New property hotspots are emerging throughout the fabric of the property industry including co-working spaces, last mile delivery solutions, freight and logistics and tourism powered by Airbnb. These hotspots are part of the platform revolution impacting cities. The well-publicised FANG (Facebook, Amazon, Netflix, Google) platforms have been joined by a myriad of others including Alibaba, Uber, Snapchat, WeChat, LinkedIn, Bitcoin, Youtube, Airbnb and Trip Advisor to name a small selection. Cities have already adapted to accommodate these platforms. For example freight, logistics and warehousing is exploding, some traditional retail strips and malls are dying, public transport is losing market share, tertiary education is moving online, banks are closing, high tech business parks are emerging in urban fringe locations, apartment living is growing quickly, movie centres are dying….in short, cities are evolving.
Unlike the platform revolution the global technology revolution will fundamentally alter the role and function of cities and lifestyle choices, by creating new industries (e.g. artificial intelligence), new industry structures, global value chains, creating new lifestyle options (e.g. driverless vehicles will increase rural living options) and by creating new infrastructure and utility types (e.g. distributed energy networks, roads and tollways as regulated asset bases, electric vehicles that feed energy back in the grid, personal medical devices linked to health networks etc). Also harnessing artificial intelligence not only to optimise infrastructure and utility performance, but also to enhance daily life through the use of personal assistants, health and recreation checks and purchase of food (e.g. smart fridges) changes lifestyle patterns. Consumer expectations in the form of renewable energy, personal health and human capital will evolve from the nuclear family to a personal networks, both global and local. In short locational decisions are changing to reflect necessary social, professional, educational and economic networks.
|Agriculture||John Deere, Intuit Fasal|
|Communications and Networking||LinkedIn, Facebook, Twitter, Tinder, Instagram, Snapchat, WeChat|
|Consumer Goods||Philips, McCormick Foods FlavorPrint|
|Education||Udemy, Skillshare, Coursera, edX, Duolingo|
|Energy and Heavy Industry||Nest, Tesla Powerwall, General Electric, EnerNOC|
|Finance||Bitcoin, Lending Club, Kickstarter|
|Health Care||Cohealo, SimpleInsured, Kaiser Permanente|
|Gaming||Xbox, Nintendo, PlayStation|
|Labor and Professional Services||Upwork, Fiver, 99designs, Sittercity, LegalZoom|
|Local Services||Yelp, Foursquare, Groupon, Angie’s List|
|Logistics and Delivery||Munchery, Foodpanda, Haier Group|
|Media||Medium, Viki, YouTube, Wikipedia, Huffington Post, Kindle Publishing|
|Operating Systems||iOS, Android, MacOS, Microsoft Windows|
|Retail||Amazon, Alibaba, Walgreens, Burberry, Shopkick|
|Transportation||Uber, Lyft, Waze, BlaBlaCar, GrabTaxi, Ola Cabs|
Source: Platform Revolution, Geoffrey G. Parker, Marshall W. Van Alystyne, Sangeet Paul Choudary Page 13
Unexpectedly, the forces driving economic and demographic centralisation will outweigh the forces of dispersion for businesses. However, peri-urban residential locations will become as, or more popular than urban fringe locations because driverless vehicles eliminate the ‘cost’ of travel time and make the opportunity available for more diverse, high amenity lifestyles.
The early phases of the current information technology and artificial intelligence revolution require collaboration and large pools of skilled labour – in Australia in many cases labour pools of at least 4 million to 5 million people are often required to provide the necessary levels of knowledge or creative specialisation. This is creating ‘centralisation’ in highly paid professional, scientific and technical employees. The ‘smart creatives’ need to collaborate not only in platform business but also in small and medium enterprises (SME’s) to innovate and to create and connect with new business value chains (Fintech is a great example). Employment ‘centralisation’, particularly in tradable services is coinciding with similarity in ‘individual’ lifestyle values and requirements. Hence the growth of inner city and other hotspots (e.g. university and health precincts) which appeal to networked groups of smart creatives from nanotechnologists to digital artistry and musicianship.
Global technology hotspots accommodating the smart ‘creatives’ networks (e.g. Manhattan, Sydney, Melbourne and London) are also connecting, collaborating and drawing on third party highly specialised services. The growth of these global hotspots is a market based precondition for viable highly specialised dispersed service providers i.e. sufficient demand needs to be generated to permit specialised dispersion.
Tradable services employment is highly paid compared with non-tradable or population driven services (e.g. retail assistants, teachers, and nurses). On the negative side of the ledger, wealth concentration, in particular where it dominates proximity to quality facilities and infrastructure, is emerging as a major urban ‘haves’ verses ‘have nots’ issue. On the positive side of the ledger, each tradable services job generates between two and five population driven jobs (though not necessarily geographically proximate). Major Australian capital cities are increasingly growing due to the forces of technology and globalisation and understanding the drivers of growth is the key to early identification of new business and property development opportunities.
About the author:
Brian Haratsis is MacroPlan’s Founder and Executive Chairman. Brian is an economist and future strategist with over 30 years experience as an advisor to governments and major corporate clients throughout Australia and New Zealand. For more information or to discuss your property research requirements, please email Brian Haratsis or call 03 9600 0500.