So, you think that smart buildings, permanent youth, always urban, shared working space and tiny homes are forever? Think again.

On being niche

By Gary H. London

The inspiration for this paper is the many changes in our lives and marketplace that people seem to regard as permanent.

They mostly are not. Trends and concepts come and go. Today’s good ideas are tomorrows stale notions.

Here is my laundry list of “niche” concepts that I believe will not capture the collective imagination of the marketplace for which they are intended, at least not over the long term:

Smart buildings: I recall a “futurist” speaking at an ULI conference a couple of years ago planting this idea: that the dumbest expense is to build “smart” buildings. This is because so called “smart” improvements become obsolescent (think pretty dumb) in short order. My reference is all of those “smart” homes with loads of wiring and cable, a closet devoted to the intersection of all electronic stuff.

Essentially the same is true of commercial buildings. A decade ago a Class A office building had to be resplendent with top speed wiring and cabling. … and then, bam! The world went WIFI and Bluetooth. That was a waste of money. The moral is that if builders stick to concentrating on great design, green and energy efficient, and incorporate flexibility, well, “smart” need not apply.

All in” urban: Demographically, we are now passing the point of “peak urban millennial” which can be roughly translated as that moment in which the largest demographic cohort, or bucket of people in America, are now 37 years old and aging. In most cities, they will opt out of the urban centers where they have habitated over the past decade, and where most builders have been constructing multi-family, vertical housing.

This doesn’t mean demand for urban housing will necessarily wane—those “Next Gens” are right around the corner and will enter their young adult years raring to rent in the City. Occupancies should stay high.

But what it does mean is that many, if not most, Millennials who are presently coupling up will seek a home in the suburb to raise their families. That is already happening, and many developers have responded by seeking development opportunities which are affordable and suitable for these young families.

Shared work spaces: I view this to be more about dating in the workplace than getting serious work done through networking. Sure, there is much to be gained by sharing, not the least of which is lower overhead for individuals and boutiques, a chance to network, etc. But the downside is loss of privacy, and I believe that this will be quite wearing on individuals in the workplace as young people move up the corporate ladders. They will seek privacy and the status of personal space. You can count on it.

Shared living spaces: The same goes for shared living space, which is apparently the new rage in some cities. This again is a cost based solution where people are willing to give up some personal space in their own living units in exchange for lower rent. That can work for a narrow demographic and for a short period of time. But most will migrate away from sharing the TV set in the wee hours.

Tiny homes: Homes have gotten smaller. But there is a big stretch between smaller and tiny. Tiny is a jail cell or skiff. Unless affordability is critical (and it is to service the homeless or the poor) few want tiny.

Working from home: This is a touchy subject for me, because I like working at home. But I have separate space. Working in your den, spare bedroom or foyer of the master bedroom, or even the kitchen table, doesn’t really work for most people. There are distractions such as children and refrigerators, loneliness, and the feeling of not being in the mainstream. I think that working from home works for all of us some of the time, but not for most of us all of the time.

Not buying a home: Home ownership rates are down as the eight-year recovery from the housing bust resulted in a loss of ownership and fortune. The other driver is that young adults can’t purchase, or are at least delayed by high costs and the burden of student debt. But the game is too rigged toward ownership, from tax deductions to wealth creation. Rising interest rates will slow home ownership rates, but rental rate increases are equally sobering. I fully expect home ownership rates to rise, albeit in ownership in a wider variety of sizes, types and locations.

All Amazon: Shopping centers are not dead. Even Amazon knows this as their own stores begin to pop up in bricks and mortar locations, alongside Apple and Bonobos, all of which are now populating the new wings of modernizing shopping centers. Shopping is a form of recreation. What we are seeing is an integration of ecommerce and bricks & mortars. That will continue to evolve, as gravity sets in on how shoppers want to shop.

Uber forever: I know the predictions, certainly with the coming of autonomous vehicles, is that fleets and services will take over our personal transportation requirements. I think this is mostly not true. No doubt fleets and services will capture a significant market share. But I don’t believe there will an outright rejection of personal autos, whether you drive them or not. What is more likely to happen is that there will be many more one-car households, with the other car ordered as needed, and available to suit that particular trip or location.

Hotels are Obsolete: Airbnb and VRBO are thriving now, and I expect will stabilize with significant market share. But they will never replace hotels. Not by a long shot. They are a classic niche service: they appeal mainly to families, travelers on a budget and those looking for unique experiences. They mostly do not appeal to business and convention segments, or a very large portion of tourists who value service above all. That is a hotel. Many travelers cannot deal with the uncertainty of their accommodations: Is it as good as the photo? Is it clean? What option do I have if I am not fully satisfied and its 8 PM at night? You can’t exactly ask for a room change.

This is my teaser list. I am interested in hearing what others would add to it, as well as those who might disagree with me.