The evolution of 'mega trends'
The COVID-19 pandemic will undoubtedly change the way we live and work for the foreseeable future, and new trends will emerge that will become part of our 'new normal.'
But what about the more familiar structural trends which have been shaping the world over the past few decades? JLL has identified and been tracking several so called 'mega trends' impacting the real estate sector for many years – the growth of corporate outsourcing; rising capital allocations to real estate; rapid urbanization and city building; the adoption of new technologies; and the imperative to build a more sustainable future and to take urgent action to combat climate change. Their role in shaping the sector has been undeniable over the past decade but, looking to the new post-pandemic world, what influence will they now exert?
All these trends look set to continue, although with some new characteristics and points of focus:
Growth in corporate outsourcing. The ongoing health crisis should accelerate the trend of outsourcing over the long term. Occupiers will increasingly seek third-party real estate services to sustain business continuity. There will be increased demand for new workplace design, including more digital, flexible and health-oriented working solutions.
Rising capital allocations to real estate. The low interest rate environment and financial asset price volatility will support the case for portfolio diversification. 'Flight to safety' in real estate, which continues to offer better relative returns in comparison to other asset classes, looks set to increase.
Urbanization. The pandemic is unlikely to slow the long-term trend in growing urbanization, but will prompt a rethink in urban design, increasing the imperative to develop truly scalable smart city solutions, to put a much greater focus on public health and safety, and to deliver greater investment in public infrastructure.
Technology. The mass adoption of remote-working technology through the pandemic phase will likely increase the pace of the Fourth Industrial Revolution, including even more emphasis on robotics, the Internet of Things (IoT), Big Data, and unmanned vehicles.
Sustainability. There will be an increased spotlight on corporate social responsibility, and through this, greater awareness of the fragility of our society and ecosystem.
Our 'new normal' will take time to evolve. New trends are already starting to take shape as governments, businesses and communities begin to adjust to the postpandemic environment. But equally, there will be other consequences to the pandemic that will surprise us and that are not yet possible to predict.