The term smart city is becoming a bigger part of real estate lingo – but what is the meaning behind it? Moreover, how will smart cities make themselves felt in the current and future real estate markets? Let’s look at three ways in which the smart-city concept is set to resonate throughout the industry.
First off, what is a smart city? It’s based around efficiency, be that in terms of communication, infrastructure, mobility, energy, or services. The rise of the small cities is being spearheaded by Boston, whose Seaport Innovation District is home to the technology firms and communities that help promote the smart-city concepts. Such trends are also taking place in New York City, Columbus, Ohio, and Roanoke, Virginia, the latter due to its government agencies’ activity on social media.
So how will the smart city transform real estate? Here are three aspects:
Housing Demand Will Increase
With the tech sector booming, the development of districts and supporting businesses in this industry will result in the creation of jobs thus attracting professionals who will need housing. In addition, population growth will also create the demand for housing, which is further stoked by the amenities wrought by a smart city: high salaries, excellent public transit, and access to expedient services as well as easy communication with government officials via social media. With the rise of smart cities comes an increase in the standard of living – and residents will follow.
Real Estate (And Other Projects) Benefit from Lower Costs
With lowered operating costs, smart cities have the flexibility to redirect funds to other projects, allowing such resources to be invested in cities and attracting developers who like to market their properties using local amenities as an appealing element.
In Columbus, an aggregation of high-tech firms into a district formed after the receipt of a $40 million U.S. Department of Transportation grant and an additional $10 million from Vulcan Inc., spearheaded by investor Paul Allen. With smart investments made by the city’s business community, those monies were multiplied tenfold.
Houses Will Be Transformed Physically and in Function
Physical safety and emotional fulfillment are two major aims of the smart-city function, which despite its high-tech roots is ultimately designed to address the needs of people. This shows itself in many ways, including the rise of micro-apartments for Baby Boomers and Millennials. With continued investment in infrastructure, community, and efficient, people-centered functionality, government entities will enhance their abilities to look out for their constituents, even spotting potential problems in real estate before they occur.
This ability was pointed out by the Wall Street Journal, which notes that “New Orleans, like most cities, has a program run by its Fire Department to distribute smoke detectors. But until recently, the program relied on residents to request an alarm.”
No longer. With data at the ready, the city’s Office of Performance and Accountability was able to identify city blocks most at risk for fire – and install 18,000 smoke detectors. In this instance, smart cities are literally lifesavers.