There is a lot of talk about technology taking jobs. Real estate won’t be immune from this trend, but specific segments are more prone to job loss than others.
In a new report Cushman & Wakefield pinpoints gas stations, bank branches, non-experiential retail and garages (those in single-family homes and commercial parking decks) and non-amenitized commodity offices as the categories of real estate that are at higher risk of obsolescence due to technology.
There have been different drivers behind these closures. Since 2009, 6% of branches have closed. In 2020, that number could jump to 20%, according to Intelnet.com. The rise of online banking has caused these changes.
With gas stations, urbanization has been the culprit. Between 2004 and 2014, the number of gas stations in Manhattan fell by one-third. Most of that land was redeveloped into condos or offices, according to The New York Times.
There will also be some winners in CRE as technological adoption increases. C&W says data centers, manufacturing centers for new technologies, remote-parking and recharging stations will be the beneficiaries of these trends.
Flexibility will be the key moving forward. C&W says that assets positioned to evolve along with technological changes should outperform others that can’t keep up
“Successful real estate offerings are likely to be those that offer multiple/diverse uses: for instance office/hospitality hybrids which offer concierge services, single-family rentals and conversions of retail into office and industrial,” according to C&W.
C&W predicts that ridesharing, autonomous mobile robotics (AMRs) for e-commerce fulfillment and electric vehicles (EVs) will be the technologies that will first impact CRE.
“Widespread adoption of most other transformative technologies are at least a decade away,” according to C&W. “Technology adoption typically follows a ‘hyper cycle’ curve before widespread adoption.”
After wide adoption, there will probably be a lag before there is any impact on real estate. C&W says this isn’t a “wait-and-see period.” Instead, the early adoption cycle determines where impacts may occur and possible remediation strategies.
Low-skilled jobs in retail and industrial are at most risk to technology. Office jobs are at low risk due to their requirement for cognitive, emotional or social intelligence,” according to C&W.
The cities best positioned to deal with technology disruption are New York, San Francisco, Boston, Washington DC, Austin, Los Angeles and San Jose, according to Cushman & Wakefield Research, Moody’s Analytics, PWC Moneytree, US News Best Cities and Walkscore.com.