I’ve been writing here about the emergence of infrastructure and the expected pressures to integrate it into the real estate curriculum. We’re starting to see its emergence start to produce academic texts. Edhec Business School, and specifically the Edhec Infrastructure Institute, have been producing high profile output in this area. They had an interesting article in the FT this week. A couple of academics from there have published a noteworthy book on infrastructure valuation. You can check it out here. It looks like a fairly heavy duty but interesting corporate finance approach to valuing the equity and debt cash flows that infrastructure projects generate and costs nearly £250. I hadn’t seen it before but I did expect that, like real estate, we would see many of the same types of sub-disciplines. The publisher of infrastructure valuation (a specialist in private equity topics) also have other tombs Best Practice in Infrastructure Asset Management and, with a revealing large focus on regulation, Managing Risks in Infrastructure Investments. All cost a lot. Possibly better value – but with a different focus is Infrastructure as an Asset Class: Investment Strategies, Project Finance and PPP by Barbara Weber and Hans Wilhelm Alfen. Sign of the shift? One of my colleagues at Reading (school of Real Estate and Planning) has just left us to go to UCL to work on infrastructure in the School of Construction and Project Management .
The RICS have just published Remit’s (Bob Thompson’s and Andrew Waller’s) research that they commissioned on how, let’s call it, automation might affect the (it sounds increasingly archaic) surveyor. I may be being a bit unfair here – but there is a more than a hint of “the machines are coming to take your jobs and your fees” about it (“The burden of this risk is likely to fall disproportionately on…”). To be fairer, the report is a bit more nuanced than this.
I’ve been waiting for this piece of research to come out for a while. I’m a bit disappointed in it. The research focuses on tasks and, recognising the risk of technological determinism, does set out different scenarios. However, the 42 tasks examined seemed fairly broad (space management, manage leases etc.). I would have expected to see these ‘tasks’ broken down and their production chain evaluated in more detail. The result was that there was little detailed consideration of how the different components of often intricate production chains could be affected by automation and, therefore, any detailed insights into the different roles and tasks. I suspect (hope) that there was much more analysis underpinning the findings that hasn’t been reported.
John Naughton wrote a really good piece recently on the importance of focussing on tasks rather than jobs and of the difficulties in predicting impacts of automation on jobs compared to tasks. He sees the recent concern with AI, ML etc. as one of our regularly recurring bouts of automation anxiety (and I remember Right Space, Right Price back in the 1990s).
In the 1960s, a Presidential Commission in the US set up in response to one these automation panics concluded that “The basic fact is that technology eliminates jobs, not work”. The key issue is whether automations substitutes or complements what workers can do. If interested, you should read David Autor’s highly readable paper on the topic which discuss the often unexpected effects of automation. Who would have thought that the number of bank tellers would rise after the introduction of ATMs?
If you look at something like property management, the scope of the job has tended to change as traditional tasks have become de-skilled. As rent collection, service charge collection, record keeping, data collection, reporting etc. have become more and more automated – and better quality – new tasks have emerged. It’s only in the last two decades that customer relationship management, sustainability practices, health and safety, and other have become standard in property management.
Where automation eliminates monotonous tasks and allows workers to switch to more fulfilling tasks, then it’s good news. Clearly, there will be some losers but there’s also likely to be many winners. We tend to be good at identifying the former and not so effective on the latter. In the UK, we also tend to be pretty bad at managing the distributional effects of such economic changes. Perhaps we should be celebrating the fact that it’s the mundane, routine functions are most likely to be automated and trying to work out how we ‘insure’ the losers?
Someone once said the institutions try to preserve the problem to which they are the solution. If the RICS is the solution, then maybe we do have a problem.
The FT has covered the issue really well in the last few months and it’s a bit like an advert for the Mall of America in Minnesota but the Observer had a good piece on the decline of the US retail sector yesterday. In addition to the statistic that the US has five times more retail space per capita than the UK, it had a few new eye-catching facts
It has been three years since a major new shopping mall opened in the US, leading even some mall operators to speculate that the last one has already been built. Of the roughly 1,200 spread across the country, less than half are expected to be in operation five years from now.
There may some journalistic hyperbole here given the ULI forecasts for retail rents. It’s hard to reconcile the two.
Given the amount of obfuscatory pleonasm (you see, we can’t help ourselves but, to be clear, it’s meant to be a joke) that academics often spew, it may be a bit rich for me to be pointing to some of the nonsense spouted in the business and management world. But – Lucy Kellaway’s FT article reflecting on 25 years of failing to stem the flow is too good to miss. She’s particularly harsh on the highly successful Starbucks chairman, Howard Schultz.
Howard Schultz is a champion in the bullshit space. The Starbucks executive chairman has provided me with more material for columns than any other executive alive or dead. Yet he is still at it, and still out-doing himself. Earlier this year, he announced that the new Starbucks Roasteries were “delivering an immersive, ultra-premium, coffee-forward experience.
There’s a good-natured and humorous reply from someone alt Starbucks today which also made me laugh.
She also quotes Eversheds who are a pretty run-of-the-mill regional law firm. I was surprised to see them in this company. I’ve met some of their partners over the years and they seemed like ordinary, grounded people to me. Something obviously went wrong in HR when in 2007 they
tried to appeal to young recruits by looking for “knowlivators, innovateers, performibutors, proactilopers, prioricators and winnomats” — the last being a particularly unwinning combination of winners and diplomats.
This piece in the Guardian is one of the clearest things that I’ve read about the student loan/graduate contribution system. Should really mention the other elephant in the room regarding repayments – the whole system may well be reformed.
There’s a dramatic piece in the FT today by Robin Wigglesworth setting out a very bleak picture of the prospects for the US retail sector. Some memorable figures are quoted.
PwC estimates that there is about 24 sq ft of retailing floorspace per person in the US, compared with 11 sq ft in Australia — the only other developed country that comes close to the US — and between 2 and 5 sq ft in Europe…
Goldman Sachs estimates that ecommerce companies only require 0.9 employees per $1m of sales compared with 3.5 for a bricks-and-mortar store,
There’s a strange contrast between the apocalyptic tone of the FT article and the fact that the ULI Consensus Forecasts for retail rental growth in the US is 2% per annum for the next three years. It’s also worth noting that availability rates in the US retail sector have been shrinking for the last three years. Can both be right?
Anna Minton has quite a provocative piece in Guardian about the ‘revolving door’-type lobbying and power networks that can be found in the planning and development sector. I’ve seen lots of secondments to and from local and national government and large planning and development consultancies and developers themselves. Most organisations try to build relationships with decision-makers in order to understand the decision-making process and to influence decisions. In property development, huge profits can hinge on fairly subjective political judgements. You can see the potential benefits in terms of exchanging knowledge and understanding but the potential for conflicts of interest are obvious. It’s a hard one to govern effectively. Lobbying is pretty pervasive in business.