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:

1. Banks: We have far too many bank branches. The bank branches that are open are mostly empty with one third the tellers and staff they were built to accommodate.  As we move towards a cashless and even checkless society, we will spend even less time at the bank, preferring to use ATMs and digital transfers, and possibly even some form of cryptocurrency.  While going inside a bank is sometimes useful, we should see 75% or more of the bank branches disappear within a decade. If cryptocurrencies, like Libra, catch on, the credit card fees will decline and we may see a decline in bank profitability as well.  Eventually we may not need traditional banks.
2. Post Offices: Almost no bills come via the mail anymore and fewer and fewer checks. Often, the only source of mail are ads and brochures, which are rapidly declining in effectiveness and could certainly be delivered once a week instead of six days a week. The USPS could easily move to a five day or four day delivery system, and were it not for deals with Amazon and similar vendors, there would be much less revenue to depend upon.  We could easily transform the USPS to private carriers, noting that those choosing to live in remote locations will no longer be subsidized by tax payers.   Most post offices could be closed by 2030, but they won’t be as local citizen’s protest what they will call the critical and essential need for a local post office. Down zoning these post office sites will become a common strategy to maintain the post office well after obsolescence suggests other higher and better uses.
3. Urban and home parking: Autonomous vehicles will be able to park in more remote lots and then move into hover mode within urban areas, to be available on demand, as needed. Less car ownership as we select different cars for different tasks (work, theater, sleep, play) suggests less need for home parking spaces or for urban homes, temporary rental income for providing shared parking for others. 
4. Car dealerships: As car ownership declines per capita, and more sales occur in fleet mode, there will be far fewer car dealerships required and with electric cars requiring less maintenance, there will be far less space required for car repairs.  This will not occur until both 5G is common and the regulators recognize that cars already drive safer than people.  Hybrid options will be available with humans taking the task of driving over remotely when weather conditions make AV driving difficult.
5. Gas Stations: Gas stations will not be needed as we move to electric distribution via the grid and within parking facilities.  Some may convert to natural gas or hydrogen fuel.
6. Libraries: Libraries are already centers of collections of obsolete media forms, nostalgic to older adults who like to hold what they read, and valuable for their increasing rarity.  They are great places for community gatherings, art and music and lectures and productive libraries have already transformed themselves into this new format and stored books away as relics of the past to anyone born today.
7. Farms:  Urban farms are twenty times as productive per unit of space, require no pesticides, can allow for controlled levels of light, require much less water and reduce transit costs.  They will slowly take over as a source of food production, while outdoor farms continue with more robotic assistance for those crops grown better in natural full sunlight.  Total acreage devoted to farming may decline, even as our population grows.
8. Bulk warehouses:  Autonomous driven trucks will be able to cover more distance as trucks can run 24 hours straight with drivers resting during the highway runs.  Not only will we need fewer trucks but we will be able to use fewer and larger bulk warehouses.  3D manufacturing may also impact the bulk warehouse in favor of more localized storage of raw materials and last mile demand goods. 
9. Retail stores:  Obviously the big box retailers have already declined and will continue to decline. Value stores will continue to thrive ( i.e. Costco, Aldi) for the less tech savvy household, while most other retail will be experiential, high service or providing services and food. Retail space will likely be replaced by more services (i.e. fitness centers, hair salons, accounting and insurance, Triple A offices) in good locations, while some sites convert to non-retail uses and last mile distribution centers.
10. Office Space:  Historically office space has been underutilized with most work spaces occupied 50% of the time or less. Traditional space was planned for a work force that mostly came into the office. Not only is telecommuting reducing office demand, but sharing space known as hot-desking or office hoteling has been reducing total space required for many years.  Third party vendors are also providing similar sharing of space on demand and all of this is raising our utilization of office space to higher levels.  In theory, we could see the need for a third of current office space to disappear. Unfortunately, the markets where we will have the most excess space will not be transferrable to economically thriving markets where local economic growth will more than offset the change in demand from sharing.  Since most of the economic growth in the US will occur in a fraction of the cities, many cities will find significantly excess space while others will need substantially more flex space. 
11. Hotels: Hotel demand will be affected by the sharing economy with vendors like AirBNB, VRBO, and others, taking over a part of the demand.   Autonomous vehicles with sleeping accommodations may someday dent the overnight hotel market as well. 
12. Schools: On-line learning in self-paced modules are superior to mediocre or non-expert teachers, who may serve well as facilitators and coaches. Much of the transition will happen in schools but could also occur in libraries and at home.  

While the sharing economy and technology generally imply less total space required per capita for any one type of use, there will be other uses that require more space including but not limited to data centers, senior citizen housing, recreation space, urban farms, and on-line education centers.  We will also need to redesign buildings to accommodate drop off lanes and city streets to allow for drop off zones and lanes, along with electric bikes and scooters and various forms of individual transit.

The Human Impacts of Redundancy 

With labor costs running ten times the average occupancy cost, the real boost in productivity can only come about by using fewer people.  Just as manufacturing has continued to grow in total output using less labor than ever, the same transition has yet to occur in most other industries.  In parallel to the real estate impacts discussed above, are the corresponding workers, including but not limited to the following examples:

1. Bankers: With less cash and fewer checks, we will need fewer tellers, fewer managers and fewer bankers in general.  Loan underwriting will become more automated, but humans will work harder at quality control and auditing functions, as well as shifting to work outs and risk management.
2. Letter carriers, mail sorters and postal customer service centers will become increasingly automated and with less physical mail to deliver the post office may be shut down some day as a result of fiscal stress and competition from private carriers. 
3. Car valets, car salesman, car repairman and auto insurance agents will all decline as we move to automated driving and fleet sales.
4. Truck drivers will decline by at least half as those surviving drive AV trucks with sleeper accommodations.
5. Farm workers will decline slightly as we continue to automate planting, pruning, harvesting functions and move towards more efficient urban farming. 
6. Retail customer sales staff have been reduced as we do more research on-line prior to purchase and new apps steer us within a store to find what we want. 
7. Appraisers of residential property are slowly being replaced by automated valuation models that do not care if they hit a certain price and cannot be coerced by lenders to facilitate a mortgage loan based on property value as collateral.  Some underwriting will become more automated by the online lenders using speed of automated analysis to screen out the easy approvals or easy rejections and delegating to humans the challenging applications. 
8. Teachers and Professors need not always be subject matter experts capable of a state of the art lecture.  Rather, they need to be good coaches and facilitators.  The total number of teachers and professors may not change but the quality of the education should improve as we rely more on true experts to generate subject matter lessons.
9. Hotel workers will primarily be those involved in cleaning and food production or concierge services, while the check in and check out functions are automated eliminating the need for front desk staff at all but the very ritziest of hotels.
10. Insurance underwriting and sales will become more automated and more of a commodity business requiring fewer sales agents.  This applies to all forms of insurance.
11. Title companies are among the highest profit margin business in the insurance industry paying out less than 20% of insurance premiums.  This suggests that with blockchain and better underwriting models, title insurance premiums will decline along with title insurance sales staff.
12. Call center staff will continually be reduced as robotic answering machines start to comprehend and steer callers more efficiently towards desired answers and resolutions.  Customer service is practically gone already but information based service centers will continue to become more automated.

Just as we will need to expand some uses of real estate, there will be many new jobs that will support the new economy in transition.  This includes programmers, engineers, robotic and drone producers and urban farmers to name a few.  Still, the net labor input into all processes will be reduced releasing an enormous gain in the quality and quantity of output across the board for products and services.   The increase in human productivity may just be enough to save us from the increased costs imposed by climate change and humans cleaning up for decades of trashing the planet while the government borrowed more and more debt to spend now and let future generations worry about repaying.

Conclusions

Eliminating anti-competitive regulations and redundant processes would unleash a tsunami of productivity gains.  This includes the paranoid fears we have about allowing new industries to displace old ones.  This is not a suggestion for eliminating regulations that protect consumers with more disclosures or protect the environment, but it is a suggestion to encourage the testing of new systems for transit, delivery, AV based logistics and honest evaluation of the risks for implementing such systems.  Innovation and science might save us from our short term outlook on the planet and living-for-today political mode of decision making.