How is the concept of ‘sharing’ changing cities?
14 December 2016
The UK has emerged as a sharing economy hub. Our recent study with the European Commission shows that sharing economy activity across Europe has accelerated over the past two years, with its five key sectors generating revenues of €3.6bn and facilitating €28bn of transactions in 2015.The UK’s sharing economy has grown the fastest in Europe, with transactions almost doubling to £7.4bn in 2015, and platforms taking home £850m of this total. It’s also become the home to a number of sharing economy success stories who are rapidly expanding outside UK shores, such as Lovehomeswap, Justpark and Hassle.
Here, real estate director Gareth Lewis explores the impact of the sharing economy on one area of society; city infrastructure.
The sharing economy is manifesting itself in all areas of real estate. In its essence real estate is based on the concept of ownership, whether that be ownership of a building or entering into a long lease on a building. So it is not surprising that the sharing economy is turning the real estate industry on its head – a point that was referenced frequently by the industry’s leaders in our ‘Emerging Trends in Real Estate (Europe)’ report.
In their very essence successful cities are the embodiment of the sharing economy. Successful cities help the largest, most diverse number of people to collaborate effectively and that involves the sharing of resources, whether that is infrastructure, technology, culture and ideas. And the very best ones embrace this concept: they have the best public transport networks with multi-modal transport options, advanced ticketing systems and car and taxi sharing. There is already evidence that the latter is changing attitudes to car ownership among young people who no longer see owning their first car as the rite of passage that it used to be.
When it comes to infrastructure the focus tends to be on the big schemes, but take bike sharing – a hugely undervalued and largely unremarked service that is actually changing the way people use cities in small ways that add up to something much bigger. I now jump on a ‘Boris Bike’ and cycle to a tube station that I used to avoid because it was too far to walk. Now it is just a four-minute cycle and that’s opened up a whole new network of transport options for me. Across London and other cities this is leading to changes in people's travel patterns, how we view the city in general and changes in the way people access and value certain areas of the city – including its real estate.
With the rise and rise of internet and online retailing, the most successful cities will soon be judged on how they solve logistical problems like last mile of delivery in an effective and sustainable way. Currently there is a growing list of different operators, such as Amazon, Waitrose, InPost and Argos, with their own click-and-collect locker services, and vans from different retailers criss-crossing all over the city, occupying space on the congested roads. But soon cities may move to an open-shared platforms used by all retailers (sounds a bit like the old post office concept?). This could be driven by the market forces or more likely by a combination of market forces and regulation as a response to congestion, air pollution and the challenge of climate change and resource scarcity.
This small-scale ‘soft’ infrastructure is often overlooked but can have a huge impact. So while the focus may be on Crossrail, for example, currently less attention is paid to the impact of a quadrupling of footfall in the area around Tottenham Court Road when the first of the new fast trains start pulling in. What does that mean for the local area? Where can you go and have a nice quiet sandwich at lunchtime? Does the whole experience of living and working in London change? We will need soft infrastructure solutions to resolve these issues which impact how a city functions, how desirable an area is, and the real estate values in those areas.
Solving many of the most important challenges facing society today will hinge on the success of cities and the sharing or collaborative economy, and these forces are undoubtedly entwined with the future of real estate.
Gareth Lewis was interviewed on this topic for Property Week Perspectives (Vol 4 - the winter issue) – ‘Success in the cities: the secret is all in the sharing’ (p14-15) published on 25 November 2016.