A decade of change: How the 2010s revamped real estate
Looking back reveals just how much has happened in the last 10 years. One decade, especially in the digital age, is a lifetime ago.
One decade, especially in the digital age, seems like a lifetime ago. In 2010 the first iPad had just launched. The extent of the global financial crisis was still unfolding. The year’s highest-grossing film was Toy Story 3.
In the 10 years since there have been some big changes. Autonomous vehicles are on the roads and drones are taking off. Offices are rich with amenities. The cost of living in cities has soared. Same-day delivery is the new battleground for online shopping, which has reshaped the world of retail.
Some things that didn’t change at all are still surprising. Did anyone think quantitative easing would still be running?
As we enter a new decade, these are some of the standout developments during the 2010s that have left a lasting impact on real estate.
Technology is more deeply integrated in our lives
Technology was nice to have in 2010. It’s now a must have.
“The take-up of the iPad is symbolic of the rapid advancement in technology and the impact on how people work,” says Andrew Ballantyne, Head of Research for JLL Australia.
It’s created an always-on culture where the boundaries between the digital world and real life are increasingly blurred.
“Technology has been the ultimate game changer,” says Amber Schiada, Senior Director of Research and Strategy for JLL in California. “We went from flip phones to smart phones, and now everyone has the internet in the palm of their hand. The way we live and work has been so impacted by this small advancement, that it’s revolutionized communication, travel, finance, and shopping.”
We expect much more from a workplace
Back then, workplaces were about the cost of each square foot. People have become a far bigger part of the equation.
“The last 10 years have been all about the consumerization of real estate,” says Tom Carroll, Head of Corporate Research and Strategy for JLL EMEA. “Workplaces are adopting a hospitality mind set. We’ve seen growing numbers of companies from a wide range of sectors — not just tech — fundamentally rethink how they design, manage and invest in their office space.”
There has been a realization that offices “can’t survive as a generic product of the past,” says Rob Sewell, Head of Office Investments for JLL Australia. “New services, creating a community, end-of-trip facilities, the activation of lobbies — investors are doing all this to help their clients retain talented workers.”
We shop differently
The shift from brick-and-mortar stores to online shopping and delivery rewrote the rules of retail.
“Customers prefer to interact with retailers across multiple-channels when and where it suits them and this has added new layers of complexity to retail operations,” says Tjard Martinus, Head of Retail Research for JLL EMEA.
“Physical retail space remains important and is increasingly about providing an interactive experience, but major retailers in the most mature retail markets are opting for smaller spaces and focusing on store location.
More of us rent from big landlords
As people flocked to cities, urban life got more expensive, increasingly pushing people to rent homes. And instead of renting from local landlords, professionally-managed multifamily schemes are gaining ground.
“A decade ago, there was little sign that a professionally-managed rented sector had such potential,” says Nick Whitten, Head of UK Living Research and Strategy for JLL. “But halfway through the past decade, that changed as large institutions sought out opportunities beyond the commercial real estate sectors and demand for rented apartments grew — as a reaction to house price rises.”
The financial crisis is gone but not forgotten
In 2010, it was clear that the global financial crisis would reshape financial markets and policies. But short-term fixes became long-term strategies.
“Measures put in place in 2009 and 2010, such as rock-bottom interest rates, are still with us today, so in some respects little has changed,” says David Rea, EMEA Chief Economist for JLL EMEA.
“Unconventional policy measures, such as quantitative easing, launched in 2009 in the UK and 2015 in the Euro area, are still running, and represent the largest shift in monetary policymaking over the past decade. That said, policymakers have moved even further into unconventional territory: A decade ago, no-one would have foreseen negative interest rates at the ECB. Today they are the norm.”
Commercial real estate investment is more popular
As investors hunted for yields amid low interest rates, commercial real estate as an asset class moved into the mainstream.
“Sovereign wealth funds and global pension funds have increased their allocation to real estate and infrastructure,” says Ballantyne. “The defensive characteristic and contractual income has become more valued in a low interest rate environment.”
Greater transparency has helped draw “a far wider range of capital than ever before,” says Matt Richards, Head of EMEA Capital Markets for JLL EMEA. “This gives investors greater visibility on how their capital is performing.”
Warehouses are hot property
As more people shop online, warehouses are in high demand and their operations are increasingly tech-driven.
“Warehousing has become trendy again for last mile logistics,” says Tony Iuliano, Executive Director, Head of Capital Markets Industrial & Logistics for JLL Australia. “Big companies are now looking at warehouses that include automation as they aim to meet rising consumer expectations around delivery times.”