The world of PropTech is one dominated by big cities. It’s in these markets, places like New York, London, and my hometown of Chicago, where investment dollars are great enough to warrant a strong PropTech industry; where there are enough angles for different types of owners, and by extension enough margin in rents to justify some experimentation; where there’s a big enough chunk of people to allow for different tech platforms to get to work. Secondary and tertiary markets, like Tucson, where I spend a substantial portion of my time, may have lots of competition across every property type, but in many cases margins are so tight and innovation so laggardly that real estate professionals see little incremental benefit to investing in PropTech.
But it won’t always be that way. In some cases, tech-heavy master-planned developments that function as cities within cities, like Hudson Yards in New York or the Sidewalk Labs projectin Toronto’s eastern waterfront, have the potential to bring individual neighborhoods to a point of primacy in the industry, despite (or in spite of) the characteristics of the broader city they’re part of.
I’ve written before of the dynamics of America’s hinterland in the face of a rising PropTech tide. While some companies expect to serve the more rural, remote communities of the country, others are sticking with the big cities. It’s a wise move that warrants no complaints.
But despite the importance of the big city to PropTech, it could very well be our specific niche of the tech world that opens up truly remote places to growth and development. As an industry we talk a lot about enabling remote work through VR and AR, team collaboration platforms like Asana, and new management styles. Plenty of articles point to both the growth and benefits of remote work. But seldom do those conversations take these technologies to their logical conclusion, years and years down the road: an explosion of interest in truly rural areas.
It makes sense: why would the growing trend of remote lifestyles stop in the city or suburb, when there is a much broader, much cheaper, much more beautiful world out there, full of open spaces for outdoor recreation, incredible natural scenery, and true removal from the distractions of urban life. Here’s an anecdotal example: since the start of 2019, Reddit’s community for digital nomads (remote workers who can, in general, work out of their home, a coffee shop, or a van down by the river) has grown from 350 thousand subscribers to a present total of over 520 thousand. While this includes plenty of observers and bot accounts, the same is true of every other subreddit. It’s a huge growth that points to the popularity of flexible work arrangements.
So what does the growth of the “remote class” mean for us in real estate? We will likely see the expansion and revitalization of small towns, as this article from We Work Remotely points out. The Mountain West region of the United States is already seeing tremendous population growth, in large part because people enjoy the lifestyle and recreation opportunities it affords. That won’t change any time soon. But I’d argue that it will go farther than that. Look at the growing ability to live comfortably anywhere, thanks to trends like tiny houses and prefab, modular construction. With that, I would expect settlements to pop up in even less-populated areas than Mayberry. These places may not be permanent and they certainly won’t appeal to everyone, but for the crowd that responds well to ideas like co-living (disclaimer: that includes me), they’ll be a very real possibility that perhaps ends up looking somewhat similar to the communes and intentional communities currently spread around the world, with a more free-flowing, transitory atmosphere. This all points to another trend I expect to see more of: nomadic lifestyles with or without a home base, spent moving from place to place after a period of time.
In the even longer term, more isolated homes could pop up increasingly far from local downtowns, since advances in connectivity and product delivery will turn the biggest limiter of development into utility access and not proximity to jobs or shopping. These houses will likely be inhabited by older residents who don’t have as much need for things like bars and restaurants.
These developments will have profound impacts on the real estate industry. Interest and funding in modular, transportable homes will likely increase, and with it, new modalities of space for transitory residents. Think slick, amenity-rich trailer parks or campsites for the remote class. Much like co-living and co-working took existing usage patterns (traditional roommate arrangements and working out of coffee shops or libraries, respectively) so too will the remote revolution repackage the idea of the campsite. Also likely to grow is the concept of membership-based homes, where, much like gym memberships, one fee gains access to numerous spaces. These systems are already growing (albeit with mixed success). For operators of these types of living spaces, the challenge today is largely in balancing locations at a middle-ground price point: price the service too low and spaces in attractive locations are priced out; price it too high and locations in cheaper areas become a bad value for users. A more rural, remote-enabled mission would help these businesses succeed by keeping prices lower across the board.
The big losers as remote work gets easier and easier will be places with no clear draw. Research indicates that Millennials, at least, are drawn to both urban and suburban areas. Whether it’s a city or a village, areas that lack a distinctive culture or natural draw will likely have a hard time remaining competitive as increasing swaths of America become occupied by a highly mobile generation.
This isn’t intended to be a comprehensive look at how remote work will impact our world over the coming years (although that’s a good idea for a future project). Rather, it’s meant to broaden the discussion on how our economy and industry will adapt to remote workers. I recently wrote about the challenge of over-relying on the familiar when envisioning future living scenarios. Nowhere is that more relevant than here: remote work will change a lot more than how our offices operate.