Real estate, alternative real assets and other diversions

The Pains and Benefits of Transforming to a More Productive Society

The Analyst

Introduction

The world can be viewed through the lens of economics and real estate markets in that whatever we do requires space, and whenever processes change it has both positive and negative impacts.  You show me a more productive industry and I’ll show you unemployed workers looking to transfer towards better opportunities. What is striking is that, as of the end of 2019, we are on the verge of enormous productivity gains in nearly all industries, but regulation and industry luddites inhibit progress such that, at present, we are running parallel and redundant systems with dramatic over-capacity.  Once we reduce over-capacity and fully embrace technology, we will end up with a far more productive society, but one with much higher permanent unemployment and/or much shorter average work weeks.  More recreation time will, of course, lead to more businesses that serve leisure time demand, but this is a long way off and the discussion below focuses on now through the next ten years.

Examples of Potential Productivity and Excess Capacity

It is doubtful that anyone still uses yellow pages for finding commercial vendors, although yellow pages continued to be sold as effective advertising long after most of us tossed them straight into the recycle garbage pail.  Some of you may still have video tape players at home or DVD’s, even though these are essentially obsolete.  There remains, as of this writing, one Blockbuster, located in the Oak Lawn Shopping Center in Bend, Oregon, independent now of any corporate chain, suggesting that the rate of economic transformation towards new technologies will not be evenly distributed by industry or geography.

Where do we have redundancy and over-capacity in our current economy?

Almost everywhere is the answer, but let’s start with some examples where we see excess capacity of space:






The Analyst, zLead Article, zNewsletter

About Norman Miller

Dr. Miller is the Hahn Chair of Real Estate Finance at the University of San Diego (USD), and Vice-President of the Homer Hoyt Institute, a think tank of global real estate scholars and industry research directors. As Senior Vice President of Research for Collateral Analytics he helps develop real estate analytic products and tools to support financial institutions, banks andinvestors including valuation models, mortgage risk products, and using machine learning for data analytics.

Articles by Norman Miller

Subscribe to our print magazine now for just £50, saving £25 on your first year's subscription!

SUBSCRIBE