Moore's Law of Real Estate : Gunnar Branson at TEDxNaperville

my name is Gunnar Branson and I love real estate real estate is my life it's all of our lives it is the collective impulses and desires and needs of all of us expressed in the world around us and the environment the built environment an environment that is almost invisible to all of us because it's everywhere it's where we live it's where we work it's where we play and if you learn how to read what is happening in real estate you can start to understand a little bit better about what we are doing as a people as a civilization and by understanding what we're doing you can start to anticipate the future all very exciting I know I know you were really really excited about the commercial real estate talk that was at the end of the TED Conference again I apologize but it is much more interesting than you think it might be in order to explain a little bit about how you can read real estate and about how you can understand that actually real estate is about to go through one of the most incredible changes it is experienced since 1450 I'm gonna have to go back a little bit and tell you a little bit of theory so again forgive me I know the cocktail awaits back in 1968 or so Gaston Bachelard a philosopher wrote a book called the poetics of space and I apologize to anyone here who is French for my bad pronunciation he wrote about something called desire lines I'm quite simply desire lines are the lines we leave behind us as we go through the world as we make the world work for ourselves as we do the things that we want to do we leave a line behind us and we've all seen them we all know exactly what they are we've all seen in a park and a college campus desire lines these are the paths that we leave in the grass right where everyone's taking a shortcut to get to where they're trying to go what I love about desire lines is they will not be resisted I've ever noticed a desire line where they take a big rock and they put it right the center of the desire line and then you have to desire lines it drives architects crazy because they make these beautiful paths made out of concrete and stone and crushed gravel that we're all supposed to travel in geometric patterns between buildings we love geometric patterns don't wait we all love going down the lines of our architectural fantasies well after this idea it was developed a lot of smart architects have started to say wait a minute I'm not going to build those anymore I'm just going to create an entire campus of buildings and I'm going to put grass everywhere in between them wait a year and then put my path right where people want it to be that's called following a desire line and when you have a deep big muddy path that's a big path a lot of people are traveling there when you have a light one you create a little footpath it's quite simple reading desire lines once you learn how to do it is actually the easiest thing in the world to do because what you're doing is looking for the tracks that we leave behind us now this has been done to great effect on things big and small on desire lines that were leaving around us all the time I want you to think about a particular place of desire that we've talked a lot about today music cast our minds back way back to ancient times oh I don't know mm when we listen to music on discs and before that records remember records vinyl old-school right well something happened and that was that someone really smart realized that there was a desire line in play and that was that we were not buying albums we were not buying records or CDs we were buying songs and you know no this store we all like to look down our noses at those idiots at Warner Brothers or Sony Music and Howe how foolish they didn't understand the Internet was coming well they've been selling a lot of records for a long time they were a lot smarter than us they were a lot richer than us they sold back in 2000 total sales of CDs cassettes and vinyl was somewhere just shy of 37 billion dollars worldwide 37 billion dollars if I am making 37 billion dollars a year I must be right and look at all the right demand that there is the record demand keeps coming there's so much demand for records no there is demand for songs and iTunes came out and within five days sold a million songs and then 200 million within a year one and a half billion by the summer of this year and they took half the business away half in less than ten years if that doesn't scare anyone who's selling anything it should because the instant that you are selling something different from what people are buying you're vulnerable because desire will always win we will always make things work for ourselves and a problem and a question that I've been asking in commercial real estate for a long time is that we sell square footage so whether you are buying space for your coffee shop or you are buying an apartment or a home or you're buying office space you're actually looking for something that you need you need very much you need a space in order to do the things that you do and all we're selling in real estate is square footage we tell you how much it costs per square footage we tell you how much square footage and yet somehow you're making that space work for yourself and it's marvelous I think the way that we adapt this imperfect thing called square footage into something that we somehow approximate life with it's an exciting kind of way that we are selling the wrong thing and people are buying another so what is going on how are we living that is not necessarily jiving with our current real estate a lot of you are familiar with Moore's Law there's a lot of very intelligent people who are much smarter here than I am there's something called Moore's law that came back about when dr. Moore realized that every 18 months there seemed to be a doubling of transistors on a single chip and that kept happening at first back in the 1960s there weren't that many so it didn't seem like much and it wasn't really impacting all of us in the room but by the time we got to the 90s it was impacting all of us because we were packing more and more chips or transistors on a chip and we were able to do amazing computer power with a very low amount of cost and low amount of space so we had computers we had the Internet all these things started developing in the 90s and then we went mobile and suddenly we all have in our pockets enough capacity to run the Apollo space program I know that's a funny little kind of weird metaphor but it's kind of true there's a lot of memory sitting inside every one of your pockets and in there is an amazing amount of stuff because along with Moore's law guess what's happening we're transitioning from atoms to electrons and the difference in size between an atom and electron is might as well be the difference between the Sun and the moon there's so much difference in space I might be illustrate a little bit about how that could impact us any of you remember getting out of college you have a record collection did you those of us that are old like me record collections book collections any of you have book collections okay how much of your apartment remember that first wonderful apartment you had how much of that do you think you took up with books and records a third generally depending on how acute you were and how much stuff you collected in other words we're not living in our space well a third of our space we're using to hold our stuff and what happens when your stuff all fits here people in their 20s are buying more than we did but they're also buying less it all fits into one of these it's amazing you know a lot of people I know that owned and managed apartment buildings are amazed at how fast people in their 20s are moving when I was in my 20s remember moving the amount of beer you had to give people and pizza just to help you move all your crud they move in an afternoon Oh am I packed I guess I'm packed so these are going away they're all fitting into this interesting thing is happening the average apartment floorplan this is what it looked like five years ago here's what the new ones are looking at now we're taking about a hundred square feet of space out of apartments by the way this apartment Red's for more money and it's a much nicer place it just has less room for all that stuff and people are not buying out on a per square footage basis notice I'm a real-estate guy so I'm saying 578 square feet but the person buying it is buying a beautiful bedroom an incredible living room and a very small kitchen because I don't cook really and I don't want to pay for it but I do get an incredible lounge downstairs the new apartment buildings that are being built by the way they're not being built in Chicago because our economy is still recessed here but in Washington DC where there's lots of government these kinds of buildings are going up apartment buildings for young people and what they're doing is they're putting a boutique hotel environment and where are people living there living in the lobby that's where they're watching TV on their pad that's where they're reading a book that's where they're listening to music together because an interesting thing is happening in real estate because it's an interesting thing that's happening amongst people we are getting smaller and we are getting closer all these doomsayers that say that these digital devices are making us antisocial it's making us more social because it allows us to connect to more people more things more ideas than ever before with less space and space you see costs money that's why we all moved out to the suburbs so we could get more space to put our stuff but if we're in the city with no stuff we have the same amount of space and now we get to be with people and people are where we get the ideas like in this meeting right here people are where we get excited we like being with each other it excites the neurons it gets us going it allows us to live and express ourselves in ways we never could before office is the same thing that's happening the typical office lease for a law firm today over the last three years has been 1/3 less than it was ten years ago in other words 1/3 less space per person per lawyer than ever born now this is important because lawyers are really boring and very predictable and lawyers like big expensive office buildings in fact most of the money made in our big cities today is made off of law firms god bless embed big libraries filled with law books now they have one shelf with law books so they can be shown on video with the law books behind them they use a database so a third of their space was taken up by books that are now gone every time they're signing up for a new lease they're getting rid of that space because it's just very expensive insulation remember these you know for fun okay just for fun next time you're in an office a really fancy office go by and just start looking inside the file cabinets see what you see generally probably for me a non-scientific survey is mostly what you find is shoes because we've been collecting all these shoes they're filling up our apartments and we have to put them in the file cabinet I don't know lots of shoes and files from you know the old days 1995 when we actually had fines so they don't have as much file space as they did before and they also don't have as much support staff and more important they don't live in their offices anymore so you talked to a lawyer today and you say listen is it still like it was in the 90s when you lived there 24/7 you went there on a Saturday afternoon and everyone was there and they'll say no it's empty on the weekends because they all have laptops they're still working around the clock because god bless some lawyers work they work all the time but now they can work at home and they'd rather do that than come into the office so they need space to have meetings they need space to collaborate they need to connect somewhere they just don't need quite as much space for the stuff this may be the look of the office of the future small floorplate lots of windows fun to go to not the big IBM tower that we had before the space is looking better than it ever looked before because you can afford it now so my per square footage cost goes way up right if I'm renting space from someone oh it used to be $50 a foot now it's $100 a foot terrible terrible terrible yeah but I need less than half of what I used before less space more living less space more living I want to take you back in time we've seen this before this huge transformation in our real estate environment that is occurring now it is happening now right under our noses and real estate about investors are starting to see where things could go because people are using space in a different way and I'm by the way I didn't even talk about retail I don't have enough time the retail is completely transformed in ways that we can't even imagine maybe we're selling a seat maybe we're selling a club membership in an apartment maybe you know so you can change apartments every six months I don't care as long as you stay in my apartment building or in my neighborhood or in my buildings if I own buildings in multiple countries and you need to change where you live every six months fine you're in the club the Zipcar of apartments kind of interesting idea I don't know I don't know if that will happen or not but I do know it is changing and here's why I know it's changing back in 1450 give or take a year or two back then they didn't keep the records the same way guy named Guttenberg said you know what I found a cheap way to make Bibles this is a great technology I'm going to print these Bibles funny thing happened with those Bibles it was just the beginning we started printing books and more importantly flights you could cheaply print a single pager and you could nail it to the door of your local church the dark side to that by the way and we're all familiar with that was a hundred hundred fifty years of brutal religious war throughout Europe but on the plus side it changed the way we looked at the world and it certainly changed real estate before that there was no real estate business the King owned the real estate you know the rest of us had huts and carts right then we wanted to read books but in order to get the books you had to store them somewhere dry right so you had to have a dry place to put it so you had to create shops in warehouses know that you had to manufacture it so you had to create factories to manufacture the paper in order to print it and you needed to have stores you need to had retail and lo and behold you needed to have universities because people had to learn how to read in order to read the things you had there so you created university towns oh and if you had a town that mean you had to sell people stuff so you suddenly had a civilization made up of towns not just of kings you had merchants you had buildings you had schools you had offices you had apartments you had real estate we were created by the printing press those of us that live in real estate then a funny thing happened back in the 20th century I know way back when someone said you know what I can help our spies get information across to each other and I can help our University researchers get some information back and forth through this ARPANET became the internet the internet then was adopted for other things including crazy people and scenting you know war which I'm a little worried about but also the greatest period of literacy our globe has ever known more people read than ever before more people have access to every book ever written more people are able to think and connect to other people than ever before and more people want to live in cities and more people need real estate to do what it should do for them our world looks like this now it's an exciting time to be and it's an exciting time to be in real estate because all of us are going to have less space and more life thank you

Channel: TEDx Talks

Views: 237,138

Keywords: ted talks, Business, Culture, ted, English, tedx talks, ted talk, tedx talk, Architecture, Design, TEDxNaperville, Social Change, tedx, United States, ted x

Id: JQ6irnso40c

Length: 17min 55sec (1075 seconds)

Published: Tue Dec 18 2012