Real Estate Predictions 2022 Building A More Sustainable .

Creating smarter urban environments Real Estate Predictions 2022Creating smarter urban environmentsHow AI-powered Generative Design can enhance urban anddevelopment planningWhen considering the design of buildings and land use planning for urbandevelopment, traditional processes result in a number of constraints. First of all, datadriven design is challenging, since there are so many factors to consider, includingeconomics, feasibility, social governance, land use and capital investment. Secondly,the planning output represents a fixed-state based on current problems, whiledevelopment might take years. This makes it more vulnerable to shifts in the marketor changes to the environmental and social context. Finally, it takes a lot of effort tomake a plan, inhibiting our ability to quickly generate alternative scenarios or pivotour approach.Urban and development planning iscurrently undergoing a massive upgrade,taking a data-centric approach to designthat leverages the power of AI andanalytics. In so doing, it introduces an agileapproach to master-planning, creating acentralized digital twin to manage an urbanecosystem in operations.Traditional processes for the designof buildings and land use planning forurban development render a numberof constraints. A data-centric approachto design, based on the power of AI anddata analytics, could enhance a massiveupgrade of urban and developmentplanning. Here’s why and how.How does AI play a part?The rise of artificial intelligence (AI) andcloud-based processing has createda wealth of opportunities across allindustries. It offers us the power toapproach complex computing problemswith incredible speed and accuracy thatexceed our human capacity. What wouldhave taken humans weeks to complete cannow be resolved in hours. This is the basisfor a revolution in the design process whichcan change our approach to planningbuildings and cities.5A comparison to natureTo explain generative design best, let’shave a look at nature. When we considera flower, for example, we marvel at itsperfection. Every nuance is perfectlycalibrated to capture moisture, to survivein harsh conditions, and to reproduce in aliving ecosystem. However, this flower didnot come to be overnight. It took millionsof years of evolution. Millions of designiterations one after the other, trial anderror, update after update. This flowercollected information from its existenceto change its properties over time untilit reached the peak of performance andefficiency. Generative design emulates thisprocess of evolution.blocks to inform detailed master planning.However, it doesn’t stop there. Eachtypology is tested and validated based onsimulating various conditions, comparingone typology against the other to identifyweaknesses and redundancies. Thiscreates stronger and stronger designoptions the model achieves acceptableoperational performance based on projectsuccess criteria. In essence, thousandsof hours of design evolution are beingcondensed into a single afternoon—based on the power of the processorthat is running the computations. Itwould be impossible to achieve thesame output through traditional, humanpowered processes.Data-driven designGenerative design creates a virtual world totest versions of a design solution. Variousdata are entered, for example aboutbuilding use, building height, constructionarea, loss rate, cost of construction, GHGemissions targets, number of residents,availability of green space, access tonatural light, connectivity, and proximityto transport. A generative design processthen renders this information into aseries (hundreds) of typologies andspatial development options throughcomputational design: the basic buildingComputational design as an enabler ofbetter human designThis does not mean that we shouldreplace designers. Instead, we shoulduse computational design to providea defensible and quantifiable spatialdevelopment framework to guide detailedhuman-led design. Instead of doingfeasibility analysis and concept design,human designers are able to focus oncreative decision-making associated toexperience design, while relying on datadriven feasibility and project resilience.

Creating smarter urban environments Real Estate Predictions 20226

Driving into the future of Real Estate Real Estate Predictions 2022Driving into the future of Real EstateThe impact of autonomous vehicles on Real Estateand infrastructureThe rise of Autonomous Vehicles (AVs) and ridesharing technology is likely torevolutionize urban transportation. Also, the impact on Real Estate is likely to beprofound and far-reaching. What is going to happen during the coming revolution andwhat could be the effects on urban spaces and Real Estate?The coming urbantransportation revolutionAutonomous vehiclesIn addition to electrification, the majorityof large vehicle manufacturers are alsoheavily investing in autonomous drivingtechnology1. However, even though therehas been talk of driverless cars for severalyears, the actual implementation to dateon our roads has been limited. This willlikely change in the near future, withmanufacturers rapidly progressing theirPartial automationVehicle has combined automatedfunctions, like acceleration and steering, but the driver must remainengaged with the driving task andmonitor the environment at all times.Conditional automationDriver is a necessity, but is notrequired to monitor the environment. The driver must be readyto take control of the vehicle at alltimes with notice.High automationThe vehicle is capable of performing all driving functions undercertain conditions. The drivermay have the option to controlthe vehicle.Driver assistanceVehicle is controlled by thedriver, but some driving assistfeatures may be included inthe vehicle design.Full automationThe vehicle is capable of performing all driving functions under allconditions. The driver may havethe option to control the vehicle.No automationZero autonomy; thedriver performs alldriving tasks.When automated vehicle technology isproven, and governments sanction itsroll-out, the level of change and impact onsociety will be exponential and profound.vehicles towards full self-driving capability.In fact, the highest levels of progressiveautomation are now being tested inlocations across the world2.Predictions vary, but autonomous vehiclescould account for as much as 40% ofpersonal mileage in Europe alone by 20303.If full automation is indeed comingin the following decade, obstaclesaround safety and legislation can besuccessfully navigated4.1 Some of the largest technology firms based largely in the Silicon Valley are spending heavily on automation and ridesharing with around 23 billion in total fundingin the last 20 years (Goldman Sachs). It is estimated to grow well beyond 96 billion by 2025 and to 290 billion by 2035. This investment would mean that globalmarket capitalization would total an estimated 17%, and approximately 27% of vehicle miles travelled will be done in AV by 2035 (Cushman & Wakefield).2 We can already see nations from almost every continent investing in this technology and preparing their roads for the introduction of AV within the next decade(the Verge 2020).3 PWC, Five trends transforming the Automotive, 2017.4 Troy Baltic, A. C., Russell Hensley, And Nathan Pfaff. How sharing the road is likely to transform American mobility, 2019.7

Driving into the future of Real Estate Real Estate Predictions 2022Ridesharing is omnipresentOver the past few years, ridesharinghas become omnipresent across globalurban centers. Companies like Uberand Lyft are now household names, andconsidered as genuine alternatives to otherforms of transport, including personalvehicle ownership and public transport.Because of their long-term strategies,they are considered highly valuable byshareholders. These companies arecontinuously collecting and analyzing dataon how to optimize vehicle usage andcustomer service. Ultimately, their goal is toleverage the full potential of AutonomousVehicles (AVs) by eliminating the need fortheir largest overhead—the driver5.The changes in cost will increaseaccessibility and convenience, which willprove an attractive alternative to publictransport and personal vehicles. To accessthe service, users will only require a pickup/drop-off location before moving on tocollect the next user. With fewer vehicleson the road, physical resource waste,including CO2 emissions9, will dropdramatically. As electric vehicles only offera marginal improvement in the wholelife carbon emission over internalcombustion engines (ICE), there wouldstill be concerning levels of emissionsand raw material damage from the metalproduction and energy required to makeand run vehicles for personal use10.More space, lower costsThe benefits of full vehicle automation, inconjunction with ridesharing, will mark thebiggest change in urban transportationsince the invention of the internalcombustion engine. Some of these changeswill include the elimination of congestion ofour roads when substantial automation isachieved. Vehicle size and required drivingspace will reduce as they will be able to”communicate” and therefore travel atcloser distances. This will reduce road sizesin urban areas, providing new space that isno longer required for vehicles6.7Increased productivity from AV willlikely play a determining factor in therapid expansion of driverless vehicles inmajor cities. As we begin spending ourfuture commute with the aid of AV andridesharing, we could be significantly moreproductive and have more time to focus onother tasks. Across an entire population,this will have a direct effect on a country’seconomy. For example, in the US, withan average yearly time spent commutingestimated at a total of 9 days, leading to avast waste of time across an entireworking population11.The shift to full automation will probablyalmost immediately impact consumercosts for AV travel. This in turn will increaseAV utilization, and decrease the usage ofpublic and private transport services8. Acontinued knock-on effect would take placewithin other service industries such asdelivery, logistics and distribution sectors.Implications for Real EstateThe desire to live in central locations coulddecrease as commuting times drop andproximity loses value. As the urban sprawlcontinues, the opportunity to change theexcess land—available because of AV—willbecome increasingly important. We willneed to make decisions on howwe design parks and green spaces, andmanage housing, services, production, andthe logistics of a wide combination of oureveryday needs.Consequence of AV on property& land useTo understand the impact of AV wemust look at the coming changes in thedevelopment and redevelopment ofbuildings and their surrounding spaces. Asthe need for parking spaces diminishes,what will we choose to do with thosespaces? It is estimated that London alonewould gain an area equivalent to 5 HydeParks (approx. 7.1km2) from developing allits car-parking space, although some of thisspace would be needed for pick-up anddrop-off points12.All this new space as well as thesimplification of roads would allow for newdevelopments, expansion of establishedbuildings, and the creation of more greenand public-use spaces. Lastly, this shift toAV would enable governments to providemore affordable homes, drive down theinequalities between owners and renters,and provide solutions to issues like thecurrent housing crisis in many countries13.Real Estate future valueIn other words, the introduction of AVwill impact the value of property and theimportance of where individuals chooseto live. As the connection time to keyamenities and the workplace drops, beingclose to central locations loses significance.Properties located within proximity topublic transport will inevitably lose theircompetitive advantage and market value.5 Uber’s self-driving cars are a key to its path to profitability, 20206 Shetty, S, The new economy, Cars take up way too much space in cities, 2021.7 Stokes, N. Can today’s car parks become tomorrow’s housing developments?, 20178 Transport & Environment, Does sharing cars really reduce car use?, 20179 Privately owned cars are not in use for 95% of their life cycle (World Economic Forum) highlighting a profound inefficiency in the way cars are used andinteracted with.10 Transport & Environment, Batteries, 2021.11 The Washington Post, Average commute time reached a new record last year, 2019.12 Sidders and Shankleman, A Driverless Future Threatens the Laws of Real Estate, 2018.13 Breach, Planning for the future: How flexible zoning will end the housing crisis. Centre for Cities, 2020.8

Driving into the future of Real Estate Real Estate Predictions 2022It is predicted that this will encourageurban areas to take use of new unusedparking spaces. This will transformresidential areas, increase the ability tocreate greener spaces, expand currentand new properties and drive commercialdevelopment14. As AV evolves and becomesfully operational, property values willnaturally fluctuate again—unused spaceswill become more attractive to investorsand re-development will take place.Central locations will again have a newlease of life as they become a hub fornew opportunities, and the demandfor property and services will increase.Requirements for successful changeAll these developments will need carefulplanning and management, with sufficientconsideration for socio-economic needs.Governments must play a role to preventvast privatization of new available land, aswell as consider the infrastructure requiredto manage this change. If the correctmeasures are put in place, we will likelybe able to manage employment, andimprove our general well-being and oursurrounding environment.14 Planners Press, Chicago, Shoup, ‘The high cost of free parking’, 2005.9

Driving into the future of Real Estate Real Estate Predictions 202210

Incorporating ESG: Living Up to Stakeholder Expectations and Business Opportunities Real Estate Predictions 2022Incorporating ESG: Living Up toStakeholder Expectations andBusiness OpportunitiesFive Steps to Make a Tangible ImpactEnvironmental, Social, and Governance (ESG) issues have emerged as a top focus,and companies need to respond to meet growing investor, tenant, and employeeexpectations. According to 60% of Real Estate respondents of the 2022 DeloitteCenter for Financial Services Outlook Survey, ESG initiatives are driving newbusiness opportunities for their organization, and half of them think that theseinitiatives are giving them a competitive edge. What can you do to prepare for the newmarket realities?Be an Industry Leader at the Frontlineon Addressing Climate Risk?The CRE sector has a huge role to play inhelping combat climate change. Accordingto Architecture 20301,3a non-profitenvironmental advocacy group, buildingsare responsible for nearly 40% of annualglobal carbon dioxide emissions. Of these,28% are caused by building operations, andthe remaining 11% by building materialsand construction (embodied carbon). Asthe world transitions into a lower-carboneconomy, Real Estate leaders can make animpact: first by collecting and assessingdata on the environmental impacts ofbuilding operations, then by investigatingand implementing resource efficiencies,and finally by partnering withdevelopers who use sustainablepractices and materials.Green Leasing Offers UpsideBy ”green leasing” we mean that tenantseither commit to or benefit from embracingsustainable practices, such as wastereduction. More and more organizationsare focusing on green leasing. Halfof respondents of the 2021 RICSSustainability report claimed that greenleases command premium rents, and 30%state that brown buildings (those withoutsustainability features) offer reduced rentsto compensate tenants.Align Social Initiatives withBusiness OpportunitiesIn our 2022 Deloitte Center for FinancialServices Outlook Survey, ESG is a keytopic. Turning to the “S” in ESG, only 50%of respondents believe their organizationis making strategic investments toimprove affordability and quality-oflife issues in communities in whichthey operate. Less than half of themsay their institution is taking steps toincrease diversity in the tenant-mixto reflect community demographics.Industry leaders should recognizethat stakeholders increasingly expectimprovements in these areas. DeveloperDL3 Realty is now on a mission to revivecommunities by redeveloping propertiesin disadvantaged neighborhoods. Theyhave converted a vacated Target store intoa Blue Cross Blue Shield customer carecenter, creating access to health care forneighborhood residents. Another propertywas repurposed into a call center forDiscover Financial Services. This providesemployment opportunities forlocal workers.Prepare for More StringentRegulatory RequirementsAs regulators step up ESG reportingdemands, firms will soon have to prioritizethese efforts. In September, the USSecurities and Exchange Commissionreleased a sample letter that requestsadditional information from companiesconcerning their efforts to address climatechange. Recent disclosure rules in theEuropean Union’s Corporate SustainabilityReporting Directive and the ChinaSecurities Regulatory Commission will alsorequire companies to identify, track, andreport on key performance indicators, suchas carbon emissions and humancapital metrics.Our survey showed that for smaller firms,quantifying climate risks in their businessand portfolio, as well as quantifying DE&Iinitiatives and social equity across differentgeographies, was particularly challenging.1 Architecture 2030, “Why the building sector?,” accessed October 8, 2021, or/11

Incorporating ESG: Living Up to Stakeholder Expectations and Business Opportunities Real Estate Predictions 2022Five Action Steps:For CRE firms who are aiming to improveESG governance and impact, werecommend the following actions: Design and implement processes torecord progress and hold leadersaccountable for achieving targetmetrics. This would improvereporting as regulators increasedisclosure expectations. Create a road map that establishes anddocuments ESG strategy as part of thebroader business strategy. Effectivegovernance and long-term value creationrequires a strong focus on priorities andclear, actionable, and measurable goals.Share this road map with stakeholdersand key decision-makers to help assessrisk and move initiatives forward. Intentionally incorporate ESG into thebusiness from the start of a projectto how it is managed daily, post-12construction. This involves everythingfrom raw materials to the use of dataanalytics to help existing tenants reducetheir carbon footprint. Communicate the firm’s ESG vision andplans to investors and employees alike.Sustainable investing is a growing areaof capital formation. CRE companiescan take advantage of this new wave ifthey are transparent about how theyincorporate ESG into the mission oftheir company. Conduct a robust climate riskassessment to mitigate overall riskand inform strategies.In the 2022 Deloitte Center for FinancialServices Outlook Survey, the responsesof more than 400 global Real Estate firmsare discussed in detail. As Environmental,Social, and Governance (ESG) have becomea key factor to meet growing investor,tenant, and employee expectations, andare driving new business opportunities, itis time to act. Firms that take a proactiverole in the field of ESG and value planet andpeople as much as profits, will definitelycreate a competitive edge. We hope oursurvey and five action steps will help youembrace the new market realities.

Incorporating ESG: Living Up to Stakeholder Expectations and Business Opportunities Real Estate Predictions 202213

How AI can enhance urban planning, asset management and investments Real Estate Predictions 2022How AI can enhance urban planning,asset management and investmentsAdvanced analytics for the cities of the futureCustomized AI tools can support a review of large files for Real Estate research, qualitychecking data and providing insights into the driving factors behind trends. Scenariosimulation and an evaluation of their impact can be used to enhance key decisionson investing, budgeting and planning. In this article, which includes a case study,we discuss how to harness the exponential power of AI for urban planning, assetmanagement and investment decision-making for the cities of the future.Understanding current and futuresupply-demand dynamicsUrban planning, asset management andinvestment decision-making are key factorsfor the cities of the future. They requirea clear understanding of the current andfuture supply-demand dynamics andunderlying macro-economic factors.Currently, this is a challenge. The RealEstate market data that is required forcity and master plans, including supply,transactions, price and rent information,typically comes in disparate sourceformats. Also, the correlation of economicmetrics, such as Gross Domestic Product(GDP), oil price, and construction financing,is often not clearly articulated. Thiscomplicates the study of their true impacton Real Estate demand.This is where machine learning and AItools come in. Existing histori

Millions of design iterations one after the other, trial and error, update after update. This flower collected information from its existence to change its properties over time until it reached the peak of performance and efficiency. Generative design emulates this process of evolution. Data-driven design Generative design creates a virtual .