COMMENT: Successive lockdowns have unleashed a tsunami of tech entrepreneurialism, with waves of unbridled innovation crashing on the shores of an economy still partly in an analogue past. Unprecedented upheaval in our ways of living and working have made us all more open to trying new things.
Confined to my home office, with my main information about the outside world coming from digital lifelines like Twitter, LinkedIn, Medium and, yes, upstart Clubhouse, it seems the tech insurrection has indisputably won.
Part of me is in violent agreement. I’ve had a front row seat to the new economy for the past 20 years. My connections to Silicon Valley through one of the original tech unicorns has given me an insider’s vantage point to the most incredible innovations in generations, spanning electric mobility, batteries, climate, energy and the natural world. As an engineer with a mindset predisposed to geeking out on tech, all this has pushed on an open door. The fourth industrial revolution is truly upon us. I embrace it.
Yet my sense from the blogosphere is that there is a degree of schadenfreude as it relates to real estate, and that gives me pause. First, the glee from the emergent tech entrepreneurs as they happily abandon the traditional office that has shackled and oppressed them for too long. And second, to the extent offices survive at all, the view that the fusion of digital and physical will be so profound as to leave Luddite landlords paralysed. The twentysomethings wring their hands in glee: real estate, as we know it, is dead.
Longing to reconnect
Emerging from my pandemic-induced echo chamber, I think the future is much more nuanced. Does all this necessarily sound the death knell for the office?
Economic growth – including in the tech sector – is generally good for property. The broad tech sector comprises around 3m UK jobs – some 10% of the working population. In 2018, according to JLL, 46% of new jobs created in London were in tech, and tech job growth is up by 40% in the past two years.
In our analysis, there is a more than 85% statistical correlation between GDP growth and property investment returns. So the rise of tech should have a positive impact.
Tech-inspired economic growth will drive direct and indirect demand. A reasonable percentage of new tech jobs will take place in offices, but offices that are less densely occupied. And the knee-jerk pivot away from offices is moderating. Take Twitter, which previously told staff not to worry about returning to the office, ever. It has now added 50% to its footprint at 20 Air Street in Soho, W1. We are more likely to see a change in the kind and location of space than a wholesale falloff in demand beyond perhaps a one-time, pandemic-induced shock driven as much by raw economics as tech.
All space needs to become sustainable, itself powered by tech. The new economy is green, full stop. Think “greentech” as much as “proptech.” And there is a clear shortage of forward-thinking office spaces in London, chronically so in regional cities.
Finally, returning to the hypothesis that tech and new digital tools create ways of interacting that makes physical connection obsolete. This may be true for the vocal, social media savvy ambassadors of the tech universe. But the early euphoria of WFH has given way to a longing to come back together in 3D.
Failing grade
And lest we forget about the dark side of tech, and its abject failure over the past decade in its mission to unite people.
Platforms such as Facebook, Twitter, Instagram, TikTok and so many more had as their overt purpose to create social cohesion, connect us virtually not physically, and act as new modern lighthouses in a rudderless world. They have had exactly the opposite effect.
Simultaneous with their growth over the past 20 years, depression has run rampant, suicide rates are up by a third – 56% among those aged 10 to 24 – poor mental health has become a pandemic itself, and survey after survey shows that we feel lonelier and more isolated than at any other time in human history. It is not coincidence. The tech revolution deserves a failing grade in this regard.
Yes, tech will change how we think about and use space. Yes, work will change, and the types of jobs we do will be dramatically different on the other side of this revolution. Yes, the office will become more a place for abstract thinking, interacting with others, and collective inspiration. But work has never been just about offices. And let’s be careful about banking on tech to save us.
Basil Demeroutis is managing partner at Fore Partnership
