2017 global cities index1/1/2024 This tech demand impacts on which cities do well and which don’t. The technology sector is the reason for re-centralisation. Unlike the large employers of the industrial revolution – the factories – the tech companies need to be in cities to attract the right calibre of employee and take advantage of mass transit to get people to the workplace. These technology behemoths are major employers and need a large, well-educated workforce. We call this the re-centralisation effect. This increases or decreases demand from companies for certain locations. The difference between today and the 19th century is that the largest employers were outside the city, now large technology companies need to be inside the city. We are, of course, talking about technology companies. The parallels that we draw today are the sheer scale of the companies dominating the economy and our daily lives. The advance of technology as a catalyst for city formation was an inflection point in the history of our cities. The advent of new technology – cheap postage, the telephone and electric lighting – meant buildings in cities could still serve heavy industry located more remotely. This white collar expertise started to form in larger conurbations – cities. Crucially, the bankers, lawyers and accountants who facilitated this financing did not need to be near to these factories. This has profound implications for where we live and how we use buildings.Īs the world industrialised in the mid 19th century, the new factories required capital formation in order to grow. We think the world is changing at a rate that has not been witnessed since the Industrial Revolution. Where it is possible to provide an outlook, however, is relating to our area of expertise: investing in specific cities and in specific real estate sub-sectors. It is simply too hard to know where positive or negative news might come from and how markets will then react to that news. An outlook that incorporates a view on the global economy is highly likely to be wrong.
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