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Technology has been advancing since the stone age when the first tools were created to help humankind perform their daily tasks. The first tools were made from stone. They were things like hammers, sharpened stones for cutting, and flattened stones for crushing and grinding. Technology continuously evolved from that point forward based upon human needs for a solution to a problem or objective. Whether it is material technology, electronic technology, computer technology, communications technology or information technology’; technology has continued its development from its first inception. And many times, one technology is born out of another technology, or the combination of several technologies to create a new technology.
For example, the first computers were purely mechanical; gears, levers and fully manual operation and were designed and built to specifically serve a single purpose. Computers evolved, combining electricity to power the gears and increase efficiency. Around that time, Alan Turing theorized the idea of a general-purpose machine able to compute most anything that may be computed. Evolution continues and mechanical gears give way to vacuum tubes which then give way to transistors; continuously shrinking the size while expanding the capabilities of the technology. Along this path, additional technologies are developed that enhance the capabilities of computers, including operating systems, programming languages, memory chips, faster and more powerful CPUs, disk drives, solid state drives; each continuing to advance in their capabilities; and in the near future, Quantum computing. Evolution continues and each of these core technologies improves becomes smaller, lighter, and more powerful.
The same evolution may be said of many technologies. Steam engines become internal combustion engines which evolve into electric engines. Airplanes engines evolve from internal combustion with propellers to jets and next, electric engines as well. Carbon steel evolves into stronger, lighter weight carbon fibers. The net result being that technology is not static, it continues to evolve and growth at the pace of human innovation.
Technology is part of existence of every business and its use and application is a function of everyone’s lives. Technology advances cover all disciplines and areas of science and industry. Focusing on computer and related technologies; in the business world, there are traditional uses of computer technology; word processing, spreadsheets, CRMs, websites, online ordering, and now virtual meetings. In engineering there is CAD, modeling, and simulation functionality. In manufacturing there are production control, numerical control and other process-oriented automation. In healthcare there are patient electronic medical records (EMR), virtual and remote reading of x-ray and other diagnostic results, and robotic and remote surgeries. Think of an industry and there is computer technology ready to support it and grow it. Technology, however, goes far beyond computers. Then there are the newer technologies today that are becoming essential parts and elements, both standalone and integrated into solutions for every industry and becoming essential for productivity and competitive position our global economy. Some of these include:
1. Internet of Things (“IOT”)
IOT is the concept that all devices may be connected via the internet to one another and to corporate data systems, providing data for analysis, reporting and measurement upon which decisions and actions may be taken in “real-time” to improve performance or outcomes, or prevent failures in a system. The information will also be used in planning and decision making for future events; all with the goal of optimizing performance, improving profitability, and increasing value. The impact on each business will be industry dependent and perhaps even somewhat unique to each organization. The end result is the same, however, gathering large amounts of data and transforming that data into information to enhance the value of the organization.
How will this affect an industry? Recognize that IOT is not only changing how business is conducted today, but also creating new business models for businesses. For example; by using IOT technology, the “pay per use” business model is a now a reality for many businesses and becoming an option for many more as IOT and the data generated becomes available.
2. Machine Learning
Machine learning, the ability of a computer to learn and teach itself based on data analysis of repeating patterns. Social media platforms use this technology to gain insights and understanding of their users, specifically; their connections, the types of articles and stories they read, or the amount of time a subject or topic engages them. The platform (machine in this case) applies that knowledge to further engage the user and increase their usage of the platform. The relevance, the longer the user engages, the more ads the user views and the greater the revenue of the social media platform.
Machine learning exists beyond social platforms and is changing the way businesses do business with both other businesses and consumers. Machine learning continues to occur on most mobile devices even when the device is not in use. By monitoring and mapping a user’s location and travels, the service provider is able to geotarget ads, offers and promotions to customers. All of this intended to increase revenue, profitability, and value.
3. Virtual Reality
Virtual Reality places you in the content Instead of just viewing content. This technology allows the user to experience and interact with contents in a virtual world. While it began in the gaming world, it is and will impact most every industry. This is made possible by advances in hardware and programming techniques.
Immediate impacts are appearing today due to the Covid pandemic. In real estate, the traditional open house or house tour is now available by some realtors via Virtual Reality. With this technology, home buyers are able to virtually walk through a home, turn on lights, open doors, turn on faucets, flush toilets; everything one would do in a home tour. The enhanced benefit, out of town buyers can tour properties and make purchase decisions without a physical visit. In the future, look for similar capabilities in retail, education, and numerous other industries.
4. Touch Commerce
Making purchases with the touch of your finger is now a reality. The merging of touchscreens with ecommerce point and click shopping facilitates the purchase of most anything with a single touch of a cell phone or tablet. Once a customer has integrated payment information, a single touch allows consumers to buy most anything and everything with a single touch of their screen.
This advancement in technology is huge for both customer convenience and of course the ecommerce companies that have integrated this into their platforms. Touch Commerce enabled transactions are growing by over 150% per year and this expected to increase as more companies implement the technology and customers become more comfortable and accepting of it.
5. Artificial Intelligence (AI)
AI is software technology enabled by advances in processor chip technologies that equips computers with the capability to make decisions, similar to human thought and mimicking human decision-making processes and performance of complex tasks. AI is used today in functions including; speech recognition (e.g., Siri, Alexa, OK Google); medical diagnostics, weather prediction, streaming services (eg., Netflix, Amazon Prime Video to recommend future choices based on a user’s watch history), scheduling and routing, (e.g., train scheduling, airline routing, Google Maps route planning); capacity planning to maximize sales and revenue (e.g., airline seat costs, hotel room pricing) and in customer service solutions (e.g., appointment setting, chatbot support). All tasks that can and are being done with efficiency and with superior outcomes for the businesses that have implemented. Superior in terms of reduced costs, increase revenue, and increase profit and value.
Blockchain, in simple terms, is an electronic ledger that is shared among different users. It creates a full, complete, and unalterable ledger of all transactions regarding an asset. Today, blockchain is most commonly associated with cryptocurrencies, i.e., BitCoin and the like. The power of blockchain, however, is to think of it as a digital record of any asset. By digitizing the asset, it is easily and openly managed, tracked and maintained. The power of blockchain is in what is known as “smart contracts.” A smart contract is a self-enforcing agreement embedded in software code managed by a blockchain. The code contains a set of rules under which the parties to that smart contract agree to interact with each other. When the predefined rules are met, the agreement is executed, and all business operational and payment settlement rules are automatically enforced.
There are other technologies that represent the current state of technology, too many to name. The end result to keep in mind; customer acceptance typical equates to greater usage. Greater usage typically equates to greater sales revenue and greater revenue typically equates to greater earnings. Collectively, all of these equate to building value for the companies that adopt them and successfully implement them.
The future for technology is limited only by the creativity of human mind. Businesses must be open to these advances, understand them and build business models that integrate technologies that enhance and optimize the workflows and performance of the company while also adding value to the customer the company serves.
Adding value is the key to technology, from both internal and external looking company perspectives. From an internal perspective, will the technology improve workflow, improve efficiency, improve throughput or improve results? From an external perspective, will the technology provide a better customer experience? Technology for technology sake is interesting but does not typically build value. Companies must keep in mind that technology is a tool, just as the first shaped rocks were tools millions of years ago. For tools to be of value, they must add value by making the work of the company “easier” in some way. Easing being, as stated earlier; improved workflow, efficiency, throughput, results, customer experience…Technology adds value by meeting these objectives.
With the invention of the telegraph, the earliest mechanical communications device, the telecommunications industry began within the 1830s. Communication time was shortened from days to hours—similar to how modern mobile technology has shortened the time required to send large quantities of data from hours to seconds. The industry broadened with each invention: telephone, radio, television, fax, computer, mobile device. These technological advances changed how business is conducted, as well as how people live.
Historically, telecommunications required physical wires connecting homes and businesses. In modern society, technology has gone mobile. Now, wireless digital technology is becoming the primary type of communication.
The sector’s structure has also changed from only a few large players to a more decentralized system with decreased regulation and barriers to entry. Major public corporations function as the service providers, while smaller companies sell, maintain and service the equipment, such as routers, switches, and infrastructure, which enable this communication. Key points regarding the telecommunications industry: The telecommunications industry consists of companies that transmit data in words, numbers, voice, audio, or video around the world; The telecommunications industry consists of three basic sub-sectors: telecom system (the largest), medium services (next largest) and wireless communication; Telecom is growing less regarding voice and progressively about video, text, and data.
POTS lines, or Plain old telephone service, or more specifically, telephone calls continue to be the industry’s biggest revenue generator. Thanks, however, to advances in network technology, this is changing. Telecom growth is increasingly about video, text, and data, and less about voice. Broadband, or high-speed internet, delivering broadband information services and interactive entertainment, has made its way into homes and businesses around the world and that growth is expanding exponentially. The main broadband telecom technologies, fiber optics, coaxial cable, and Digital Subscriber Line (DSL), have ushered in a new era. And today, the fastest growth comes from services delivered over mobile networks.
Small business and residential markets are arguably the toughest. With numerous players within the market, competition is generally driven by price, with in certain instances, belief in the service of the provider which is usually associated with name recognition. Success is driven largely by heavy investment in efficient systems and building brand image. The corporate market, however, remains the industry’s favorite. Large corporate customers, who are concerned mostly about the quality and reliability of their telephone calls and data delivery, tend to be less price-sensitive than residential and small business customers. Large corporations tend to spend heavily on infrastructure to support their distributed operations. They also readily spend for premium services, such as; security, private or virtual private networks and video-conferencing.
Telecom operators also generate revenue by providing network property to alternative telecom corporations that require it, and by wholesaling circuits to serious network users such as internet service suppliers and corporations. Interconnected and wholesale markets favor those players with extensive networks.
Key Telecommunications trade Segments. There are three sub-sectors of telecommunications industry (in declining order by size): communication system, telecom services and wireless communication.
The major segments inside these sub-sectors include: Wireless communications; Communications equipment; Processing systems and products; Long-distance carriers; Domestic telecom services; Foreign telecom services; Diversified communication services
As more and more communication and computing strategies shift to mobile devices and cloud-based technologies, the fastest growing space in the world is wireless communication. This industry is the expected cornerstone of the continued world expansion of the telecommunications industry. Even in developed countries, there is still enough room for growth. The Federal Communications Commission (FCC), in 2018, reported that about one-fifth of the American rural population still has limited to no access to broadband networks.
Looking ahead, the biggest challenge for the industry is to meet the needs of consumers and companies for faster data connections, higher resolutions, faster video streaming and ample multimedia applications. Meeting customer’s needs for ever faster, stable, and reliable connections for consuming and creating content requires significant capital expenditure. Companies that can meet these needs are experiencing excellent revenue and profitability growth.
It’s hard not to conclude that size matters in telecommunications. It is a capital-intensive business. Rivals must be of sufficient size, measured on revenue, earnings and cash flow, to cover the costs of expanding and upgrading networks and services that rapidly become obsolete. Transmission systems require frequent replacement, as often as every two years. Large companies that have extensive networks, including networks that extend directly to end customer premises, depend less and spend less on interconnection services and costs with other companies to complete their service to the end destinations. In turn, smaller players must pay more for the interconnection to finish the job. For smaller operators hoping to one day achieve massive growth, the financial challenges of continuous investment to keep up with rapid technological changes and the depreciation of their current technology investments can be enormous.
The Internet, initially referred to as the World-Wide-Web, and today also known as; the net, the web, and the cloud, changed the world of computers and communications. The internet has a worldwide broadcasting function, an information dissemination mechanism, and a medium for collaboration and interaction between people and computers regardless of geographic location. Inventions including the telegraph, telephone, radio and computer laid the foundation for the web and its’ unprecedented integration of functions. Because of the internet and its penetration into society, e-mail addresses and website URLs flow off the tongue of most people in the world.
Today, the Internet has become a broad information infrastructure, the first version of what is commonly referred to as a national (or world or galaxy) information infrastructure. Its history is complex, involving many aspects-technology, organization, and community. As we increasingly tend to use online tools to complete e-commerce, information acquisition, and business and community operations, its influence not only involves the field of computer communication technology, but also affects the entire society.
Published research and scientific papers on the subject of computer interconnection networks that share information through the network became the basis of the Defense Funding Research Projects Agency (DARPA) project and on October 29, 1969, the first electronic message was sent between two computers via ARPANET, and the Internet was born.
In October 1972, DARPA demonstrated the new networking technology ARPANET to the public. In addition, in 1972, the first “hot” web application email was introduced. The first email was between two people. Based on great success and recognition, the utility quickly expanded to include email lists, replies, forwarding, and filing. The rapid acceptance, adoption, and growth of email as an application are the harbingers of the kind of activity, we see on the Internet today.
The internet flourished, enabled by the extensive development of LANS, PCs and workstations in the 1980s. Ethernet technology, developed at Xerox PARC in 1973 is the main network technology. As the Internet grew in size and scale, host names called URLs (Uniform Resource Locators) were created to replace numeric addresses, making it easier to use. Since then, the commercialization of the Internet has grown and evolved. Commercialization includes competitive network services, applications enabled by underlying web technology, and development of commercial products that implement Internet technology.
Early internet businesses were mainly suppliers of basic network products; email, messaging, ecommerce; and service providers that provided connectivity and basic Internet services. The Internet has now become a “utility” service, where those early products and services exist and continue to be of great importance, but where current business opportunities are focused on the use of the global infrastructure to support other commercial services. Many of the latest developments in technology provide increasingly integrated and complex services, enabling transactions and information flow with less friction, built on the foundation of existing Internet data communications.
The Internet industry is made up of companies that provide various products and services online mainly through their websites and mobile applications. All sectors of the global economy are represented on, and most some level or form of business on the internet.
Although some participants must continue to invest in their operations to remain competitive, the industry is not very capital intensive. Many companies have substantial cash flows that can be used for capital expenditures, acquisitions and stock buybacks.
Companies in the Internet industry operate in a fiercely competitive environment and their technology is changing with each passing day. Barriers to entry vary depending on the specific market served. Internet companies operate on the global stage, and the results usually depend on the performance of overseas markets and currency exchange rates. In addition, the weakness of the retail economy or low online advertising spending may hinder the performance of many participants. Nonetheless, the long-term prospects of the industry are encouraging. Increasing global Internet usage, overseas expansion and the continued popularity of online advertising will further benefit companies in this industry. As a result, many industry players seem to be in an advantageous position in an attractive market.
Important measures that companies should consider when examining their value is revenue growth, percentage of recurring revenue, lifetime value of a customer and customer acquisition costs. The performance of a particular market and the company’s share of that market are important drivers of revenue growth and correspondingly a company’s value. Factors such as subscriber growth and transaction volume also affect revenue and value.
The profitability of industry participants may vary greatly, depending on the market they serve and the operating cost structure. Return on equity is an important indicator that companies should consider. Companies with strong competitive advantages and competent management are more likely to deliver a strong profit margin and obtain a higher return on equity. Earnings may be the most important driver of company value, and industry participants with strong earnings growth over a longer period are likely to achieve the greatest value.
Given the dynamic nature of the Internet industry, companies must innovate to remain competitive. This only means providing new products and services to customers. However, industry participants must also position themselves to benefit from technological development and the creation or expansion of markets. For example, in the field of search engines, the mobile and video markets are promising. New applications may continue to be introduced in these areas.
Acquisitions and Partnerships
Acquisitions and strategic partnerships are common for companies in the Internet industry. These initiatives enable participants to better serve customers and gain market share. Acquiring competitors can reduce competitive pressure, while purchasing new technologies can enable companies to better serve their own markets and enter new markets. Ideally, these activities can diversify the company’s revenue sources and ultimately prove to increase revenue. Smaller companies may even find themselves the target of acquisitions. In short, Internet companies may continue to make acquisitions and reach partnership agreements, although their timing and scope are uncertain.
In a challenging economic period, industry participants can take a variety of measures to improve performance. It is a strategy to divest underperforming non-core businesses. The restructuring of the company’s business is another matter. In addition, many companies have begun to take measures to improve their cost structure during difficult times.
The Internet has undergone great changes in the fifty plus years since its birth. The internet was conceived in the time-sharing era, but it has always existed in the era of personal computers, client servers, peer-to-peer computing, network computers and today, data centers and server farms enabling cloud computing. It was designed before LAN existed, but it has adapted to new network technologies. It was conceived to support a series of functions from file sharing and remote login to resource sharing and collaboration, and gave birth to e-mail, and today a global infrastructure for commerce, media and communications.
Although the Internet is a network of names and geographic locations, it is a computer creature, not a traditional network in the telephone or television industry. The internet is a dynamic infrastructure and it continue to change and develop at the speed of not just the computer industry any longer, but the needs of all industries to support all means of communications, information sharing, data reporting, transaction processing, audio communications, video streaming and media. It will need to change in the future to support emerging technologies such as; Internet of Things (IOT), mobile transaction processing, and expanded use of desktop video conferencing.
The availability of universal networks (i.e., the Internet) and portable forms of powerful and affordable computing and communications (eg., laptop computers, tablets, PDAs, cellular phones) are making mobile computing and communications the default paradigm. This development will bring us new applications and expand the capabilities and functionality of existing applications. It is being developed to allow more complex forms of pricing and cost recovery, which can be a painful requirement in this business world. It is changing to adapt to another generation of basic network technology with different characteristics and requirements. New access modes and new service forms will give birth to new applications, thereby promoting the further development of the network itself.
For as long as there have been companies and businesses, there have been business services and professional service businesses to provide services and support to them. The service industry or industry includes a wide range of markets. Businesses that do not engage in raw material extraction or manufacturing belong to the service category. Examples include law firms, staffing firms, engineering services, consulting services and computer system design to company headquarters to temporary help companies, call centers and gatekeepers. If one can think of a service that is used by a business, there is a business service provider to provide that service.
When economists report employment data, they are referring to industries experiencing growth or decline. In recent years, professional and business services have received attention because it adds significant amounts employment. Being a large and broad industry, business services can be segmented into three area: professional and technical services, company management, and administration and waste management.
Employment growth in the 1990s can primarily be attributed to the business services sector. While the industry experience exceptional growth in the 1990’s is not immune to economic cycles. The 2000-2003 relatively mild economic recession particularly impacted the professional and business services sector. Although the overall economy fell by only 2.7%, professional and business services fell by 6.4%. The impact to the business services industry was greater at this time, is that this period included the market correction for the high-tech industry, also known as the burst of the internet bubble.
The Great Recession beginning towards the end of 2007, effected the professional and business services industry more than the overall economy. Overall, the industry lost over 35% of its jobs by 2009. Since the economic recover from that recession, sector growth rate has once again exceeded the overall economy.
With the growth of the stable middle class and high-income families, the demand for services is rising. The economic sector gradually no longer pays attention to material needs. For consumers, this has led to a growing demand for services such as healthcare, education, training and expanded forms of recreation and entertainment.
In business, the company recognizes that service providers can handle many activities more efficiently. Outsourcing services allow companies to focus on core business activities that drive their success. These are known as the essential activities of the professional services sector and include accounting, finance, service delivery, sales and marketing, technology, quality, product and management, human resources, finance, and product development.
The digital world has also embraced service-based growth through disruptive technologies and location-independent business operations. Companies provide their services locally, nationally and globally as being local is no longer a limiting factor. An accountant in a rural community for example, can grow a national client base through an online business. Technology has expanded the category via what is now referred to as Gig Workers, enabled virtually all professional, technical, and other Business Services and Professional Services providers to offer their skills independently and directly on a national level, adding additional pressure to an already competitive market.
Technology is driving major changes in the service industry, and traditional roles (such as taxi services) have been replaced by Lyft, Uber, and other options that connect large numbers of part-time employees to specific markets. Airbnb opened the rental market to individual owners by cutting management companies and allowing a large audience to stay in direct contact with owners.
As new technologies disrupt markets and provide more opportunities for individuals and contractors, many areas of the service economy are changing people’s perceptions of employment and labor. The benefits of traditional employment are usually lost, but the entire service industry is open to more individuals, and technology ultimately promotes growth that was once considered a locked-in market. The New York City taxi medal was once highly valued and became the controller of the market. However, the launch of Lyft and Uber opened the door to commercial driving for all those who meet the minimum qualifications. The entire market has now changed, and many people are using private transportation to make money in the market.
According to the Bureau of Labor Statistics, another factor in the growth of the service industry is the continued complexity of the business. Companies that provide consulting services help small businesses deal with legal changes, emerging technologies, and marketing challenges by allowing them to acquire skills and knowledge that they do not have internally. The service industry is benefiting from improved service marketing because companies will communicate their messages more effectively driving growth of the industry.
Over the next ten years later, the traditional professional service industry will undergo fundamental changes. The nature of the work and the skills required to perform the work in the future will change due to; changing needs of customers, expectations of employees, fast paced technological development and other external factors. Ultimately, these factors and leading technologies may even challenge the nature of “practical expertise” provided by professionals.
The development of digital technology is the main disruptor. Social, mobile, cloud, big data, artificial intelligence, and the growing demand for access to information “anytime, anywhere” are the major disruptors of digital technology. Other reasons include changes in demographics; entrepreneurship and innovation capabilities, reducing the gap between mature and developing economies.
So far, professional services such as accounting, law, and consulting have not been severely affected by these technological developments, but all signs indicate that real changes are coming, and the industry is at the door of the digital transformation process. The greatest impact may not only come from new methods of organizing and providing professional services, but also challenging the nature of “practical expertise” provided by professionals.
Historically, technological development has changed our specialization process in important ways. Now everything indicates that technology will completely change the way professional services are used. Some people even think that technology will eventually replace these service providers, because technology can provide a more effective way of sharing knowledge, which is the core of professional services. Professional services are a significant and important component of the overall economy. Therefore, any change can have a significant impact on our economy, let alone what the dramatic changes in the professional services industry mean.
Generally, at all levels of the professional services industry, the shortage of skills will become more and more serious, and it will be more difficult to find suitable candidates. It is expected that medium-sized companies may face the biggest challenges, especially in services related to compliance. Some people expect that mainly the bottom of the professional services pyramid will be affected. Technology will replace most of the tedious work of discovering, analyzing and comparing information done at the low end. In addition, low-end services can be replaced by self-service platforms, or they will become commoditized services, especially when technology can directly enter customer data streams as needed, such as accounting and auditing.
Accounting companies and professionals will face new challenges caused by new technologies, new platforms, new services, and changing customer expectations. Some services may be automated, commoditized, or completed internally by customers themselves. This is because customers can use new technical methods to understand their own financial data.
Although the legal industry has undergone some changes in recent decades, it is expected that the entire legal industry will undergo major changes in the next decade. Due to the rapid development of technology, changes in the global labor force demographic structure, changes in customer needs, and providing customers with more value-for-money needs, the transformation of the legal industry may be fundamental.
For the consulting industry, the same external factors as accounting and law will affect the shape and form of the consulting industry. However, some consulting industries may also benefit from this era of disruption. Due to disruption, customers are rethinking their goals and business models. Therefore, the demand for technology-based strategic consulting will increase, which is likely to go hand in hand with new participants in strategic consulting.
Customer needs will also change, and combined with the technological revolution, it may be one of the main driving factors affecting the way professional services are provided in the future. Key insights include: Customers will increasingly use technology and automation to obtain services and knowledge. Services can appear in the form of service markets through knowledge sharing and crowdsourcing models or through virtual consultants backed by technology and artificial intelligence; Customers will insist on immediate results and look for companies with competitive prices; The value of the relationship will become more and more important, and where possible, there will be more physical collaboration between customers and the company, but on the other hand, it will also be common to distribute customers and consultants on different continents; Customers will demand pricing based on results and value rather than hourly charges; Customers will continuously improve their internal capabilities by acquiring highly specialized employees, improved processes, and more opportunities for task automation.
The history of the estate industry cannot be separated from the history of real estate itself. Human beings are members of society. We like to work, live and socialize with people with similar interests.
In most of human history, most of these groups are social or political groups, but with the establishment of the American capitalist system, a person’s network began to provide a new type of utility: business. Therefore, we have an up-to-date understanding of the term “network”. Although the emergence of the Internet, social media, and personal devices have fundamentally changed the way we connect to the Internet, their functions remain unchanged. Networking is to help yourself by helping others, bringing your knowledge to public places and gaining collective benefits. Therefore, real estate starts with land and then develops into residential communities, namely single-family and multi-family families. Business, that is, office, retail; industry, that is warehouse, distribution center, factory; and developed into an area where people gather to live and connect.
The “Debt Recovery Act” in the United Kingdom fundamentally changed the nature of real estate. It allowed British businessmen not only to seize personal property to pay off debts owed by American colonial growers, but also to seize real property, that is, land and anything on the land. This set a precedent for the use of land instead of money, which happened in a country with a lot of available land. From there, the real estate relationship between the United States and capital began. It is not only a means of resolving debts, but ultimately our main means of generating debts.
By the beginning of the 20th century, the real estate industry in the United States was booming. Banks began to provide mortgage loans to middle-class Americans. It was during this period, in 1908, that the first official community of real estate agents was born, the National Association of Realtors (formerly known as the National Association of Real Estate Exchanges). NAR not only convened real estate professionals, but also registered the “Real Estate Agent” trademark in 1950, which was used only by members of the organization. Today, NAR has more than one million members and is the largest trade organization in the United States. By the 1990s, the real estate listing was online, but the community was still paying attention to it.
Like many other communities, the CRE community in the 21st century has become digital. Agents and brokers find each other on sites such as Facebook and LinkedIn. However, despite the large number of members, many of these communities have fallen into the common Internet trap, that is, there are more echo rooms than round tables, and users forget that the Internet is not talking but listening.
Commercial real estate today bears little resemblance to the industry 20 or 30 years ago. In the past, the CRE industry relied on funds in a fragmented portfolio of investors. These investors were either excessively involved in assets or had ownership of assets, but the reality was real estate. Since then, the industry has become diversified, specialized, and more data-driven. Although many of these changes occur in terms of ownership, they also have an impact on tenants.
In the 1980s and 1990s, commercial real estate experienced difficult times. Before the tax reforms of the Reagan era, non-traditional investors usually held commercial buildings for tax reasons. Reagan’s reforms eliminated many real estate tax havens, and the financial turmoil of the S&L crisis changed the ownership of commercial real estate. As the industry recovered from the double whammy, a new class of owners-financial professionals emerged.
As commercial properties have become core assets, the nature of equity and debt has changed. In terms of equity, some of the most respected institutional investors in the world have become major real estate owners. Debt also began to come from the capital market. Due to Wall Street debt, real estate has moved from community funds to global funds.
Larger, more professional owners and larger, more professional lenders use different methods to establish ownership and management rights. Usually, they contract with professional management and leasing companies. These companies interact with tenants and suppliers. Usually, these arrangements will bring opportunities for better and more consistent service. However, they can also eliminate some flexibility between tenants and landlords.
Another change brought about by broad trends in society and the specialization of the industry is the increasing use of data to make decisions. Once, commercial real estate decisions were mainly made by instinct. Developers used their best guesses to choose a building and location to build. The landlord determined the rent based on the rent they believed they could get, while the manager and the company’s real estate team operate the building according to the parameters they assumed would be effective.
Today, everything has changed. Better geographic, demographic, and psychological data can allow developers to accurately determine the type, quality, and area of a building long before construction begins. Although competitive rent and occupancy cost data are not always available, they can be used in conjunction with work, expenses, or both. These data pools allow landlords to maximize their income, but also allow tenants to use them to ensure that they can get a reasonable price before signing a lease.
The revolution in data-based building occupancy management allows companies to compare their investment portfolios with each other to improve cost efficiency. It can also make commercial real estate buildings operate better, reduce their environmental footprint and protect the ecosystem.
The future of real estate is facing urbanization, changing demographics, and new real estate technology trends. Looking ahead to 2020, there will be some economic and social changes, more and more opportunities, greater risks and rewards, and new value drivers will follow.
Expansion of Cities
As the industry sees trends in urbanization and economic growth, the prospects for real estate are very bright. Cities all over the world are trying to make themselves the center of wealth creation. With the vigorous development of construction activities, it is expected that emerging cities in Asia (the fastest growing region), Africa, the Middle East and Latin America will make more contributions to the future of real estate. Overall, by 2025, the global construction output value is expected to reach 15 trillion US dollars.
As new cities appear in various countries around the world, immigration will increase. China is expected to experience the largest migration (1.5 million new residents per month in the next ten years). Even developed cities have witnessed population growth. By 2031, London will welcome 2 million new residents. The United States will also have large-scale development projects (such as the reconstruction of Hudson Yards in New York) to promote urban expansion.
Demographic Shifts Trigger Real Estate Demand
By the end of 2020, the number of middle-class consumers in the world will increase by 1 billion. Developing countries have the largest share of young people. The aging of the population in advanced economies will have a greater impact on the future of real estate. Although the future of the real estate market will indeed be dominated by major sectors such as office, industry, retail and residential, some changes will still occur. The elderly population will need more nursing homes, so healthcare and retirement will become important sub-sectors in the market. The global population is expected to increase to 9.3 billion, and more affordable housing will be needed. Population growth means more food consumption; this will stimulate more investors’ interest in the agricultural sub-sector. Changes in demographic trends will certainly lead to some changes in consumer demand and real estate development.
A Greener Future for Real Estate
Population growth and urbanization have brought the need for greener real estate development. It is estimated that by 2050, if the world wants to maintain population growth, it will need 50% energy, 40% water and 35% food. This means that “green” strategies are considered when designing new properties. Just as we have seen buildings start to incorporate renewable energy technologies and waste reduction, the future of real estate marketing is also getting greener, because this is what people are concerned about. However, if this trend of economic efficiency exceeds the environmental protection capabilities of current buildings, their value may drop sharply. Therefore, this trend will also play an important role in future real estate appraisal.
Real Estate Technology Trends in 2020
With so many industries putting their businesses online, it is natural to think about how technology will affect the future of real estate in 2020 and beyond. Expect an increasing use of data analysis in the industry. Real estate is related to numbers, especially when it comes to investing in real estate. Real estate professionals need to view large amounts of data to maintain their assets. If you want to be competitive in the industry, you must use artificial intelligence (AI) and predictive analytics.
Looking at the global real estate industry, it can be expected that the demand for blockchain applications. Blockchain is the technology behind Bitcoin and other cryptocurrencies. Moreover, the technology can be designed to support any type of transaction. Think of it as a web-based real estate market. The future of real estate agents will revolve around this technology, using blockchain to actively buy and sell real estate. But this may also have a negative impact on the future of real estate agents. As technology continues to simplify real estate transactions, reliance on real estate searches may decrease.
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With its’ location in close proximity to the Trinity river, Dallas originated in the as a trading post in the mid 1800’s. Good soil and river access were attractive benefits for the first settlers. The population grew and demand for materials grew as well, as did the ability to transport these materials. Businesses follow demand and correspondingly, manufacturing companies began production of carriages and trucks, and Dallas became the service center for the growing rural population. Because of its location, population and industry base, Dallas became increasingly important during the Civil War.
Dallas became a major transportation hub by the late 1800s, serving norther Texas, with several railroads passed through the area. The availability of railroads made Dallas a center for the production and distribution of cotton and agricultural products. Capital needs of these industries created demand for banking and financial services. Based on this, Dallas quickly became a location of choice for bankers, real estate developers, insurance and agriculture.
At the beginning of the 20th century, the importance of agriculture to Dallas’ economy began to decline. The manufacturing and transportation industries had grown together with the banking and financial industries. Oil discovered in the 1930s brought Dallas yet another economic growth and alleviated the impact of the Great Depression on the region. World War II brought additional demands on manufacturing and distribution of military supplies and aviation equipment and Dallas became a major center for this as well.
Due to its diversified industrial base, strong industrial, financial and transportation base, Dallas’ economy developed rapidly in the 30 years after the war. The rapid decline in oil prices in the 1980s negatively impacted its economy. Since that time, the Dallas economy has diversified and grown, reducing dependence on the oil industry.
Dallas is part of the Dallas-Fort Worth (DFW) metropolitan area, which includes approximately 30 surrounding cities. Nine Fortune 500 companies are headquartered in Dallas, and 21 are in the DFW area. These companies include Texas Instruments (TI), Kimberly Clark (Kimberly Clark) and Southwest Airlines (Southwest Airlines). The metropolitan area is now the fifth largest economy in the United States. The main industries in the region are banking, commerce, telecommunications, technology, energy, healthcare and medical research, as well as transportation and logistics.
Dallas is home to the third largest population of Fortune 500 companies in the United States, including operation centers of JP Morgan, Chase, Citicorp and Capital One, and major distribution centers of Amazon, Frito-Lay, Whirlpool and Walmart. It is the seat of the Eleventh Federal Reserve Bank. It is a transportation center and is regarded as an important inland port due to the large number of major railroads and highways that pass through the region and Dallas Fort Worth International Airport, one of the busiest airports in the world. Slurpee, integrated circuits, microcontrollers and liquid paper were invented there.
Due to the local government’s fiscal policies and management practices, it is considered to be one of the best-run counties in the country and has one of the lowest property tax rates in the state. It is also one of the few counties in the United States that has been rated as “AAA” bonds by Moody’s and Standard & Poor’s.
The county’s economy is strong, and its employment growth is expected to remain stable with housing and office demand. In the past few decades, regional industries have become less dependent on the oil industry, making the local economy less affected by changes in the oil and gas industry. However, low energy prices and a strong US dollar have had and will continue to have a negative impact on prices, especially in manufacturing. Manufacturing prices continue to fall, and most companies related to the service industry have seen slower price growth.
The county participates in tax increment financing and provides strategic tax reduction measures. If the goods are shipped within 175 days after production, a “duty free” tax exemption is provided for goods shipped outside the state. A quarter of the population is foreign-born, and the region is considered one of the best choices for retirees and college graduates.
Due to the continuous increasing demand for new housing and infrastructure, growth bodes well for the construction industry. It contributes to the positive job prospects of skilled and unskilled workers. Labor will continue to be a concern for business owners, as both skilled and low-skilled personnel exist and are expected to be in short supply.
Businesses in Dallas will continue to search for and try to entice people to relocate to the Dallas area to help meet the anticipated growing demands for skilled employees. Dallas is also investing into education and training programs to train local people to fill the growing number of jobs.
Dallas has, and is expected to continue to have a business friendly focus with a lower cost of living. The largest job growths are expected to be in construction, professional and business services, technology, education and health services. Manufacturing and the transportation industries will continue to grow but will be much more dependent on the world economy.
In the second half of the 1800s, Chicago’s booming economy attracted a large number of new immigrants from Europe and migrants from the eastern United States. Germans, Irish, Poles, Swedes, and Czechs accounted for nearly two-thirds of the foreign-born population. With the industrial prosperity and the rapid expansion of the labor force, labor conflicts emerged, including the hay market incident on May 4, 1886 and the Pullman strike in 1894. Anarchists and socialist groups played an important role in creating large-scale and highly organized labor actions. Concerned about the social problems of the poor immigrants in Chicago, Jane Addams and Ellen Gates Starr founded the Hull House in 1889. The program developed there became a model for the new field of social work. During the 1870s and 1880s, Chicago was a leader in improving public health and enjoyed a great reputation throughout the country. Later, other cities adopted similar public health rules. Over time, these public health rules were codified into public health laws with subsequently raised the standards of the medical industry and combated cholera, smallpox, and yellow fever epidemics. These laws serve as templates for public health reforms in other cities and states within the US.
In the late 1800s, Chicago became the railroad center of the United States. By 1910, more than 20 railroad companies operated passenger services in six different urban terminal buildings. In 1883, Chicago’s railroad managers needed a common time agreement, so they developed a standardized system for the North American time zone. This time-telling system is spread across the entire North American continent.
In 1893, Chicago hosted the World Columbian Exposition in the former marshland on the current site of Jackson Park. The Expo attracted 27.5 million visitors and is considered the most influential World Expo in history. The University of Chicago, previously located at another location, moved to the same area in 1892. The term “midway” for fairs or carnivals originally referred to Midway Plaisance, a piece of parkland that still runs through the University of Chicago campus, connecting Washington Park and Jackson Park.
The Great Depression brought unprecedented suffering to Chicago, thanks in large part to the city’s heavy dependence on heavy industry. It is worth noting that the industrial area at the southern end of the Chicago River and the residential areas on both sides of the river were destroyed. By 1933, more than 50% of the city’s industrial jobs were lost, and the city’s unemployment rate for blacks and Mexicans exceeded 40%. Coming out of the depression and World War 2, Chicago has bounced back, grown and prospered to become one of the largest and robust cities in the United States.
Today Chicago is the third most densely populated city in the United States. As of 2017 census estimates, its population is 2,716,450, which makes it the most populous city in Illinois and the Midwestern United States. Chicago is the county seat of Cook County, which is the second most populous county in the United States and a major city in the Chicago metropolitan area. The Chicago metropolitan area has a population of nearly 10 million. It is the third largest metropolitan area in the United States, the fourth largest metropolitan area in North America, and the third largest metropolitan area in the world by land area.
Located on the banks of Lake Michigan, Chicago was merged into one city in 1837 near the port between the Great Lakes and the Mississippi River Divide, and it developed rapidly in the mid-19th century. After the Chicago Fire in 1871 destroyed several square miles and made more than 100,000 people homeless, the city worked together to rebuild. In the following decades, the boom in construction accelerated population growth, and by 1900, Chicago had become one of the five largest cities in the world.
During this period, Chicago has made outstanding contributions to urban planning and zoning standards, including new architectural styles (including the Chicago School of Architecture), the development of urban beauty sports, and steel-frame skyscrapers. Chicago is an international hub for finance, commerce, industry, technology, telecommunications and transportation. It was the site where the first standardized futures contracts were created on the Chicago Board of Trade, which is now the world’s largest and most diverse derivatives market, accounting for the total trading volume of commodities and financial futures 20%. O’Hare International Airport is one of the busiest airports in the world. The region has the largest number of highways in the United States and the largest volume of rail freight. In 2012, Chicago was listed as an Alpha global city by the Globalization and World Cities Research Network (Globalization and World Cities Research Network), and it ranked seventh in the world in the 2017 Global Cities Index. Chicago is one of the countries with the highest total value of urban products in the world, with a total output value of over US$679.69 billion in 2017. In addition, Chicago has one of the most diversified and balanced economies in the world. It does not depend on any industry, and no industry employs more than 14% of the labor force. In 2007, Chicago was named the world’s fourth most important business center in the MasterCard Global Business Center Index. In addition, in the 2014 calendar year, the Chicago metro area recorded the most new companies or new company facilities in the United States.
The Chicago Metropolitan Area has the third largest scientific and engineering team of all metropolitan areas in the United States. In 2009, Chicago was ranked ninth among the richest cities in the world by UBS. Chicago is the birthplace to industrialist John Crerar (John Crerar), John Whitfield Bunn (John Whitfield Bunn), Richard Teller Crane (Richard Teller Crane), Marshall Field, John Farwell (John Farwell), Julius Rosenwald (Julius Rosenwald) and many other business visionaries who laid the foundation for Midwestern and global industries. Chicago is the world’s major financial center and has the second largest central business district in the United States. The city is home to the seventh district of the Federal Reserve Bank of Chicago. The city has major financial and futures exchanges, including the Chicago Stock Exchange, the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange. The latter is jointly owned by the Chicago CME Group and the Chicago Board of Trade (CBOT). In 2017, the Chicago Board of Trade traded 4.7 billion derivatives with a face value of more than $1 trillion. Chase Bank’s commercial and retail banking headquarters are located in the Chase Building in Chicago. Academically, Chicago has exerted its influence through the Chicago School of Economics, which sent about 12 Nobel Prize winners.
Chicago and the surrounding metropolitan area has the third largest labor resource in the United States, with approximately 4.63 million workers. Illinois has 66 Fortune 1000 companies, including Chicago companies. The City of Chicago also has 12 Fortune Global 500 companies and 17 Financial Times 500 companies. According to a report in “Site Selection” magazine, from 2013 to 2016, the Chicago area had the largest number of relocation or expansion projects for US company headquarters for four consecutive years.
In the 1840s, Chicago became a major grain port, and in the 1850s and 1860s, Chicago’s pork and beef industries developed into major meat companies. Several have created global enterprises. Although the meat packaging industry currently plays a small role in the city’s economy, Chicago is still a major transportation and distribution center. Manufacturing, printing, publishing and food processing also play an important role in the urban economy, as does healthcare, medical products and service companies. Other industries well represented include; commercial banking, investment banking, venture capital, finance, accounting, legal, distribution, transportation, retail and technology. Based upon Chicago’s size, scale and diversity, healthcare and vibrant, educated workforce due to the significant University and academic presence, there are few if any industries not well represented in the market. And all of these elements available within the robust Chicago ecosystem make Chicago a strong and vibrant home for technology startups as well.
Los Angeles CA
The industrial history of Los Angeles can be traced back to the early 1800s, when it was engaged in animal husbandry and agricultural activities. The area remained stable until the California Gold Rush in 1848. Although gold was discovered north of the Sierra Nevada, Los Angeles became the main travel route for those coming from northern Mexico, as well as the source for food, such as beef and all other supplies needed in mining towns. In 1885, a railroad line was opened between Santa Fe and Los Angeles, creating the ability to readily transport those supplies from the area. This led to a rapid influx of people and industry. In this time period Los Angeles County was mostly farmland, dedicated to raising beef and dairy cows and growing vegetables and citrus products. Companies to support these growing businesses were readily created in the area.
Oil was discovered and by the 1920s, the region had become a major oil producer. During the same period, the proximity to the Pacific Ocean led to the rise of ocean transportation, leading to the construction of ports and shipping terminals. Beautiful weather attracted early filmmakers to locate to the area and by the 1930s, Los Angeles was the film capital of the world. The demand for products and services that support the entertainment industry has driven the emergence of more and more startups.
World War II transformed the Los Angeles area into a production center for equipment and supplies needed for war. Factories were built to produce aircraft, ammunition and war materials. Businesses grew along with the need for employees, bringing more people to the area to fill those jobs. After the war, people either stayed in the area or soon returned due to excellent opportunities for employment and career growth.
Since the war, more and more farmland has been removed from agriculture usage and develop into housing and industrial facilities. As Los Angeles transitioned away from the agricultural industry and related employment decreased, demand and employment increased for residential and commercial building, and transportation infrastructure construction. Engineering and construction firms in the region pioneered techniques and methods for development of high-capacity roads and bridges. Land development became the main industry, replacing oil and agriculture.
While Los Angeles County is the “Entertainment Capital of the World”, it also is home to many different major industries as well. These include; entertainment, digital media, high technology, food and textile manufacturing, trade and logistics, aerospace and defense, biological sciences, information technology, and hospitality and tourism. The size of the region and this mix of key industries have formed interdependence between industries. Every major industry relies on both other major industries, as well as the abundance of smaller companies to support their overall business. The aerospace and defense industries rely on large and small high-tech manufacturers and business service providers to provide components for new equipment, as well as for maintenance existing equipment. Manufacturers need the support of supply chains which creates demand for transportation and logistics companies. The entertainment and digital media industries require creative design, scene development and content distribution. As a result, there is a high concentration of such companies in Los Angeles County.
Los Angeles has more than 1 million companies with fewer than 10 employees, while more than 8,000 companies have 250 employees or more. Los Angeles is also the location of two seaports, the Port of Los Angeles and the Port of Long Beach, which together form the largest seaport complex in the Western Hemisphere. 40% of all sea containers entering the United States come through these ports.
The influence of the fashion and apparel industry, as well as the entertainment industry, has created an attractive field for creative people. This, together with the local industry’s demand for high-tech products and processes, led to the start of many design companies. Although Los Angeles does not produce cars, it is home to many automotive design and testing companies, including more and more companies focusing on advanced design vehicles.
Los Angeles is also home to a booming tech startup economy. Driven by talented, educated and skill tech professionals and supported by an ecosystem conducive to startups, early stage tech companies are flourishing in the area.
In support of the numerous aerospace and defense companies in the area, Los Angeles County has attracted more and more high-tech companies to start or expand their capabilities. Southern California’s Advanced Manufacturing Partners Organization is collaborating with numerous private, public, and academic institutions to expand its advanced manufacturing base and companies that support its supply chain requirements. The goal is to increase the number of jobs requiring more skilled workers in order to establish a more stable employment base.
The defense industry is clearly related to federal defense spending. However, the region’s demand for aerospace and ot