The June 18, 2020 episode of the RealNex Webinar Series featured Geoffrey Kasselman, SIOR, AP Leed and his presentation of The Exponential Future of Real Estate. RealNex CEO Jeffrey Finn hosted the session that took a look back over the past century and time traveled forward to the next 25 year to envision the dramatically and dynamically transformed new world that might be in store. Geoff provided a highlight reel of the exponential technologies that are transforming our world, the expected disruption and the convergence that is likely to take place. He also shined a light on the X Factors that could accelerate, decelerate or change the course. To set the stage the he referenced a quote from The 2019 World Economic Forum:
“We stand at the brink of a technology revolution that will fundamentally alter the way we live, work and relate to one another. In its scale, scope and complexity, the transformation will be unlike anything humankind has experienced before.”
Quite a daunting, intimidating and yet inspiring start.
The discussion that followed was based on 3 fundamental premises:
- Digitization is systematically eliminating inefficiencies
- Past results are no longer a predictor of future success: the pace and path of change is moving from linear to exponential.
- There are no spectators…everyone is a player. You can play offense or defense, but everyone will be impacted.
With the stage set, Geoff referenced 4 visionaries that have guided his thinking and perspective and shared their inspirational quotes.
“The only constant is change and the pace of change is increasing.”
“By 2100, our destiny is to become like the gods we once worshipped and feared. Our tools will not be magic wands and potions but the science of computers, nano-technology, artificial intelligence, biotechnology and most of all quantum theory.”
Dr. Michio Kaku
“Mark my words. When it comes to disruptive technology, there’s AI…and then there is everything else.”
“We won’t experience 100 years of change in the 21st century – it will be more like 20,000 years of progress (at today’s rate).”
The foundation of exponential growth acceleration was predicted by Gordon Moore in 1965. Moore’s Law hypothesized that computing power would double every 18-24 months. And, while that may not mean that much for the first few iterations of change, now that we are in the 30th iteration, results in computing power today being 138,000 times more than what we had in 1988. To put that in perspective in 1956 the first 5 Megabyte hard drive filled up an 18 wheel truck, while today we enjoy 8 Terabytes on a thumb drive! Or how about this, it’s like taking 30 paces and moving 1 billion meters!
Another pointed example of the exponential growth curve we are experiencing; It took more tan 50 years for airplanes, automobiles and the telephone to reach 50 million users, the internet took 7, Facebook took 3, twitter took 2 and Pokemon Go took just 19 days!
Moore’s Law may be about to expire, but for now and another turn or 2 it is spiking, and the impact will be staggering.
If Moore’s Law is expiring what’s next. After the integrated circuit…quantum computing, ushering in another era of accelerated change.
“We always overestimate the change that will occur in the next 2 years and underestimate what will occur in the next 10.”
If that is true, then the following predictions of the next 10 may be conservative!
By 2025 we will be living in a world where the following new frontier will be commonplace, pervasive and engaged:
- Big data
- Internet of Things
- Autonomous cars and trucks
- 3D Printing
- Renewable Energy
Digitalization will rapidly transform the supply chain from robotics on the factory floor to automated ports and distribution centers to drones and automated vehicles taking care of last mile delivery…and we are just getting started. By 2030 the change will be even more dramatic.
- A $1000 computer will process information as fast as the human brain
- AI will be running 24/7
- The Internet of Things will become the Internet of Everything
- Autonomous Vehicles will yield Transportation as a Service
- 3D Printing of everything
- Crisper, Biotech and Nanotech will transform healthcare and wellness
- Blockchain will eliminate cash currency
- Low cost solar energy will be abundant
And, just in case you didn’t pick up the importance of AI…
“AI is the most important thing that humanity is working on. Its more profound than, I don’t know, electricity or fire.”
“I am really quite close, very close, to the cutting edge of AI and it scares the hell out of me. Its capable of vastly more than almost anyone knows, and the rate of improvement is exponential.”
A few other concepts of the exponential future:
Digital Twins - A virtual representation of the physical asset used to perfectly simulate real world operations under different scenarios
Autonomous Vehicles - Not just cars and trucks, how about ships and planes, emergency vehicles. They are quiet, safe and efficient.
Hyperloop – Think of a world connected by 670 mph safe and easily accessible transit creating mega cities and regional clusters.
T/Maas – Transportation as a service. Cars are incredibly inefficient. 1 person taking up 5 seats for 2 hours a day vs. light rail fully loaded taking you just were you need to go. Or air transit with VTOL (Vertical Take-off and Landing) that will take you 60 miles in minutes for the cost of a cross town Uber ride.
Solar energy – There is enough solar energy hitting the earth every hour to satisfy global energy needs for a year. We just need to create battery storage to handle the capacity and it will become the dominant low-cost energy source.
With these dramatic changes and more, as we approach the 2040’s things start to get little scary with what Ray Kurzweil predicts as The Singularity…
“By the time we get to the 2040’s we’ll be able to multiply human intelligence a billion-fold. A profound change that’s singular in nature. Computers are going to keep getting smaller and smaller. Ultimately, they will go inside our bodies and brains and make us healthier, make us smarter.”
- The Singularity
- A $1000 computer will be 1 Billion x more intelligent than every human on earth, combined!
- Everything as a service
- Simulated Realty will be indistinguishable from Reality
- Magnifier effect: abundance + turbulence= unintended consequences
- Perfect data and markets
- Parity vs. Scale
- Profound Implications
As technology and humanity converge the implications are indeed profound.
How do we deal with the Geo-Political threats and Socio-Economic needs of the world moving at the speed of light?
What about a world where life expectancy is 150 years…or how about a world in which Stephen Hawking suggests humanity faces an existential threat within 100 years!
With the time travel completed and the vision of technological transformation explored, the presentation took a look at the X Factors that could impact the future state before drilling down into how all of this would impact real estate.
The X Factors include:
- Force Majeure
- Climate Change
- Economic Cycle
- Capital Cost
- Data Standards
- David vs. Goliath
- Cyber Crime
Each of these factors has the ability to shape and affect the timing of the Exponential Future. Perhaps none more than Climate Change. Estimates predict sea levels will rise to dramatically alter the US coast, swallowing up Florida, much of the eastern seaboard and even New York City. Not to mention New Orleans and the bay that would become of much of California.
These exponential changes will impact all real estate asset classes. From Space as a Service to the prominence of Experiential properties, successful assets will need to have a Brand to inspire and create community. They will have to be automated, connected and hyper-mobile. In the Exponential Future capital formation will be digitized with tokenization allowing myriad individuals to own a piece of the rock and trade their interest freely 24/7 and new codes will be required to allow the innovative combination of uses that optimize accessibility, productivity and engagement.
Likely the darling of all asset classes will be mission critical data centers which are expected to realize exponential demand, growing from hyper-scale to mega scale to massive campuses that will accommodate the need for energy efficient real-time processing power.
The session concluded with a deep dive into the specific impacts expected for each primary real estate asset class. To learn more about Geoff’s vision for how the Exponential Future will impact Real Estate access the presentation.
In the meantime, remember…
“It’s not the strongest of the species that survive, nor the most intelligent, but the most responsive to change.”
Geoffrey Kasselman, SIOR, LEED AP, recently joined CRG / Clayco as Partner & SVP, Workplace Strategy. Geoff oversees CRG’s national accounts and leads all client-related initiatives for the company’s expanding industrial, office and data center project delivery platform. Additionally, Geoff provides CRG clients with “future-proofing” strategies for their real estate holdings and workplaces.
Geoff is also Founder & CEO of Op2mize Energy, a strategic real estate consultancy and energy procurement firm. Previously, he served as Executive Managing Director at NKF where he led NKF’s National Industrial Practice Group from 2014-2018. He also served as the 2017 Global President of the Society of Industrial and Office Realtors® (SIOR), the largest international non-profit trade association of its kind. Mr. Kasselman was recently honored by Crain’s Chicago Business as a member of their Most Influential Commercial Real Estate Brokers in Chicago list; was inducted into the Midwest CRE Hall of Fame; is a four-time CoStar Power Broker, and received NKF’s Outstanding Service Award, amongst other honors and distinctions.
In addition to his core RE development and energy activities, Mr. Kasselman is an innovation-minded futurist and accomplished global speaker on a variety of topics including economic trends, innovation, sustainability, e-commerce/supply chain, blockchain, and exponential technologies. He has traveled the globe studying smart buildings and cities; provides mentoring to several PropTech startups; and sits on various advisory boards including CRETech; Solar Skyrise; BEI.RE; InteliGlas; and RealNex. He is also the Chicago Regional Chair for the Foundation for International Blockchain and Real Estate Expertise (FIBREE), and a Governing Board Member for Sky Foundation, a non-profit pancreatic cancer research organization.