A Collection of Key Takeaways – Global Cities in an Era of Change: 2016 Symposium
Robert J Pliska, CRE
Stanford University – SPIRE (Stanford Professionals in Real Estate), the Counselors of Real Estate of the National Association of Realtors and RICS joined together to create The Global Cities in an Era of Change: 2016 Symposium on March 30 to April 1, 2016 on the campus of Stanford University. Thought leaders and decision-makers addressed the challenges and opportunities facing the real estate industry as the built environment rapidly scales to meet the needs of the global urban population. Speakers and attendees included Sam Zell; Michael Chertoff, Homeland Security; Chip Conley, Airbnb; Jeff Jacobson, LaSalle; Robert White, Real Capital Analytics; Phillip Barrett, Pramerica; Sam Freshman, SPIRE Chairman, Stanford; Peter Korpacz; H. Kit Miyamoto, Miyamoto International; Hugh Kelly, New York University; James Curtis, Bristol Group; Colin Shepherd, Hines; Luis Bettencourt, Santa Fe Institute; and many others
A collection of key takeaways include:
1) Real estate is about to experience a radical disruption from the avalanche of technology.
2) Smart cities are more than technology – it’s how we leverage it to improve our quality of life.
3) Affordability is not just about housing. It is also the cost of commuting, schooling, groceries, etc
4) There is a need to build more flexible buildings. It’s more investment up front but more sustainable over time.
5) Smart city involves engaged citizens, improving environment, economy, durability, happiness – hinges on infrastructure. The common denominator of building a smart city is a strong infrastructure.
6) Developers are finding themselves in the midst of an attitude shift about the workplace, led by the tech industry and its predominantly millennial workforce – Gensler.
7) Tech is changing the way we work, and it’s about more than amenity-rich buildings.
8) Banks, insurance companies, and even law firms identify themselves as Tech – Gensler.
9) There’s a paradigm shift happening, and, not surprisingly, it’s being led by millennials – Gensler.
10) As the lines between work, life and play continue to blur, the concept of going to the office has been rendered obsolete – Gensler.
11) People now choose where they want to live first, then look for a job – Gensler. Employees help decide where an office should be
12) 76% place high value on walkability in communities – Gensler.
13) Innovations really address an underlying business need not being met – Chip Conley.
14) Major cities are performing due to demographics, technology and urbanism – Jeff Jacobson
15) Supply constraint is good for real estate – Jeff Jacobson.
16) Investment thinking went from expressway visibility to the walkability score – Sam Zell.
17) Uber brought the thinking that you don’t need a car, you need transportation – Sam Zell
18) Cities like Seattle are doing it right for investment – creating scarcity, has all the barriers to entry and accommodates industry – Sam Zell.
19) The U.S. real estate market now has a more propensity to go down than up – Sam Zell
20) We need courses to teach entrepreneurship – Sam Zell
21) We need to teach how to learn – John Barton, Stanford
22) We need to follow Wayne Gretzky’s quote – “good players play where the puck is, great players play where the puck is going to be” – James Curtis, Bristol Capital
23) Sustainability is important if it’s important to clients – Philip Barrett, Pramerica.
24) Innovation does not typically arrive without a foreshadowing – Chip Conley
25) While not all millennials want to be in the city, they still want the walkability of where they live.
26) We need to teach students how to learn because of how fast things change – John Barton, Stanford
27) One overall theme – technology is a disruptor – James Curtis, Bristol
28) Security threats are a recent reality. Specialized security spaces with emergency response functions demand to be rethought.
29) Global drivers of change – demographics, technology, and resiliency
30) Traditional zoning is over. Form based codes for planning are taking off across the USA.
31) We must engage millennials to understand their needs.
32) Conventional zoning is not delivering the places people want. Business as usual will be left behind.
33) The publicity of ISIS attacks has made other groups merge with them.
34) Yes, some ISIS followers are religious zealots, but many are attracted because it gives them a sense of purpose.
35) Changes as a result of autonomous vehicles could return up to 42% of green space into cities.
36) When building parking structures today, you must think of an exit strategy.
37) Some businesses now have a subscription service with a car company and no parking garage.
38) Self-returning car rental vehicles will transform the industry
39) Commentary – I would rather give up my car rather than a smartphone.
40) We need to take auto insurance from loss pooling to prevention.
41) $200 billion is spent on car insurance every year.
42) $18 billion is spent on health care related to car accidents.
43) U.S. needs to spend more on infrastructure and have leadership – Sam Zell
44) Need a great collaboration between landlord and tenant to reduce consumption of energy and water – Frank Billand, Union Investment
45) A long term investment is sometimes defined as a short term investment gone bad.
46) Client demand and regulation helps drive economics and supports sustainability- Robert White.
47) Sustainability is important if it’s important to clients. It’s important in Portland, not so much in Dallas – Philip Barrett, Pramerica
48) What makes real estate different as an investment is that it’s a unique asset – Philip Barrett.
49) At the end of the day, we may like sustainability but we need to have the appropriate risk adjusted return.
50) Challenges facing cities – vulnerability to catastrophic events, economic inequality and poor governance.
51) Technology and demographics are just two of the reasons major cities are outperforming others.
52) Vibrant cities deliver better capital growth.
53) Politics, religious beliefs aside – at the end of the day, does the investment provide a better adjusted ROI – Jeff Jacobson
54) Water is becoming the most important utility – Glumac
55) Our buildings and infrastructure needs to be more resilient to be sustainable.
56) You need to invest up front to make more money at the end – Steven Straus, Glumac
57) As you consider future projects – look at them with an eye towards reliance and sustainability – Ed Friedrichs
58) Seismic strengthening is cost effective in seismic areas. – H. Kit Miyamoto
59) You can’t build buildings to code anymore. You can’t build one event buildings anymore – H. Kit Miyamoto
60) We learned we have to be nimble because things change. You have to be able to move quickly – James Worms, Paladin.
61) Market conditions are now good in Brazil, Mexico, Peru and Columbia.
62) Many countries are over 80% urbanized – creating traffic, sanitation and energy issues.
63) The most important transportation innovation of the decade is the smartphone – Luis Bettencourt
64) Using data can lead to making policy decision and things can change quickly. It can influence urban design.
65) The universe of urban data is richer than ever before – Brett Goldstein, University of Chicago.
66) People want a sense that data being collected is used to improve quality of life – not be spied upon. Kansas City, for example, has defined privacy rules. – need to be transparent and build trust.
67) Technology allows us to make decisions in real time to be more responsive and reactive.
68) 200 square miles in LA are dedicated to parking. Let’s rethink that with sharing and autonomous vehicles.
69) Real time information can change behavior and lead to better outcomes.
70) As urbanization occurs, approaches need to address the changing relationship between citizen and the city.
Robert J Pliska, CRE, CPA is owner/managing director of SVN (Sperry Van Ness) Property Investment Associates, LLC in Birmingham, Michigan (Detroit) and is a Board Member of the Counselors of Real Estate. Mr. Pliska specializes in the sale, leasing, consulting, managing, financing and accelerated marketing of all types of investment and commercial properties. Mr. Pliska is a local speaker, author, radio guest, panelist and social media expert for many local and national organizations. SVN (Sperry Van Ness) is a commercial real estate organization with 200 offices and 1400 associates and staff.