Mass migration of more than 2 billion people from the suburbs and rural villages to the world’s cities probably represents the biggest development opportunity in the history of the planet for the global real estate industry. Urbanization transcends all aspects of society, from where we live to where we work and from where we shop to where we choose to spend our leisure time.
Urbanization is also a very real global trend. Figures from the United Nations show that 54% of the world’s population now resides in urban areas, compared to just 30% in 1950. The figure is projected to reach an incredible 66% globally by 2050.
The implications for real estate could not be more far- reaching. However, the trend towards urbanization is diametrically opposite to the general tide of retail development in particular over the last 50 years, which has seen ever greater emphasis placed on out-of-centre destinations, whether that be food supermarkets, out-of-town shopping outlets or regional shopping malls. In simple terms, retail facilities have been increasingly located further away from where growing numbers of people are choosing to live.
Mixed-use schemes have long been an industry buzzword but they are increasingly becoming an urban reality around the world, but they really only scratch the surface of the opportunity. Too often, the reality of mixed-use developments is a substantial residential element, with a complementary but a token retail and leisure offering comprising a convenience store, a coffee shop and a couple of branded restaurants. There is nothing flawed in the basic psychology of pairing homes and offices with retail and leisure, but the concept can be and should be created on a far larger, more integrated and more ambitious scale.
The trend in urbanization also runs against many property planning principles. Real estate likes the order and logic of zones, such as Central Business District, Shopping district, Healthcare City, or cultural quarter, for example. However, true urbanization recognizes none of these artificially engineered boundaries and the utopia of urbanization is a blend of real estate uses that goes far beyond mixed-use as we know it currently. An area left to its own devices and the natural process of urbanization will combine residential, office, retail and leisure in a non-uniform environment of synergistic uses that support and depend on each other in a harmonious balance. The order we have become accustomed to will not be replaced by chaos, but far from it, a sense of vitality and diversity which are pre-requisites for every successful new location or place. Convenience is everything and amenity, amenity, amenity….is now the new differentiator.
Contrarily, the Internet has actually deepened a desire for face-to-face interaction and connectivity. Commercial and residential projects where people can meet either intentionally or by chance and build community through common spaces will succeed most. Similarly office workers want to work near each other in open spaces that foster collaboration – so demand for traditional office space is in decline. The technology sector will surely continue to be the economic driver in cities around the globe. Younger tech-workers now want to live and work in cities and have no desire at all for what earlier generations aspired to—a single-family home in the suburbs with a car, and a commute to the office!
The leisure element of the mix is relatively easy to define – a full range of eating and drinking venues catering for every price point and every taste. The retail element is expected to comprise local specialist individuals and high street multiples – but away from their traditional shopping mall and prime destination locations – providing a seamless dovetail with the ever-present on-line capability, creating the ultimate realisation of the often elusive multi-channel dream.
With land in short supply and population growth on an upwards trajectory in already heavily urbanised cities, this place-making urban utopia is taking shape in some areas naturally