American Realty Advisors


Research Insights, October 10, 2018

Tech Disruption and Commercial Real Estate – Invest Where Technology is Creating, Not Constraining Jobs

Key Takeaways

  • Markets driven by  the companies creating the disruptive technologies will thrive while markets anchored in jobs most exposed to disruptive technologies will not 
  • Invest where technology is creating,  not constraining jobs
  • Contrary to today’s conventional wisdom, in the event of significant adoption, self-driving cars and ride-sharing services will increase the relative appeal of public transit as riders seek to avoid worsening congestion
  • Self-driving cars will not lead to a wholesale and instantaneous abandonment of dynamic urban cores in favor of suburban environments

A Key Ingredient in Investment Strategy Development

Keeping pace with and understanding how technological innovations will shape the future is both an essential and challenging component of developing a successful, forward thinking investment strategy. Evaluating how today’s technology disruptors might impact life in the future enables investors to better frame the risks and opportunities for real estate associated with each innovation. Given the expeditious pace of technological innovation, this practice is more important now than ever.

In this newsletter we first identify the inevitable shift in the composition of America’s employment base as the primary risk and opportunity associated with the current batch of technology disruptors, then examine how emerging technologies are already impacting commercial real estate companies, analyze ways self-driving cars and ride share services may impact commercial real estate more broadly, and conclude  with a brief review of other emerging technologies. 

The importance of this analysis will only increase as hundreds of billions of dollars1,2 have already been invested in emerging technologies having the potential to impact where we work, how we work, where we live, and how we purchase and consume goods and services. Said another way, these technologies have the potential to impact all types of commercial real estate in some fashion. A short, non-exhaustive list includes the following: self-driving cars, artificial intelligence (AI), 3D printing, pre-fab construction, ride-sharing, and drone delivery. 

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