FoC_CITY SHAPERS VIRTUALISATION REPORT

CITY SHAPER: VIRTUALISATION

Present day baseline If the first industrial revolution was about mechanisation, the current one is about digitalisation. The internet has unlocked the ability to move products and ideas instantly and has become the primary vehicle for sharing knowledge and doing business globally. For the first time in late ‘90s intangible assets (intellectual property, data etc . ) overtook tangible ones (property, plant etc . ) in their worth on collective business balance sheets, and this is set to continue. activities formerly reserved for the real world, in new virtual settings. At its simplest, this is eCommerce, the ability to browse and buy something without going into a shop. In 1995, the closest that one could get to this was a mail-order catalogue. Now it accounts for >30% of all sales. Then came working from home. In 2000 this meant taking your paper files home and buying a fax machine; now it means interactive video calls and cloud file storage. Developed on the shoulders of digitalisation is virtualisation: the ability to carry out As technology has improved little by little, carrying out tasks through virtual means increasingly approaches fidelity to the real-world equivalent. Importantly, virtual mechanisms are being used not just for functional tasks, but also for fun. Starting with video gaming, the number of people using virtual worlds as a venue for interacting with each other is rising sharply.

How might virtualisation develop over a horizon to 2040?

We offer a short exploration and consider the impact on cities of the future.

CITY SHAPER: Virtualisation

1 Cushman & Wakefield | Future of Cities |

What might change by 2040? We stand at the precipice of what might prove to be one of the biggest steps in the history of human evolution. By 2040, it is plausible that virtual reality technology will have evolved to a point where virtual environments are substantially indistinguishable from the physical world. Screens will be first replaced by headsets and then by contact lenses and other wearables to stimulate touch, smell and taste. Ultimately, neural implants will send signals directly from the internet to the brain. This capability is no longer science fiction, but rather a matter of time. The big question is whether, when presented with this technology, humans will choose to adopt it or reject it. Safety and privacy considerations will need to be weighed against access to what could be an improved version of existence over the real world for many. The potential urban impacts of widescale adoption are manifest. The economics of cities and real estate are predicated on there being no alternative to the physical world. A viable digital substitute or substitutes would radically transform the nature of cities and the nature of reality. Noting that virtual environment ‘Fortnite’, has 350m regular users, and Roblox has 150m regular uses (both many factors larger than the population of the world’s top cities), we cannot discount the possibility that the biggest city in the UK by 2040 could be a virtual one; a place where people spend the majority of their time, and a substantial element of their earnings on virtual rewards and experiences More likely, physical cities of 2040 will be heavily augmented with digital realities. In the same way that your smart phone currently allows you to supplement your own knowledge with information from the internet, we are likely to see a broader based adoption of digital technologies that allow for augmented real-time visual data based on your location and your interactions in the city. Taking the form of glasses, contact lenses, follow-me signage, or just your phone screen, the fabric of our urban environments will become interlaced with data about where you are, advertising as you pass shops, and interactive public art. Dystopia or panacea? We may be about to find out…

Takeaways » Digitisation has not run its course, and will continue to influence how we work, shop and live. » Virtual environments will be improved by processor power, wearables, and ultimately implanted chips. » People are increasingly seeking out virtual worlds for leisure and the experience is improving. » Increased virtualisation substitutes demand for physical activities, affect a range of urban elements. » The city of 2040 will be augmented with visual data; our experience will be forever altered. For Investors » Keep a close eye on the potential for digital substitution of activity underpinning demand for your assets. For Occupiers » Consider opportunities to better manage dispersed networks using virtual technologies. For Government » Form a plan to integrate virtual and digital infrastructure into city centres. Black Swan Risks » Virtual takeover / city collapse. » Rejection of virtual technologies.

What might this mean for your business? Get in touch with one of our Future of Cities team who can help with strategic evaluation, horizon scanning, scenario planning and future proofing: futureofcities@cushwake.com

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CITY SHAPER: Virtualisation

2 Cushman & Wakefield | Future of Cities |