about more, better, faster, with governments determined to build, build, build their way of a global economic slump. To do so though, we need to build more effectively working in collaboration with our city leaders and communities, as well as throughout the supply chain, we will need to build better to ensure we build sustainability in, and finally, we will need build faster utilising technologies to help expedite build programmes and automate manual processes.
2020 has taught us about being adaptable and embracing rapid change. Let’s hope for our profession much good comes as a result. The future for us as built environment professionals is about adaption and creativity in a technologically enabled world.
Together we are creating tomorrow’s future today
Written by Amanda Clack, Head of Strategic Advisory CBRE https://www.linkedin.com/in/amanda-clack-4187471/