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Virtual Space and the Future of Real Estate

19/11/2019

Did you know that in 2007 the number of bits of information stored in the digital, virtual universe overtook the number of stars in the physical universe? 11 years on, if you combined the number of stars with the number of grains of sand on earth, it still wouldn’t equal the amount of information we have stored digitally. The phenomenon that makes these bits of information worth talking about is called big data.

Big data doesn’t refer to a special type or volume of data. Rather, it refers to how machines learn from the analysis of data. Big data is already dramatically increasing the revenue-making capabilities of businesses large and small by empowering them to make data-driven, strategic decisions. The biggest companies in the world have all taken advantage, investing and making virtual infrastructure the strategic focus, even more so than physical infrastructure.

Building out the Virtual Environment

Big data has fostered a profound reliance on the virtual space. It’s helpful to think of your company’s network as a virtual city that’s constantly expanding, within a digital universe that is larger than the physical universe that we call home. In today’s business environment, it’s the intangible, cloud-based, wireless, weightless, placeless processes that are paramount to enabling success.

While location continues to play an important role within business operations, in this age of increasing globalisation, hyperconnectivity, and improved mobility for businesses and customers, the relationship and interdependence between physical and virtual spaces has changed drastically. The virtual world began as a reflection of the physical world, merely a storage of information collected from people and places. However, the increasing advancement of technology means that machines now create new insights, new efficiencies, and new priorities that are all formulated solely within the virtual world.

Blurring the Lines

At first glance it seems that there is a clear divide between what can be defined as “reality” and what cannot. The things I can touch are real and the intangible stuff is not. The chair that you’re sitting on while reading this article is real, but if I Google Image the word ‘chair’, the pictures that pop up aren’t real, right? However, looking closer we can see that much of what is important to us, much of what we create value out of, and much of the way that we build knowledge, does not fit this definition of ‘reality’. Much of our productive work today is completed in a virtual, spaceless place. Emails, IMs, LinkedIn, phone calls, Google Drive, Apple Cloud, online banking, the company intranet, and the list goes on.

So, how will the real estate industry be affected by our reduced reliance on physical space? After all, there are already a range of tools on the market that are powering a new wave of virtual workplaces. With vSpatial, for example, you can have an excel spreadsheet as tall as you which you can walk around in order to analyse your data from a different perspective.

Virtual Space

Anton Koning used this technology to help him mine the human genome. Rather than simply observing information, he has quite literally stepped inside and interacted with one of nature’s most profound sets of data.

What’s Next for the Physical Workspace?

Given the relentless pace of technological innovation, it’s easy for futurists to fall into the trap of going too far and predicting a dystopian Matrix-like, Tron-inspired future where we all exist in a digital, virtual world. But let’s not get carried away. Technology is not solely responsible for defining how we will exist in the future, but instead sits alongside a myriad of other factors including business demands, policies, political climates, psychological barriers, societal perception, and changes in consumer behaviour.

Because of this, the future is far more likely to look like a hybrid of virtual and physical worlds. Real estate is already responding to this change, with an increasing focus on flexibility, customisation, and the creation of unique experiences. Concepts like the pod vending machine skyscraper, where a functional building is never ‘complete’ but is able to constantly grow or shrink in relation to demand, demonstrate how real estate could evolve to both solve the huge wastage problem on construction sites as well as future corporate need for space flexibility based on demand. In this example, pods are 3D constructed to specific specifications quickly and then dismantled once the office is no longer needed. A transient, pop up, commercial space of the future.

Reimagining Tomorrow’s Real Estate Industry

Real estate itself is not a binary business that can be encapsulated by algorithmic 1’s and 0’s. After all, what drives value in the real estate industry isn’t actually the buildings we manage, sell, construct, or occupy. Rather, it’s about the wider context of a real estate’s role within the business strategy, as well as the narrower function of creating productive spaces for the individual.

Likewise, the companies that will come out on top and harness the amazing technological capabilities of tomorrow understand that the broad operating space of the virtual world has an increasingly ubiquitous role in influencing and morphing our strategic actions in the ‘real’ (estate) world.

This article is based on a speech presented at the CoreNet Annual Symposium in September 2018 under the title “How the Rise of Virtual Space Impacts Real Estate”.

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