SAN DIEGO—Technology-related disruptors like Amazon, autonomous vehicles and Airbnb will dramatically and permanent shift the way we use real estate, while other types have been overplayed, London Moeder Advisors' senior principal Gary London tells GlobeSt.com. In a recent paper, London relayed “a laundry list of 'niche' concepts that I believe will not capture the collective imagination of the marketplace for which they are intended, at least not over the long term.” Among these concepts are smart buildings, all-in urban, shared workspaces and tiny homes.

We spoke with London about the disruptors he believes are here to stay, as well as which are likely to fade out shortly and why.

GlobeSt.com: Which market disruptors do you believe are long-lasting, and why?

London: Most things that are technology related are real estate related. For instance, computers and smartphones have dramatically and permanently compressed the need for office space. Amazon has permanently reduced and altered the type and amount of bricks-and-mortar retail. It has also given birth to an entire industry of reuse and conversion of vestigial retail centers. What we are seeing is an integration of e-commerce and bricks-and-mortars. That will continue to evolve as gravity sets in on how shoppers want to shop. Amazon has also transformed industrial/manufacturing space to warehouse space.

The next great disruptor will be autonomous vehicles because AV will reduce parking requirements in commercial buildings (AVs can drop off their passengers and leave). We predict that this will reduce hard costs by 20% to 25% in most buildings.

In the visitor sector, Airbnb and its ilk are permanent players. The traditional hotel industry is adjusting, and there is room for everyone. Cities love it because they generate revenues through taxes and fees. They are a classic niche service: they appeal mainly to families, travelers on a budget and those looking for unique experiences. They mostly do not appeal to business and convention segments or a very large portion of tourists who value service above all. That is a hotel. Many travelers cannot deal with the uncertainty of their accommodations: Is it as good as the photo? Is it clean? What option do I have if I am not fully satisfied and its 8:00 at night? You can't exactly ask for a room change.

GlobeSt.com: Which market disruptors do you believe will fade out shortly, and why?

London: Shared spaces have been overplayed. I think communal working environments are fine for some and for the young, but in the long run, the quest for privacy will prevail. Also, the shared-space business model is apt to change, with building owners taking out the shared space intermediaries and running these businesses themselves. There is much to be gained by sharing, not the least of which is lower overhead for individuals and boutiques, a chance to network, etc. But the downside is loss of privacy, and I believe that this will be quite wearing on individuals in the workplace as young people move up the corporate ladder. They will seek privacy and the status of personal space.

GlobeSt.com: Do you believe the commercial real estate market is undergoing a fundamental shift with regard to technology?

London: Yes. It will translate into a) continuing to need less of it, as recent trends have already suggested, b) the “time-in-office” in terms of overall time and shift time in a day are altering, and c) retail is becoming more about entertainment and less about “stuff.”

GlobeSt.com: How do you see the transition from “old school” methods to new, more modern methods of functioning in CRE going?

London: While technology causes revolutionary changes, in the real estate sector change is more evolutionary. Overall the commercial sector will continue to have to deal with downsizing of companies—which don't require people to perform tasks that technology has taken over, nor do they require space for file cabinets in paperless environments—and retail spaces will continue to diminish and downsize. In particular, the “old-school” real estate broker model is likely to be impacted in much the same way that other service intermediaries have (think travel agents). Broker functions won't go away, but they become customized and cater to the high-end market. I see that sector downsizing over time.

Instant Insights /

Which Market Disruptors Are—and Are Not—Here to Stay?

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