Envisioning the future of the high-rise, Aliza Dzik, Jennifer Kilian, Jan Mischke, Aditya Sanghvi, and Gernot Strube discuss what it will be like to build, manage, or occupy one in 2030.
Building a high-rise
Gernot Strube: In a slow-moving industry like construction, 2030 is not really that far away, but we will see some major changes. One will be that people will just not accept anymore the traffic disturbances, for example, that construction sites cause—which will have major implications. We’ll need to do much more prefabricated building, bringing complete modules in and bundling deliveries, tools, materials, and so on.
Jan Mischke: If modular construction really picks up this time around, which we are extremely optimistic about, it can have dramatic implications over the next decade or two. Ten years out, we expect a market potential of $130 billion, just in Europe and US new-build real estate.
Gernot Strube: Another thing is that I think we will see restrictions on pollution. I’m specifically talking about light pollution, noise pollution, and also dust pollution. People just won’t accept that they’re constantly surrounded, day and night, by noise from construction sites around them—which means that we will have to be much more productive. We will have to be much more efficient because the times during which we can construct will be reduced.
Living and working in a high-rise
Jennifer Kilian: The real-estate industry has been traditionally about developing, operating, maintaining, and selling assets. And it really thinks about buildings and places. I think we’re seeing this huge shift toward customer centricity. So I think, if we look back ten years from now, the thing we’re going to see as the biggest change is that real-estate companies will serve people instead of established buildings.
Aditya Sanghvi: It used to be that every building, whether it’s a multifamily building or an office building, would really just stick to the asset class that it was in. But increasingly, the biggest innovators in the space are starting to think about buildings not just as the four walls, but as the community—and the experiences that it creates. So then the high-rise of the future isn’t just office for 50 floors. It’s office for ten floors; it’s multifamily for 15; it’s a hotel for ten; a club area at the top of the building. And that, to us, is the real future of the high-rise.
Jennifer Kilian: In 2030, I think our needs will be anticipated, and all the kinds of services and things that take our time up today—errands, laundry, or whatever they might be—we’ll have solutions for from a concierge or digital standpoint.
Aliza Dzik: If I’m living in a space, can the building management start to understand what my preferences are, such as when I tend to use a cleaning service and when I want to get my Uber rides? Can there be a kind of proactive meeting of an employee or of a resident in their place of work or in their space, so that [the building management] knows what I want before I even know I want it?
Jennifer Kilian: They’ll remind me if I’m running out of something and proactively get it for me. They’ll have childcare and eldercare in the building. They’ll have pet-grooming and -walking services. Any amenity that you can think of just becomes a natural part of that residential experience.
Aditya Sanghvi: And the beautiful part about technology in all of these solutions is that it will mean that it’s not just for the ultraluxury segment that [high-rises] will be able to do this—but actually for everyone.
Managing a high-rise
Jennifer Kilian: I think another big mindset change for people who are running real-estate companies will be around the timing of delivering new things. Right now, it’s a multiyear cycle, usually three to five. And when we get to more of an agile mindset and digital labs, we’re looking at two-week cycles. And we’re looking at three to four months to put new services or digital products into market. And that’s a really big difference.
Aditya Sanghvi: Most real-estate firms have to completely change the capabilities they have and how they view their role. They need to curate the experience of being in the building. They need not to view their job as “the customers and the tenants are foes across the negotiation table, where I have to push them down on price as much as I possibly can”—but instead view them as clients and try to make their lives and their experiences better, so that they’re more likely to stay. And they will be with you forever.
COVID-19’s impact on the future of high-rises
Aditya Sanghvi: Despite the optimism of almost every single leading real-estate company out there, we don't believe that it's possible for the world to go back to the way that it was. And the reason isn't the pandemic. The reason is what the lockdown has done in terms of changing our behaviors of how we like to work, how we like to shop, and how we like to live.
Even just as a simple example: currently, the purpose in most offices—if you look at how much square footage is allocated to different activities—is individual work. But if the role of the office is really meant to be about those moments of collaboration that can't happen remotely, then maybe instead of 80 percent individual work stations, it should be 80 percent conference rooms.
And the real-estate developers and owners that will be the most successful will be the ones that carefully monitor exactly how our behaviors have changed already, and how they will continue to change. And they will build spaces and create experiences that match how we want to live, work, play, and shop to be successful in the future.
Aliza Dzik is an expert in McKinsey’s New York office, where Jennifer Kilian is a partner and Aditya Sanghvi is a senior partner; Jan Mischke is a partner in the Zurich office; and Gernot Strube is a senior partner in the Munich office.