The Great Pandemic has expanded or, for some, reinforced the view of how our lives can rely more fully on personal computing devices to work, dine, shop, and socialize without the need to collocate to physical environments built of “bricks and mortar” for these purposes. Traditional office buildings, retail stores, dining and entertainment venues, and in their collection, once vibrant city and town centers are potentially in jeopardy in the new scheme of things. How might real estate developers, urban planners, architects, and others invested in an urban lifestyle best adapt to such drastic and likely irreversible change? Here are some observations on where we are and thoughts on where we might be headed:
Our Current Situation, Challenges and Opportunities
Blue Sky a Blue Sky: Less Travel Saves Time and Is Good for the Planet
One unexpected side effect of the pandemic-related lockdowns is that once-crowded and noisy thoroughfares became barren and quiet. leading to hazy urban skies becoming blue for the first time in decades. This phenomenon, compounded with the opportunity for many workers to exchange a daily commute for additional time with family and friends while also being far less contributory to generating carbon dioxide and global warming. Was it inevitable for transportation technology to run amuck devolving eventually into making our cities into a version of a dystopian Gotham City? Now we can see, maybe not.
Freedom Is the New Currency: The Old Rules of Work and Life Will Not Return
The recent lockdowns have also been called a great awakening, a jolting wake-up call to the dead-end nature of, for many, their status-quo workaday lives. Once given the opportunity to telecommute, some have left the big cities in search of more affordable housing and to commune with nature. Many have discovered that life on the proverbial hamster wheel, following societal norms, chasing money, status, and power is a bit of a fool’s errand. Having the opportunity to stop and think, they come to realize that life is fragile and short, and that achieving the “good life” is today or never. Try as they might, will employers be able to stuff this genie back into the bottle? Not likely.
A Ready Player One Future Is Coming: Personal devices Will Only Increase in Multi-sense Fidelity
Virtual Reality (VR) has reached the mainstream with the recent release and market success of the Oculus Quest 2 goggles. Apple, Microsoft, and other big guns have also been busy working on Augmented Reality (AR), a similar technology that optically overlays immersive, computer-generated visualizations with real life. VR and AR have already achieved high quality visual and audio fidelity while industry players continue to develop the technology to enhance these primary senses with increasingly sophisticated haptics (touch), scent and perhaps one day even taste, completing the panoply of five senses. All this to emphasize that advances in technology are rapidly creating a virtual reality that is catching up to reality as we know it. For all intents and purposes, we are on track to eventually realize the Holodeck of Star Trek fame. Will such a technology become a legitimate replacement for physical place and make commuting and even the multi-billion dollar travel industry obsolete? One has to wonder.
The “Digitalization” of Human Interaction is a Double-edged Sword
While we have five known senses, it is possible there are many more that, due to their subtlety and mystery, are not, at least for now, subject to machine simulation. Walking through a real forest is a far, far different experience from walking through a virtual representation of one. Even if, through developments in technology, reality and simulation can eventually be on par, there remains a key philosophical question: Is a simulated experience as valid as a genuine one? Reporting as of today, apps such as VR Chat bring a very different character to personal interaction, both potentially good and bad. Is hiding behind an avatar in social interactions disingenuous and potentially more isolating than real life interactions? Does the availability of such apps at least bring the opportunity of social interaction to far flung participants who otherwise would not socialize?
Not All Is Lost: The Desire for Human Connection is Enduring and May Never Compute
There is an intangible aspect to working in the same workspace, meeting in the same room, and literally seeing eye to eye. Do the value of those intangibles outweigh the issues of environmental sustainability and personal freedom mentioned above? After some consideration, I would make the case that the ideal future is one of options, not an either/or equation. Office spaces for communal interaction are valuable and should still exist, physical shopping venues and other commercial activities in the public realm are, in many ways, no less valid than they were 20 years ago and arguably more precious than ever.
Commercial Buildings Need A New Paradigm
The silver lining in all this is that it may be a final and unmistakable wake-up call to real estate development and it’s hand-in-glove partners, architecture and construction. This is an industry which has been stubbornly set in its ways, certainly through the entirety of my long career, in which the leasing or selling of formulaic building types is exchanged for modest and, until recently, fairly reliable financial returns. In an era of the booming success of high tech, and fintech, the financial model of developing building projects may be one of the last pillars to fall at the hands of disruption. There are a few key points and areas of vulnerability in the status quo which we will briefly identify:
- Land is a valuable asset, poorly adapted buildings are not.
While adaptive reuse has always been a thing, there is a huge stock in our cities and towns of mediocre Class B office buildings, department stores, big-box retail stores, and other specialized commercial building types whose once potential tenants have evolved beyond the need for the solutions they provide. Lacking the charm, design quality and durability of buildings that are successful candidates for adaptive reuse, they increasingly risk sitting as empty shells as their pool of clients diminishes and rent and sales prices are bid progressively downward.
- Buildings last for 30 or more years, the pace of dramatic change today is more like 5 years and getting shorter.
Technology has been both the instigator of and response to rapid societal change in a self-reinforcing cycle. Building’s only have value to the extent they are still able to address a present need. Being stuck with an inventory of static buildings, ill-fit for current needs and ill-adapted to future change is somewhat akin to a owning a used car lot full of oil-burning cars when the music finally stops and oil is all used-up.
- The future is not truly knowable.
If next week, the Pentagon announces it has been sitting on reverse-engineered antigravity technology and finally wants to come clean, how will this week’s world best anticipate that today? Simply put, it cannot. Flexibility and adaptability to future unknowns thus becomes a key part of a savvy, rational approach.
- As freedom is the new currency to spend, high quality experiences are the new products to buy.
The Work from Home movement accelerated by the Great Pandemic is predictive of a need for less office space square footage as “hoteling” replaces dedicated desks and the workplace becomes more essential as a place for in-person meetings and team bonding. Without enforced in-0ffice workdays, the quality of the work environment will need to successfully compete with the quality and convenience of the home environment. While WeWork has had its share of stumbles, the established market success of beautiful coworking environments may presage the future for many businesses, especially small ones. Arguably, the paradigm of “dragging one’s ass to work” has already flipped. Recent polls have confirmed that many workers would rather quit than go back to the old world of water cooler gossip, cubicles, and fighting traffic. Looking to retail, shopping centers clearly need fewer shops, cinemas, and department stores but they may consider doubling down on what’s always been their strongest suit. They are the ultimate getaway, the convenient, social, and potentially transformational escape from the home environment when a weekend vacation is not in the cards. In all these examples of commercial building types, the highest value distills really into one aspect: delivering to end-users the highest quality of life.
- Dynamic mixed-use buildings may permanently trump static, single-use buildings.
The Tokyo zoning code freely and famously allows for less intensive uses in areas of more intensive zoning. Hence an interesting, vital, but perhaps visually cluttered mix of retail, office, and residential in the most unlikely of places. The specific-use zoning of most U.S. towns and cities, caught in a 1950’s (or older) view of what the market demand is for different, specialized building types is no longer valid. It has become the inadvertent ticket to both sleepy, purely residential neighborhoods where foot traffic is discouraged, anonymous expanses of industrial buildings in industrial zones, and barren Main Streets where closed shops stay closed. The better alternative is to provide buildings on land which is zoned for multiple uses and designed to flexibly adapt when the proportion of uses may want to change–not stuck in a fallacy about how society and markets will always function.
- A twist to the old core and shell and tenant improvement split.
The commercial real estate world is long acquainted with the notion of building core and shell buildings that are populated with customized, mostly interior buildouts, called tenant improvements attached to tenant leases. Looking to our present and near future, what’s needed is arguably a more rational, systemized approach to looking at open buildings. My own design approach has evolved in this direction. I am convinced commercial buildings are now best designed in three parts instead of two: Firstly as open, extremely rational and durable armatures with a lifetime of up to, say 60 years, whose structural system and geometry is organized upon the premise of universality, i.e. being used interchangeably for parking, residential, office, hotel, and retail as the known uses. Secondly, as a core and shell exterior envelope with a lifetime of, say 7-10 years, that is more a akin to an exterior tenant improvement, one that can accommodate it’s first uses day one but is then amenable to replacement as market forces drive change. And lastly, as relatively conventional interior tenant improvements that now need to acknowledge the ascendance of coworking in the world of offices but increasingly in other commercial venues such as co-retailing and coworking kitchens as well.