The Uberization of the world is happening, and like everything else, you can blame the Millennials. As most everyone knows, Uber is the ride-hailing company that has disrupted the cab industry across the U.S. (and now much of the world) by having "drivers" and "riders" communicating directly, via the Uber App. The Uber App allows drivers and riders to rate each other on a 5-star scale, and allows riders to see exactly where a driver is on a map on the riders' phones. Having the map feature on the app allows riders to confirm that the most direct route is being taken by the driver.
Not only is Uber more efficient than a cab, it is much more affordable. The market dictates the price, meaning the price of a ride fluctuates up and down depending on the current supply of drivers and demand of riders at any given time. Riders have their credit card numbers saved on the Uber App, so no physical money changes hands at the completion of a ride.
So, as someone selling lots and development land, I have to wonder, how is the Uberization of the world going to disrupt real estate and development?
First and foremost, data is key. Data has become sexy and is accessible to the masses through their mobile devices and cellphones. For the time being, engineers, builders, developers, and real estate agents are the gatekeepers to the information. Much of the future real estate decisions will revolve around all of this data that is available and easily accessible. Lenders will be the first to adopt data-based, real estate investment strategies to protect themselves against potential failure of real estate projects. Eventually, lenders will require a "data report" prior to lending on a project.
Uber has paved the way for driverless-cars and they are currently testing the market for driverless rides in Philadelphia. In the near future, robots will be replacing drivers.
In the scope of real estate Uberization, like the drivers being replaced, many construction jobs will in essence be replaced by 3-D printers. They have recently started printing houses in Asia and it is being tested in the U.S. A robotic printer prints the house with a concrete product. The printing does not stop until the house is finished. Houses can be finished in 45 days, and companies are working to make 3-D construction even more efficient. Houses and subdivisions will, in a sense, be printed.
With data laying the foundation, and 3-D printers building/developing the real estate, we will see more institutional investment in speculative building and developing across the world. Data will tell these investors when, where, and what needs to be built, which will be dictated by algorithms made up of historical, and real-time trending data. Due to the data available to all, local expertise and local relationships will not hold the same value that they have in the past.
Milennials do not and will not require the same housing needs that we have seen in the past. First of all, homeownership is not overly important to Millennials. Millennials not only want money to spend on their needs, but they want the ability to spend money on their wants. Because of this, many Millennials choose to rent rather than own. They see renting as a cheaper alternative than the continual cost of homeownership, and they would rather spend the money that they would be spending on a down payment and home upkeep on themselves.
For those Millennials that do choose homeownership, their homes won't require as much square-footage because families will be smaller, and they will spend more time outside their home than in it.
Currently, approximately 90% of American households own at least one car. This percentage is declining at an increasing rate. 3-car garages will no longer be the norm, as families will not own as many cars due to the affordability and ease of transportation via Uber or Uber-like, ride-hailing companies, offering driver-less transportation that will be paid for on a per-use basis, which will be more affordable than owning. Due to the smaller width and size of homes, lot sizes will continue to shrink and subdivisions will increase in density.
In San Francisco, apartment building owners are already using monthly-transportation subsidies for their dwellers to sell their cars and instead use Uber or public transportation. Parking lots and garages in dense areas will decrease significantly, due to less commuters needing parking spaces for their privately-owned vehicles, which will open up a lot of development opportunities in urban areas.
It is still early for definitive answers on how everything will play-out, but these are points to consider. Access to data will be the what sells in the future of real estate, because a smile and friendly handshake don't move quick enough.