The Digital Revolution Impact On Real Estate

We have all been hearing about Twitter, Facebook, Fliker andmany other forms of digital communication and how younger peopleare spending their time online, on mobile devices, and changing thesocial patterns. What you do not hear about much is the massiveimpact all of this is starting to have on real estate and the speedat which it is suddenly happening. Office space requirements arechanging at many companies, law firms, banks and other places.Private offices are quickly becoming obsolete in many companies.Open spaces and less space per employee is now becoming the rule.One major law firm has now set 210 sq ft as the space allotted toany person-including partners. If a partner takes more space it isdeducted from the available to others, so partners are gettingsmaller offices. The law library is gone. Paper storage is almostgone. The big secretarial pool is gone. The media, ad agencies, andsimilar companies are knocking down offices and making cubicles andopen spaces. Some companies have departments where two people sharea cubicle with one in the office two days and the other two orthree. With I pads, I phones, blackberrys and the like, many youngpeople work from all sorts of alternative locations. Just multiplythis times all the major companies, and the office space requiredin the future will shrink materially. Lease terms will require verydifferent TI and shorter term so the tenant can change as its needsreduce. Young staff-under 35- think it fine to be working from outof the office. Teenagers spend huge amounts of time online in oneway or another.

Recruiting for law firms and other kinds of companies haschanged dramatically lately with the firms having to offer verydifferent work environments. Talk to young executives and they talkabout the environment more than anything. In retail the way storesaccommodate online shopping in the future, how stores are laid out,how brands promote themselves, is all changing rapidly. While brickstores are not going away, the demand for additional retail spaceis likely to be curtailed as more and more shopping is online. Itis becoming common for a physical store to be the showroom, andthen the customer goes home and executes the purchase online. Somefirms now give a new employee $3,000 on their first day to go buytheir own computer, but out of the $3,000 the employee must pay tomaintain it himself. The firm only provides the servers andprinting, not maintenance.