Death of the Silo!

In an age of increasing complexity, the world has become-hyper specialised. This is particularly true of the property industry. Most people and organisations live in a discipline or sector silo. Whether your discipline is investment, development, or leasing in a sector such as retail, office, logistics––and yesstudent housing––we are an industry that highly values specialised expertise. 

Silos are based on an antiquated understanding of how people want to use place. They are a tidy way to categorise how real estate is planned, designed, developed, and managed. They make life easy for investors with more predictable cash flows and valuations. City planners can neatly group similar uses together in order to forecast things like traffic and sewage flows. Developers and architects can perfect column spacing and room sizes.

The result of this convenient segregation of uses is dead industrial ‘parks’, soulless shopping centres, and offices people can’t wait to leave. It’s sterile cities and lots of traffic. The good news is that people, governments, a\’nd the real estate industry have recognised the unsustainability of this flawed model. Over the past 30 years there has been a growing embrace of the radical idea of mixing uses. This has transformed many struggling city centres into places people want to be.

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The challenge is that mixed use is messy and complicated, harder to design, value and manage. Most often, mixing uses has meant moving them closer together. An office building next to retail next to the hotel with maybe some residential on top. Still separate operators, cash flows and valuations but more vibrant, convenient and liveable places.

Just as we’ve begun to master these challenges a new trend is emerging. Over the past few years the lines between how property is used has begun to blur. Technology has enabled people to work where they sleep, eat where they shop and learn where they live. More or less the way people lived and cities functioned throughout most of history!

We may be on the cusp of a ‘back to the future’ era for cities and the real estate industry where mixed-use is evolving to ‘fusion’. This will have profound implications for our industry and business models. It creates the need for much closer integration of developer, owner and user of place.

Fusion also requires a rethink of organisational and career strategies. A pure project, deal, transactional focus will no longer be enough. As developers evolve into owner-operators, traditional business models, investment strategies and skillsets will be increasingly obsolete. We will also likely see a renaissance of the generalist. Expertise still matters but the ability to see the bigger picture, to connect the dots will become more important than ever.

In order to thrive in this new world, organisations and individuals need to reinvent themselves. Genuine cross-industry, sector and discipline collaboration and co-creation are the future. Understanding consumer behaviour, how people interact with place and emerging technologies as well as the fundamentals of bricks and mortar are the cornerstones of innovation.

There has never been a more exciting time to be in the ‘property’ business!