How AR and 5G advancements are saving the world, extinguishing one commute at a time and marking the end of commercial office space. CEO Gavriel looks at how technology will shape the future of office spaces and answers why REalyse is sticking with residential real estate for the time being.
Read Time: 15 minutes
We often get asked ‘why doesn’t REalyse do commercial real estate as well?’. Usually the answer is that we just haven’t gotten around to it yet.
However, nowadays we have a much better answer: because in the next 10-15 years, commercial real estate may well be a shadow of its former self – especially with the demise of demand for office spaces.
The technological evisceration of large sections of the retail sector (Amazon, anyone?) has resulted in its struggle with endlessly rising rents and an ever-diminishing customer base. Well, we predict this will soon extend to affect the commercial real estate sector as well, though in a slightly different way.
As retail property empires and brands crumble, we’ll be asking how this same future will hit the office market. If you want to know the answer, just read the second to last sentence of this section. If you want to know how, read the rest of the article.
So, why will commercial offices die out? The answer is relatively simple: AR – augmented reality. (No, not piracy!)
Let’s start with a brief pros and cons of office spaces.
Why People Don’t Like Offices
1) Commuting: You have to travel to get to them, which means commuting. This will probably involved being compressed and frustrated alongside thousands of other people trying to get to the same place at the same early hour of the morning.
2) Costs: The transportation cost of getting to and from work on average is about 5% of gross income, which comes directly out of your pocket.
3) Uninspiring Spaces: Most offices are not particularly inspiring spaces. While in recent years this has improved and the interior design of offices are starting to broaden beyond more than just ‘clinical dentist of the future’ and ‘the cheapest possible fit out’ as options, it is still a long way off what anyone really wants. It is unlikely to hit all the right spots because everyone has different preferences.
4) That Colleague: There’s always that one (OK, maybe more than one…) colleague you don’t like. It’s inevitable. And having to share a room with them is significantly less desirable than not seeing them at all.
5) Distractions: Distractions in the office are endless. From requests, messages, conversations to requests for tea or coffee, there are regular demands on your attention that divert from the job in hand.
Why Companies Don’t Like Offices
1) Costs: They’re expensive. Really expensive. Like an additional tax or a permanent cost of doing business that has little to do with your core functions. You need a place to put people to do things productively in order to build your business. And that place costs money.
2) Inflexibility: They don’t get bigger or smaller as you need them to. Co-working and serviced office companies may go some way to alleviating this, but then the tenant has to pay a higher cost for the flexibility. See point 1 above.
3) Maintenance: You have to update them and relocate them all the time, keeping up at least the trends of the last decade is a must.
Why People Like Offices
1) Social Spaces: It gives people interactions they otherwise wouldn’t get with people they otherwise wouldn’t meet.
2) Productivity: It gives people a place to go that isn’t home to get things done.
3) Status: It gives people a sense of status, provided that the office is keeping up with the trends.
Why Companies Like Offices
1) Supervision: It allows employers to make sure that their staff members are productive and on-track.
2) Status: It gives the company a sense of status, provided that the office is keeping up with the trends.
3) Collaboration: It allows for interaction on complex subjects through face-to-face meetings enabling the interpretation of nuanced non-verbal communication and a more collaborative mode of ideas generation and problem-solving.
So, wouldn’t it be great if there was a way that you could get all of the good things together without any of the bad things?
Commercial Offices and the Environment
There is also the very significant impact that commercial property, and people commuting to offices has on energy usage and the environment.
On the environmental side, in the US the energy usage figures stack up like this:
Commercial activity makes up 18% of the total energy usage of consumers based in the US. And transportation makes up 29% of that same total.
Imagine a person commuting to work. Roughly 40% of total transportation energy consumption is from personal vehicles (see chart below). In the UK those with personal vehicles spend 60% of their active time commuting to and from places of work, which in roughly 50% of cases was to an office.
You might argue that in the UK a higher proportion of the population use public transport. But even in those cases the trains run on electricity, half of which is generated from gas or coal.
Or alternatively on buses, the majority of which run on diesel.
Once people have arrived at those commercial workplaces, roughly 43% of them (based on US statistics show below) were either office buildings or fulfiling a function that was not location dependent. Unlike food services, warehouses or storage providers (which all require a physical product), office, mercantile and education spaces do not necessarily require a specific location for people to undertake their tasks (see graph below).
So, by combining the different proportions of energy usage, we can estimate that 7.5 quadrillion BTUs were used by people in offices, and 13.5 quadrillion BTUs were used by people getting to those offices, out of a total of 97.7 quadrillion BTUs.
21.5% of US energy usage is therefore dependent on people turning up to work in an office of some kind.
The Paris Agreement roughly suggests an approximate 20% energy saving in each country. Reducing the amount of time people spend travelling to work, and in turn the energy consumed by running an office space in a working day, seems like a pretty good way to make that happen.
Commercial Property Walks the Plank
AR – not just a pirate’s way of saying hello, but the acronym for augmented reality.
Watching people play Pokemon Go may have been the first global experience of some early commercial steps in that direction. Everything from Google Glass to Microsoft’s HoloLens and Magic Leap’s One is marching rapidly towards a world that mixes the digital with the real in order to obtain the best of both. A place where companies spend less money on office rent, where employees spend less time and money on commuting and where energy usage and emissions are lower as a result of reduced office utilisation.
Magic Leap One
Virtual Desktop for Oculus Rift
In the same way that personal computer power was largely driven by the requirements of increasingly detailed video games in the past, today the advancements of AR are being driven by entertainment requirements. Ultimately, that same advancement of computing power will be directed to the work environment and greatly change the way we all work, for the better.
AR in Practice Imagine: it’s 8:30am on a weekday. You’ve worked out, had a coffee and watched the news. Now, you sit down at your desk, which is in your own home. You start your working day by putting on an AR headset.
In front of you is your familiar computer monitor, which is loading up your work screen. When you have logged in, you can see into a virtual representation of an office; the office itself may well appear to be on a beach or even in space. One by one you see your colleagues’ desks and monitors appear online.
You stand up from your desk to deliver the morning round of reports. In turn, each person does the same. Their movements captured by the 6 cameras located in each person’s home and their voices captured by a regular VOIP (Voice over Internet Protocol) microphone. You need to get a closer look at what one of your colleagues is talking about, so they share their screen with you, which appears in a second monitor in front of you.
This probably doesn’t even sound unrealistic or fanciful because is already within reach of existing technology (hello, Zoom and Google Hangouts) – we just haven’t taken the leap into the more sophisticated AR technology yet.
But the trend is already underway. In the US, more than one in 20 people now exclusively work from home and (if the trend from 2015 has continued) 40% of people have at some point worked from home. From the perspective of commercial office space, these would appear to be the early stages of a large shift.
The graph above illustrates the relative growth in the overall US working population, compared with the growth in the population working from home.
That is, in my view, where a very large majority of non-physical jobs will end up: virtual offices run from home. But you can go further yet, with remote drone operators making site inspections from a home office entirely possible in the not-too-distant future. Who knows? Perhaps even going to a bar will end up as remotely operated too.
AR Becoming a Reality
For this to happen there are three technical limitations that need to be overcome:
1) Improved Resolution: The resolution of the display system. If anyone has tried an AR system like Oculus Rift, you’ll know that after a few hours your brain does tend to melt, similarly with the much less advanced Google Cardboard. The relatively low resolution (~1.3 megapixels for Oculus Rift) and staring at what is undeniably a two dimensional surface strains the eyes before too long.
2) Increased Processing Power: The processing power of the image capturing systems, video systems, audio systems and in-device applications needs to be powerful enough to render and merge complex environments in real time with minimal loss of detail.
3) Quicker Data Transfers Rates: The data transfer rate needs to be high enough to be able to support ultra-high definition. This needs to be able to stream both up and down as the user’s local system reports their movement and position to the platform and the platform reports back the information from their applications and the other users.
Dealing with these aspects in turn:
1) In order to mimic the resolution of a human eye, a screen would need 576 megapixels. AR systems are not anywhere close to this level of detail yet. However, given the rate of progress it would seem feasible that this could be achieved in the early-mid 2020s. a) 2013 – 4K Television – 12 megapixels b) 2017 – 8K Television – 33 megapixels c) 2019 – 16K Television – 133 megapixels d) 2021 – 32K Television ~ 400 megapixels? e) 2023 – 64K Television ~ 1200 megapixels? It is foreseeable that by the mid 2020s near-life resolution will be achieved. The technology could then subsequently be scaled down to fit into a wearable device such as an AR headset.
2) It is harder to estimate the processing power required, though it might not be as much as you would expect. Borrowing a lot from techniques developed to render highly detailed multiplayer video games, the merging of different perspectives on a screen becomes relatively straightforward once that scene is built. High detail video rendering would be the largest component; however, even this could even be allayed with pre-built avatars, much like in a video game. Video compression would also help. The technical requirements of existing VR/AR systems aren’t much more than a mid-level desktop computer, so it would make sense that any future VR/AR system would have requirements aligned with a mid-level desktop at the time.
3) The amount of data being transferred by a 576 megapixel livestream would be enormous. 8K is expected to require around 80-100Mbits. This is feasible with 5g infrastructure, but roughly speaking the upgrade to ‘human-K’ might need something like 3.2Gbits. While wired or microwave systems wouldn’t have much problem with that level of data usage, the user is unlikely to want to be wired up while working (doesn’t that defeat the point somewhat?) and so wireless transmission will play a key part in this technology.
Similarly as people move from the cities to more suburban and rural locations, telecoms companies are not going to pay to wire up every house with fibre-optic or microwave connections, but they might happily setup a 5G or 6G antenna to broadcast to thousands at once. Bear in mind that the monitor you are reading this on right now probably doesn’t have a resolution much higher than 5 megapixels, so a near-life level of detail isn’t necessarily required to be able to work all day. 5g-capable 8k-screens are already being released now and when the technology can be shrunk down to the level of a headset, then that could well be sufficient.
a) 1980 – 1G b) 1991 – 2G – 40kbits c) 1998 – 3G – 200kbits d) 2008 – 3.5G – 14Mbits e) 2009 – 4G – 100Mbits f) 2019 – 5G – 1Gbits g) 2029 – 6G – 10Gbits?
The rollout of secure 5G networks will be crucial to this transformation.
This leads us to the almost inevitable conclusion that once these technological hurdles are achieved there will be very little in the way of people whose jobs can be fulfilled remotely to work at home. Align that with consistent improvements in automation across industries, which in turn lead to fewer people having physical requirements attached to their work and you can see that this will transform the entire working environment of the future.
In this future world, companies would save enormous amounts of money on office rent, insurance, and onboarding. Instead they would only need to send their employees a pack containing camera hardware, a headset and login details. And while energy usage at home would increase, energy usage in offices and transportation would greatly decrease. The stress of commuting would be gone and people would save money on transport. It’s much easier for an individual to put solar panels on their roof to power their virtual office than it is for a company to do the same with an office building.
Meanwhile property development outside of cities would increase in number and prominence as more and more people move to suburbs and rural locations where they can still work just as easily, but can have more space, cost effective housing, better quality of life and, provided they have transportation, access to whatever centralised urban amenities still exist at that time.
Our example worker might, after a long day at their desk, quickly flick channels on the headset to check out the scene at a nearby bar and decide with a few friends if it’s worth calling up a self-driving Uber, Lyft, Tesla or Waymo to take them to the center of town. They’ll drive past the facades of banks, insurers, estate agents and supermarkets, and past the towers built just decades earlier that were once the offices of global corporations but have been repurposed as live-work apartments. Apartments with really great views.
Want to be the first to read REalyse Founder’s analysis hot-off-the-press? Sign up to our weekly newsletter and never miss an update.
© Treex 2020