Fortune-telling is not David Lind’s regular job.
Nevertheless, he is willing to gaze into a crystal ball and predict the forces that will shape commercial real estate during the rest of this century.
“Technology will alter societal behavior. It will change all industries, including real estate, eliminating some and creating new ones,” said Lind, senior vice president in the Oak Brook office of CB Commercial Real Estate Group.
He foresees the growing popularity of telecommuting and video conferencing, grocery shopping by computer, and even roving gas stations.
Also, he believes that a shortage of trained workers in the future will mean that companies will drop their autocratic attitudes and value their employees more highly.
As CB Commercial’s No. 1 producer in 1988, topping 3,000 salespeople and 100 offices nationwide, and the top producer in Chicago nine times, Lind is well qualified to be a prognosticator.
“Technology will provide electronic distribution, which will have a dramatic impact on how people shop, how people work, and how goods are distributed,” he said.
“For $20 a month, a small Evanston-based company called Peapod allows you to grocery shop by computer, saving time and aggravation. Orders are picked up by a Peapod shopper from the shelves of a Jewel and bagged. Push a button and arrange for home delivery within 1 1/2 hours. By late 1995 or early 1996, over 20,000 Chicago households will use Peapod.
“The impact: 20,000 households will make 50 fewer trips to the grocery store per year, or 1 million fewer trips. Divided among 10 stores, that’s 100,000 fewer visits to each shopping center.
“Impulse buying, sales of the National Inquirer or sales in the card shop next door will be reduced. Future grocery stores may have narrower aisles or could be warehouses.”
Lind sees a day within several years, when “you will strap on your virtual reality helmet, visit the virtual reality store and see improved 3-D graphics, which will be a giant improvement from existing home shopping.
“For example, you could select a car through your computer, get prices and quotes on financing and take it for a test drive. All without leaving your chair.”
The implication: Fewer car dealers and not as many branch banks to structure auto loans, according to Lind.
Currently, he says, about 70 percent of banking transactions are done electronically, up from 20 percent five years ago. The impact: Industry consolidation or a property surplus; financial institutions won’t need as many branch offices.
Additional thoughts:
“Catalog sales have plateaued at 12 percent of retail sales. The home shopping network, which many predicted would hurt retail malls, is only a fraction of retail sales. On-line shopping is less than 0.5 percent today, but will grow to 5 percent and maybe more by 2000. Why? Because on-line graphics, selections, and comparison shopping will improve.”
Lind noted that in Chicagoland a 5 percent reduction in retail sales equals $2.5 billion in lost sales, which is the equivalent of four Oak Brook regional malls or twenty 500,000-square-foot power centers.
And what about those roving gas stations?
“The technology exists to have satellite sensors on cars that will register low on the gas gauge and beam your location to a mobile gas truck that will drive to your office and fill your car with gas while you’re at work. The impact: Oil companies will change their distribution channels,” Lind said.
He maintains that technology will boost telecommuting and alternative work arrangements to a maximum of 10 to 20 percent of the work force, but won’t replace core office workers. The impact: Reduced demand for office space and a change in house designs to include office areas:
“Soon you will have a TV camera and microphone at your desk so you will have personal video conferencing. The impact: Space design that does not feature soundproofed work areas will have to be replaced, and business travel will be reduced.”
Technology will eliminate middlemen and their need for space, as markets become more efficient and costs are squeezed, Lind said.
Computers, of course, will play an increasingly vital role.
“Today, there is one computer for every employee in a Fortune 500 company. Over 25 million households, or 35 percent of America, have a home computer. Home computer sales in 1994 were $8 billion (virtually tied with TV sales), a third of which had CD-ROM capabilities.
“Over 25 million people worldwide are connected to the Internet and over 6 million in the U.S. subscribe to an on-line service like Prodigy or America On-Line.”
Lind noted that “Anderson Consulting estimates that by 1998, 30 percent of households will be connected to interactive TV, 65 percent by 2005.
“Over $30 billion will be spent on interactive technology in the next two years,” he said.
“Those of us who didn’t grow up with computers may be reluctant to use these services, but our kids will have no problem. If you don’t think behavior patterns can change, remember everyone over 35 used to get gas from a full-service station and cash from a bank teller.”
In 1990 virtually no computers were sold on-line or through the mail. This year about 20 percent of the 22 million PCs bought, or $9 billion worth, will be sold through mail-order or on-line services. Will there be the need for as many computer warehouses?
Another major force in real estate will be a change in demographics, including the shrinkage of the productive work force. The number of people between 18 and 35 years old is expected to drop from 50 million to 43 million by the end of the century.
“We already are seeing shortages of educated workers in the Chicago area,” said Lind, noting that in the future there will be fewer corporate layoffs, fewer women entering the work force, and a shrinking pool of college graduates. That will subject corporations to fresh pressures to obtain workers.
The new supply of employees will consist in large measure of immigrants or poorly educated workers whose skills don’t match information-based job requirements, he said.
“The shrinkage of quality workers and their increasing mobility means educated employees will be able to dictate changes in their companies rather than autocratic companies setting policies and making their work force adhere to them.
“Consequently, we are seeing the leveling of organizations, fewer private offices, more casual days, and a general trend of companies being nice to their employees and accommodating their unique requirements.”
The shortage of quality workers means that the location of an educated work force will drive corporate relocation decisions.
Amenities, indoor air quality, security, and employee comfort must be addressed, he said.
Lind warned that “those who do not pay attention to new trends will be gone.”
