Real Estate has been valued on its exclusivity; lower supply, higher demand. The industry has been predicated on the belief that in order to be of value, you must have a physical existence. Town centres were built around this.
Businesses lived or died by its location. This formed clusters by proxy of companies that needed likemindedness for survival. By restricting supply, the landlord/developer could control the market in its prices and its offers.
Then the internet.
The internet is made up of numbers, and numbers are infinite. To borrow a phrase from Bob Marley “if all you seek is money, money is numbers, and numbers never end.” The internet is endless. By default binary code is endless…only computing power holds us back and at the current rate nothing is really holding us back.
To exist as a business, you do not need square footage, you need bandwidth and gigabytes. One is limited by a set of political, ethical, moral, economical, and physical laws, the other by mathematical. According to StartupBritain, there were 657,790 businesses established in 2016, yet this doesn’t lead to an equal or representative amount of physical space being occupied.
The first place a company goes to establish itself now is the internet. Setting up shop has never been easier, within 15 minutes you can have a Squarespace site built, and you’re ready to take orders for products or offer consultancy. Setting up a SME business can take anywhere from 10 minutes, through Tide, to 48hours with NatWest Online. No longer is the imperative to be visually aware on a high street or in a building to be considered open for business.
To exist online, you rent space. Amazon Web Servers are your landlord. They are your infinite landlord. Need more space, no problem. Click a button and your rented assets double in size. Double your real estate assets and it’s 6 months of productivity dwindling negotiation and balance sheet wincing costs. Only WeWork have the ability to move a company around, but we’re still talking weeks of work.
To chose between a place where my landlord matches my imagination, or the one that stifles it?
The infinite landlords are not based on the horizontals of our businesses, but on the verticals. I value my digital landlord by the verticals it offers my digital business, the integrations to other platforms, the API’s that can be added, the solutions that all can be customised and offered to me. The online support staff that can help me craft the ideal package needed, and adapt with me as my business changes. Whilst there may be other players in the market helping me on the way – all I see is my host. The host that is ever responsive, helping me progress, being supportive and providing add-ons throughout.
Then I look at what a physical real estate landlord can offer me and I shudder. To chose between a place where my landlord matches my imagination, or the one that stifles it?
The question therefore comes to mind, of why exist in a particular location. By default I become limited. Albeit this can’t be taken in absolute otherwise you end up much like the business version of Syd Barret. In a biographical documentary about him, he describes the realisation that in bed his mind could go anywhere and do anything, but as soon as he got up his choices were limited. Sadly for Syd Barret this led to a mental breakdown. Is our business eco-system going through the same crisis? As soon as I have to exist in person and take action, I’m hamstrung by not only time restraints but by financial and physical ones too.
Does the physical space I rent offer me the same productivity enhancing functions that I get from my digital infinite landlord? Do I want a rent reduction or a revenue increase? The more physical space impacts and misunderstands my business, the more I will turn to digital services, that in turn will reduce my footprint – why have the space if it doesn’t help you grow?
How does physical real estate represent value in relation to our digital? That is the big challenge facing the real estate industry. What value does physical real estate bring a business that could easily exist online, operate virtually with it’s staff, use AI bots to answer requests and find ideal clients?
How does a building act like a website? It may not be infinite, but to be seen on equal standing it needs to enhance my business needs. Landlords need to know what their purpose is, and the purpose of their buildings. It goes beyond herding people under one roof. They must enrich spaces with the tools, capabilities, adaptive features (and not just moveable drywall) that can enhance productivity by understanding the outputs of the users better.
As a form of user experience, I find most office buildings the physical equivalent of this website.
Will Squarespace become a landlord? They know how we set up businesses, promote them, and engage with others on them. Google knows even more: our purchasing habits, what makes us curious, how we interact across a series of social platforms, what type of holidays we like. All this user insight provides them with data to design online environments, but now also our built environments.
The proof in the pudding will be the success of their proposed “from the internet up” development in Toronto, Canada. With Alibaba buying the Chinese shopping mall operator InTime, and Amazon buying Wholefoods, we’re now seeing that to be a landlord, you don’t have to be a property owner, nor think like one.
The future landlords will not be real estate companies but brands who understand the life cycle and eco-system of industries, and enhance their capabilities in both the digital and physical worlds. In the omni-channel world, how does the physical landlord offer parity in line with the infinite landlord?
This article first appeared in the Conscious Cities Journal #3 - http://www.ccities.org/the-infinite-landlord/