28 January 2022
A personal view of the evolving role of real estate in a world of technological, social and business change, by Richard Pickering, Chief Strategy Officer, UK.
2020s / 1960s / 1880s
Welcome to this week’s blog. If you’d prefer to listen to an audio version, click here for the podcast.
Happy New Year to all readers! Having taken a break towards the end of last year, I’m pleased to say that Futures /Cut will continue on a fortnightly basis for the foreseeable future. Of course, the future has become far less foreseeable in recent years; however, I hope through your interactions with this blog that we can try to shine some light together on the path ahead.
The Christmas break is a good time for reflections on the past and using them to forge resolutions for the future. I stumbled across a news article over Christmas that gave pause for thought. It concerned the removal of a statue of Robert E. Lee in Richmond, Virginia. A once celebrated hero of the American South, respected among his Northern enemies, he is nevertheless a divisive figure. In the past 50 years his legacy has shifted to focus on his position on slavery and has been used by white supremacists in support of their cause. Consequently, in the wake of modern social justice movements, and in common with others with similar reputations, his statues have been progressively removed. Meanwhile in the UK last week, four protestors were acquitted of criminal damage after toppling a statue of slave trader, Edward Colston. The jury’s decision was seemingly based not on whether the accused had committed a crime (they admitted to the act), but rather why they did what they did.
And here’s the first reflection. We live in an era where the parameters of socially acceptable views and societal values are being remoulded. The Black Lives Matters movement is the tip of an iceberg of progressive thinking sweeping over society, which includes a raft of social justice issues influencing both corporate and political thinking. The ‘Overton Window’, which describes the range of policies that are politically acceptable to the mainstream has shifted significantly over the past 10 years. Things that would have been acceptable or unchallenged 10 years ago, have become socially unacceptable and vice versa. This has been fuelled by the openness created by social media, which is in itself reshaping politics.
Of course, this is nothing new; social values change constantly, and the trend over the last 100 years has been a creeping shift to the left. However, there are periods such as the 1960s when these changes flush through more quickly. The 60s was an era of protest, a search for greater equality, a liberalisation of publishing, the expansion of mass media, and an era of mistrust in politicians and the establishment. It strikes me that the 2020s will be remembered for similar reasons, and that the changes we will see in the coming decade will be similarly pronounced. We are now in an era when statues will continue to be toppled, when norms will be broken and when narratives on how society functions will be rewritten. Importantly this will affect how we work and how we derive profits from real estate. Particularly, the licence to make money as organisations or property owners will be increasingly conditioned by our social contract; how we perform on issues such as sustainability and the impact of our activities on creating a fair society. All of this will be driven by the triumvirate of legislation, taxation and public pressures.
Back to Virginia… As the statue was being removed, the team found a time capsule buried in the plinth. There had been local stories of a capsule being buried in the area in 1887, and historians believe they have found what they are looking for. Whilst a full review of the contents is ongoing, the sealed container is said to include early photos, books and documents from the time. And what a time this was. The 1880s stood at a crossroads marked by the dying of an old world and the birth of a new one.
This was a time when the West was still wild; Billy the Kid was in his prime, and the gunfight at the O.K. Corral (1880) was fought in Arizona, at the same time that Ned Kelly was being captured (1881) in Australia. The US was still a largely rural economy (only ~30% urbanised) and the principal form of transport was horseback. Slavery had been abolished only 15 years previously. Over on this side of the Atlantic, London was still a Dickensian city, populated by slums and workhouses, and Jack the Ripper walked the streets of the East End (1888). There was no such thing as compulsory education, the welfare state and the NHS didn’t exist, and the tallest building in the world was Rouen Cathedral.
This might sound like a distant age; however, the second sobering reflection is that my grandfather was born in 1881. In just three (admittedly long) generations the world has changed unrecognisably, as has real estate. We often view cities as eternal and unchanging, but when the conditions are right, we can in fact see radical changes to the urban form. In the 1880s these were triggered through a series of technological innovations.
In the period leading to 1880, two major innovations had started to change the game. Starting in the 1830s with the Liverpool & Manchester Railway, the development and then consolidation of the UK’s railways changed our relationship with distance; and our cities expanded rapidly. By the 1880s this had picked up pace; including the development of London’s underground Circle Line (1884) and deep level lines (1890).
Secondly, an innovation of 1852, the safety elevator, together with innovative new use of steel building techniques was starting to change the concept of height. For the first time in the 1880s we saw tall buildings, such as the Home Insurance Building in Chicago (1885) tower where only church steeples had previously soared.
And then came another innovation: electrification. In the 1880s, Edison began production of the electric light bulb (1880) and the UK’s first public power station was developed (1881). By the end of the decade there were over a thousand. This lit up our cities and would precipitate a new wave of automation and innovation that would go on to define how we lived in the 20th century.
And so, largely in the space of a decade, our cities become simultaneously and unrecognisably bigger, taller and brighter. How must it have felt for someone born in the Old West to have walked down a street in Manhattan in the 1880s and see the new breed of skyscrapers, bright lights, theatre halls, state schools and railways, now connected to the mainland via the imposing Brooklyn Bridge (1883) and watched over by a new symbol of social progress, the Statue of Liberty (1886)? The change must have been dizzying.
And now, here we stand at a rare intersection of social change and technological progress; a mix of the 1960s and the 1880s. There have been few such points in history; and when they have materialised, the ensuing change to how our cities function and appear has been radical. Our small lifetimes are not a sufficiently long period of evidence against which to judge the likelihood or impact of the change on the horizon, which is reflective of these longer waves of progress.
But what would a time capsule of today say to future generations, and what might happen in the rest of this decade?
If I asked you to fill that capsule today, I suspect that it might include a lateral flow kit, a gas bill, and Kim Kardashian’s divorce papers. These are the preoccupations of our time. However, they are all temporal red herrings that will disappear and become irrelevant to future generations. Energy pricing is high due to a momentary supply-demand imbalance in the wholesale markets. Lateral flows and everything to do with coronavirus will eventually fade into an endemic cold and be forgotten (how many of you knew anything about the Spanish Flu until two years ago?) And as for the Kardashians… well, enough said.
Similarly, I believe that the historic record will show that some of today’s real estate preoccupations gave way to or became consumed by bigger trends. The ‘flex’ in flexible offices will expand to cover time of the day (or night), the structure of the building you are working in, the activity to which the space is dedicated and even the company that you are working for that day. Hybrid working will become hybrid reality; a blending of the physical and digital worlds in a way that many today will find difficult to conceive. And sustainability will transcend carbon counting and relate to a 360 view of the negative and positive externalities that we create as businesses and individuals, including measurement and balancing of social and psychological impacts.
There has understandably been a lot of talk recently about if 2022 will be the year we will get ‘back to normal’. People have become fatigued by personal and economic uncertainty and have been waiting for an opportunity to breathe a collective sigh of relief and get back to having some fun. These things will I’m sure all happen, hopefully in the coming months. However, the truth is surely that we are never going ‘back to normal’. How can I be sure of this…? Because we never have! Social and technological change are progressive, and in a world changing quickly, the ‘normal’ of 2 years ago already feels like an eternity away.
Much like the 1880s, this promises to be a decade where change manifests quickly and radically; when long held axioms disappear, and when those who don’t adapt get left behind. To a future generation, 9-5 working, typing things with your fingers, shops being a place to buy things, and the current shape and form of our big cities will likely appear as anachronistic as a cowboy walking down Broadway in 1880.
The opportunity lies ahead, and I wish all readers a prosperous, innovative and above all happy 2022.
Regards,
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