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New Technology Transforming Commercial Real Estate CRE Experts Analyzed Self-Driving Cars & More at RCA MIAMI event

by | May 24, 2017
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Imagine riding in a self-driving car, being dropped off at work and then having your car drive itself to a parking lot across town. The scenario, which experts say is closer than we think, would have a major impact on real estate as it reduces the need for today’s parking garages and surface lots.

The structures, which often sit in prime real estate locations, can now be reimagined in new ways (housing, retail, commercial and healthcare).

The MIAMI Association of REALTORS® (MIAMI) Realtors Commercial Alliance (RCA MIAMI) analyzed the impact of self-driving cars, the rise of e-commerce, the growth of industrial real estate, a proposal for the largest proposed mall in the United States and other topics at its fifth annual RCA MIAMI Midyear Update held recently at the Coral Gables Country Club.

“The way we did business 30 years ago or 20 years ago or even 5 years ago is changing,” said panelist Jose I. Juncadella, an office and industrial Miami broker and the principal of Fairchild Partners. “It’s important for all (brokers) to understand that we have to move on because technology is improving.”

New Technology Disrupting Real Estate
Real estate is one of three industries ripe for technology disruption, according to RCA MIAMI keynote speaker Geoffrey Kasselman, the executive managing director at the Chicago office of Newmark Grubb Knight Frank. New technology, automation and digitization will also impact banking and healthcare.

The rise of self-driving cars will not only make many of today’s parking lots extinct, but it will make passengers more productive.

Passengers in driverless cars can travel hands-free and stay connected, increasing personal productivity and the amount of time that commuters are willing to spend in the car. Rural or suburban areas could become popular as passengers adapt to long commutes. As populations in both suburban and rural areas continue to grow, real estate developers could adapt to the new demographic and recreate suburban communities with an urban feel.

There are other ways technology could change real estate, Kasselman said.

Office buildings, for instance, are grossly inefficient. The average 9-to-5 office building is unoccupied for 16 hours each day. Could office buildings become flexible mixed-use properties in the future and have another use after the daily workers leave?

Air rights could be the next litigious battle as drones or vertical taxis become mainstream, Kasselman said. What are the rules when an unnamed flying drone flies through another homeowner’s backyard? How will government regulate the flight patterns of vertical taxis?

Growth of E-Commerce
E-commerce is another disrupter. E-commerce comprises just 8.1 percent of U.S. retail sales, but the industry is growing fast. U.S. e-commerce sales in 2016 totaled $394.9 billion, a 15 percent increase from 2015. is the big leader, posting increased net sales of 27 percent to $136 billion in 2016 with a $2.4 billion net profit compared with a $596 million profit in 2015.

The rise of e-commerce has led some to believe it will bring the death of brick and mortar shopping malls. Malls, such as the proposed American Dream Miami mall, argue physical stores continue to be the core of the shopping experience.

Today’s malls are focusing more on entertainment, dining and creating an experience for mall goers. Many times, the consumer is researching a purchase online and then buying it in store.

American Dream Miami
If approved, American Dream Miami would be the largest theme park and mall in North America. The proposed complex in northwest Miami-Dade County which would house an indoor ski slope, water park, movie complex and more.

American Dream Miami would total 6.2 million square feet, including 3.5 million square feet of retail, plus 2,000 hotel rooms. American Dream Miami estimates it would receive 40 million projected visitors and create 14,500 permanent jobs.

“It’s an opportunity for the commercial world to interact with consumable world directly,” said Robert Gorlow, who is managing American Dream Miami for Triple Five Group. “That’s the way we look at it. We don’t look at it as retail versus e-commerce. When you build projects like this, if they are to be financially viable you need to survive all this change.”

Industrial Real Estate on Fire as an Asset Class
Amazon’s growth has helped fuel the rapid expansion of industrial real estate. Absorption for industrial real estate hit a new record last year.

Amazon will soon have 1.4 million square feet of space in the Miami area, Juncadella said. About 20 to 30 percent of all industrial absorption around the world was by, Kasselman said.

Population growth has propped up all real estate sectors but has favored the industrial sector specifically. The booming tourism industry has also helped fill the region's warehouses. Nearly 60 percent of the goods sitting in local warehouses end up in South Florida.

Miami as a Worldwide Brand
Among all this change heading to commercial real estate, Miami is also evolving.

Once just a tourist location, Miami has become a center for business, technology, art, fashion culture and more.

“Miami is one of the most recognizable brands in the world,” said F. Antonio (Tony) Puente of Fairchild Partners. “People want to be associated with Miami. Just the name itself. You say the word ‘Miami’ and a lot of cities around the world from South America to Asia know where it is.”

Like other major global cities, Miami is already implementing and utilizing new technology.
Kasselman’s presentation showcased waves of transformative disruption in the future. Big data, automation and package-delivering drones will be in the first wave (next three to five years). 24/7 learning via artificial intelligence, 3D printing for everything and abundant low-cost energy in the second wave (next five to 15 years)

“We won't experience 100 years of progress in the 21st century - it will be more like 20,000 years of progress (at today's rate),” world-renowned futurist Ray Kurzweil said.

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