The innovation economy – where ideas and IP are king – is evolving, growing, and urbanising exponentially. The world’s 1,000 biggest spending firms on research and development (R&D) now spend over €1 billion a day to gain an innovation edge, and many of them are moving to the inner city, to maximise their scale and reach. At the same time, disruptive technologies including mobile connectivity, the internet of things, and 3D printing are attracting trillions of dollars of investment and increasing the power of agile small companies to hit the big time.
Mega disruptors are feeding the growth of this new economy. Big data, digitisation, the sharing economy, and the global war for talent, are all transforming how people and companies work and think. This disruption is driving more variety, volume, and quality, unsettling old business models, and forcing down barriers to entrepreneurship. Critically, they are also changing the patterns of demand for workplaces, buildings, urban districts, and even for cities themselves.
In this report, we explore and explain how all of this creates a new normal for real estate. The business cycles of innovation sectors mean they need flexible leases, operate under different revenue models, and need access to grow-on space. They also need fully customised workspaces, reliable utility systems, and often a lively mix of retail, performance and event space built in. These specific and bespoke demands mean that any ‘one size fits all’ approach is destined to fail. What is more, these new requirements are no longer solely the demands of innovators. The influence of innovation is stretching to traditional sectors and tenants, rapidly transforming the real estate landscape.
The lessons from some of the world’s ground-breaking innovation spaces and districts suggest that real estate needs to revolutionise its modus operandi if it is to effectively service and profit from the innovation economy. It can no longer rely just on bricks and mortar; these changing patterns add up to a fundamental change to the business model for real estate.