- The COVID-19 pandemic has shed light on a variety of weaknesses in the built environment, including many that are easily overlooked or simply accepted.
- A Framework for the Future of Real Estate shows that our spaces should be liveable, sustainable, resilient and affordable.
- We can make our spaces better by leveraging technology, rethinking design and improving community engagement – and the industry is ready to deliver.
We are all building occupants. We occupy apartments we rent and homes we own. We work in offices our companies lease and we shop in retail stores. We use buildings in a variety of ways and spend an estimated 90% of our day in them. So why should we continue to accept space that often underperforms its full potential?
The COVID-19 pandemic has shed light on a variety of weaknesses in the built environment, including many that are easily overlooked or simply accepted. Freezing in your office? Get a sweater. Caught your colleague’s cold? Well, that’s just wintertime. That overpriced apartment near the subway? A necessary tradeoff for convenience.
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Crises often present opportunities to rethink. They engender paradigm shifts that often result in lasting changes and real estate is no exception. After the Global Financial Crisis, mortgage lending standards became much stricter. Half bathrooms evolved from entry-way sinks installed after the Spanish Flu. There are countless examples of resilience measures, from fireproof materials to stormproof windows, being installed in the aftermath of climate disasters. But beyond resilience measures, the current crisis has raised questions around how we use space and whether it is fully satisfying our needs.
One thing is clear – space needs to improve. A Framework for the Future of Real Estate lays out how exactly. Real Estate of the future should be liveable – meaning we feel comfortable, productive and healthy in buildings; it should be sustainable – meaning net zero carbon and reduced emissions throughout the entire asset lifecycle; it should be resilient – meaning buildings can withstand a range of both acute shocks, and also chronic, longer-term change; and it should be affordable – meaning sufficient supply of accessible, quality space for housing, small and growing businesses, non-profits, and the arts.
And this is not only possible, it is imminently probable. If the real estate industry wants to resume the growth trajectory of the last decade, it must evolve. Both legislation and investor pressure are forcing change on issues of sustainability, affordability and resilience, and consumer demand is simultaneously accelerating the adoption of more liveability and sustainability.
So how exactly do we make our spaces better?
Leverage technology: Innovation in design and construction can help develop higher quality, more affordable spaces. The use of digital twin technology can save millions of dollars in construction costs and shorten project timelines while improving quality. Lendlease has applied digital twin technology to reduce the usual months-long design phase to just several days, saving significant time and money.
Autonomous buildings can continuously learn, adapt and respond to the needs of people and the environment by drawing on digital infrastructure that provides insights on building performance. Property technology can provide a more customised experience for occupants and improve everything from air quality to booking space for meetings. Personal climate controls anyone?
Rethink design: Both neighbourhoods and spaces will become more fluid in a post-COVID world. Office-heavy central business districts will need to evolve to more mixed-use destinations. To buffer against falling revenues, cities will need to get more creative with public space, possibly monetising some of its use and changing it for different purposes, such as outdoor gyms or pop-up galleries like London has proposed as part of its 2025 Vision.
Offices will need to promote more collaboration if workers have remote options, which means more places to effectively gather with colleagues. Homes will be places for both work and leisure, and maybe even primary residences for more than one generation, necessitating design evolution to better accommodate distinct uses and users. Lennar Corporation, a home construction and real estate company based in Florida, has embraced this evolving residential reality with their Next Gen home – a layout that includes private accommodations complete with kitchens and separate entries within a larger home for grandparents or young adult children.
Community engagement: For too long, financial returns have overshadowed community needs and often tenant needs. Working across industry silos and having a better understanding of stakeholders will better enable the provision of space that is inclusive, accessible and liveable. Swire Properties enlisted every facet of the community to develop Taikoo Place, a large mixed-use development in Hong Kong. The breadth of their outreach even included biologists from Hong Kong University to boost biodiversity in the development.
The rise of NIMBY (“not in my backyard”) shows what can happen when projects do not provide adequate benefits for all parties involved. With the increased focus on ESG (environmental, social and corporate governance), the emphasis on wider benefits beyond pure financial returns will help solidify this recalibration.
What is the World Economic Forum doing to support the Future of Real Estate?
While investable real estate has grown by more than 55% since 2012 (PwC), the COVID-19 crisis has underscored weaknesses in relation to human and planetary health along with drastic inequalities, leaving a stark reminder of the influence the built environment has on societies and the vulnerabilities that exist in times of crisis regarding how spaces perform.
As the real estate industry looks towards recovery, the need for transformation is clear. Portfolios must be rebalanced, and distressed assets repurposed. Technology must be fully embraced, and sustainability and wellness must be at the core of design and operation. The affordable housing crisis that already existed pre COVID-19 must be systemically approached to ensure access to adequate and affordable housing. If the Real Estate industry is to deliver transformation, it is more important than ever to ensure that policy, financing and business solutions are aligned in delivering better buildings and cities.
The World Economic Forum has brought together CEOs from the Real Estate industry to develop a Framework for the Future of Real Estate to help drive the industry’s transition to a healthier, more affordable, resilient and sustainable world.
For too long we have accepted our built environment the way that it was: capital intensive assets with long-time horizons and little flexibility. But it’s time to ask for more. It's time for space to help us live healthier, more productive and connected lives. And the industry is ready to deliver.