June 2017 :: Latest News
Commercial Property - To be or not to be disrupted?
Global disruption in almost all industries raises the question: ‘Will the age-old performer — commercial property — be affected by the myriad of changes and measures causing disruption?’
To consider this question, it will help to break the broad term ‘commercial property’ into different areas and drill down into each one:
Office
Leading digital disruption experts are predicting that virtual reality will progress rapidly over the next 10 years, which could have a dramatic impact on commercial office space. Nigel Dalton, Chief Inventor at the REA Group, recently said, ‘People are currently driving up to 80 km every day into the CBD to email each other all day — this doesn’t make sense.’ With technology, in the future, the same people could work side by side in a collaborative environment from their home using virtual reality.
Retail
We all know about the enormous increase in online shopping and the highly anticipated Amazon launch in Australia. As online shopping increases (and there are so many practical reasons why it will), the value of retail property will ultimately be affected. The question is ‘How much and when?’
Industrial
In the industrial sector, automation is increasing efficiency and decreasing labour costs. Other than that, it’s difficult to anticipate any further disruption now. People need products, and products are made and stored in factories and warehouses. The cost of transport to and from these factories and warehouses dictates the value of the property’s position. There has been some discussion about the impact of home/personal 3D printers. Perhaps these may have some impact as products could be produced at home. But due to the efficiencies of mass production, this seems unlikely.
In conclusion, it seems that office and retail property could possibly be disrupted with technology over time. It stands to reason that industrial property could be the long-term performer.
