Our tipping point is here – let’s embrace it

COMMENT This year has kicked off with a bang, it seems. Perhaps reflecting that time appears to be accelerating. Driven by a world where three non-linear accelerations are all in full flow: nature; markets, via digitisation and globalisation; and technology, with Moore’s Law having held up now for more than half a century. As I think about how we can accelerate change in our industry, I wonder whether what is relevant is not the absolute pace of change, but the second order derivative – your perception of change. A bit like in economics, where behaviour is influenced by inflation expectations more than it is by inflation itself. If you think a certain known fact will be stable forever, a small change in that could be disruptive. That kind of change has a greater impact than the absolute pace of change in computing power, which is something we have come to expect. Going through changes We are less well-equipped to deal with the “change in the pace of change” at this moment in history than we have been for a generation. We have gone through a period of trauma at a meta level with overlapping crises of pandemic, war, and in the economy, translating into personal trauma for many. There is a large body of work around trauma, which brings feelings of hopelessness, a resistance to change and a thirst for stability. But change can be good – necessary even. Crisis situations can be catalytic events that act as tipping points to accelerate it. Bringing suppressed issues to the forefront, these events prompt a collective response and make change more likely. In real estate, stability has been the mantra for generations. Property provides ballast in an investor’s portfolio, unwavering, reliable income, with 20-year leases. Buildings stand there to welcome you day in, day out. Yet this notion has been overcome by facts and those expectations overturned. Not least of all the profound changes in every aspect our sector that we are required to combat is the climate crisis. We are neck deep in change. Hindsight is 20:20 Will the changes we have seen in real estate these past few years stick? Predicting when a specific change will become inevitable can be challenging, as it depends on a complex interplay of factors. The identification of a tipping point is often only clear in hindsight. So are we at the foothills of transformative change? I think we are. I believe we are exiting the trough of disillusionment and climbing the slope of enlightenment. This social construct about change comes from Everett Rogers’ 1962 Diffusion of Innovations theory. His book explores how new ideas, technologies and cultural norms gain momentum, spread and are adopted. According to Rogers, for transformation to stick, it needs to be seen as objectively better, fitting our needs, easy to implement and test, and provide results. If we think about the innovation needed to drive greater sustainability and social impact in real estate, I believe all of these factors are already prevalent in spades. The “new normal” is how we described this change towards low-carbon and resilient buildings in The Building Breakthrough commitment launched at COP28. With a 2030 target to get to that point, surely 2024 must bring with it a wholesale acceptance that from now on we can only build buildings to a net-zero standard. When the UK’s first cross-industry standard is published in the spring, we will finally have a single, agreed methodology to define what makes a building net-zero carbon. Special to everyday I hope that in 2024, reporting of embodied and operational carbon – two simple numbers – will become ubiquitous. And retrofit and reuse will become the accepted norm. We are seeing this already. The City of London approved a record number of retrofit planning applications in the Square Mile in 2023 and is now pressing ahead with its retrofit-first policy. I also believe in 2024 we will stop talking about social value and focus on social impact. Every building, on every street, will be recognised for its potential to be a factory of improved social outcomes. This will be the year that these and other things tip from the realm of the special case into the realm of the everyday. Finding a balance between stability and change is crucial for long-term wellbeing on every level – personally, professionally and politically. But history is replete with examples of tipping points, both technological and social, that worked out just fine. The printing press, electrification, the internet, revolutions, civil rights. Perhaps this is one of those moments. And it is the time for change. Basil Demeroutis is managing partner at Fore Partnership