Moore Law is changing the desire lines in the real estate world.

The real estate industry is facing a shrinking demand for physical space as a result of Moore’s Law, a prediction made in the 1960’s by Intel co-founder Gordon E. Moore that the computer power of micro-chips would improve exponentially every two years and take up less physical space as time over time. This is having far reaching effects throughout our world and it’s becoming evident in the world of real estate.

 In 1989 when I bought my current home we brought with us our record collection, my wife’s 210 boxes of books, and my component stereo system with massive speakers and all the rest of our stuff. I figure one third of our home was dedicated to storing our stuff.

 All these things that we considered essential now fits on the smartphones or thumb drives in our pockets or on servers and databases accessed by cloud computing. My file cabinets don’t store files they hold stuff that I never use. No longer do we require libraries and bookshelves to store their magazines, books, and CD’s.

For the first time in decade new homes are getting smaller, the younger generation values less space and more living. These changes in behavior are called “desire lines” and to ignore them is death to a company or even an industry. No one buys albums, they buy music, no one buys books they buy e-books, look what happened to K-Mart, J C Penny’s or Sears, B Daltons or Borders.

The real estate market needs to take notice of the “desire lines” that are changing the market. Mc Mansions are no longer desirable; later this month a home that cost $23 million to build will be auctioned off with a reserve of $4 million. Gated communities with little or no retail are stacking up with homes for sale. They need to consider dedicating some of the undeveloped land to retail and social gathering places, it should be funded by the residents and they should share in the profits. It’s called crowd funding.

The reduction in physical space presents an opportunity – rather than an obstacle – for the real estate industry. Place-making should still be the priority of real estate developers and should be pursued according to three principles: density, diversity, and shared ownership. If I share in the ownership of the grocery store that’s where I’ll buy my groceries, that’s where I meet with my fellow owners.

 Diversity doesn’t just mean ethnic and gender diversity, but diversity in retail, price points, services, and housing types. The more variation, the more interesting and engaging your community will be. Shared ownership is upon us. Car-sharing services like Zipcar, Lyft, and Uber are here to stay with fewer and fewer urban dwellers interested in owning their own vehicles.

Follow the “desire lines” of consumers – observe consumer behavior and re- design communities and services that reflect what people are actually doing instead of trying to mold preferences to outdated paradigms.

To see this all in action compare the current real estate market in Crestline Village or Mountain Brook Village to those in Greystone and Highland Lakes. Liberty Park appears to have seen the light and is moving in the right direction.

 

Kerry Grinkmeyer is a real estate agent in Birmingham, AL specializing in the marketing and sales of luxury homes. Kerry's a retired financial advisor, he sold his firm, one of the largest in the Ameriprise Financial Advisor system in 2005 to his son, daughter and nephew.   Now he's building one of the largest boutique real estate agencies that he'll eventually sell to his grandchildren.  He the author of the children’s book The Christmas Web- A Family Christmas Tradition.  Kerry competes in the Senior Olympics in to 50M, 100M and 200M dash as well as the 5k and 10k time trial cycling events.

Kerry offers you his financial background, knowledge of the community, love of business and family and energy to assist you in one of the most important financial decisions you'll make in your lifetime.

205 919 6006 

bestofus.kg@gmail.com