Global cities desperately need new leadership models
Global cities desperately need new leadership models
Global cities desperately need new leadership models
The choice is ours: Will we have successful cities or human extinction?
The world’s population centres are the critical places in the future of our planet. Where people settle, and how they live with the planet, will define the ultimate endgame in the story of human life. Will we spoil our habitat or remake it?
Whether we think of such cities as consumption markets, infrastructure hubs, innovation ecosystems, decision-making centres, sharing platforms or visitor destinations does not really matter. They are all these things—and much more. We have come to call them “cities” because they serve and seek to empower citizens, but this word is now so overused, and sometimes so contentious, that it may just be better to think of them as population centres: places where people are concentrated. In the quest to avoid human extinction, such places are ontologically important.
On this planet, there are some 10,000 cities where we humans make our home, according to Cities in the World, European Commission and OECD. Meanwhile, the United Nations World Population Projection says we are on the road to 9 billion city dwellers by 2080. Currently, about 600 cities drive our global economy and fuel our national treasuries, 200 cities are the centres of national policy and law making, and 100 cities are the hubs of corporate enterprise.
Anyone who wants to argue against the idea of an urban world needs to articulate the alternative. How would you distribute and service 9 billion souls without using cities as the primary platforms? What are the environmental and social consequences of alternative models?
We know, from all the amassed science of success, that leadership is critical to how countries and companies survive and thrive. We read books about national heroes and about great corporate leaders. But less frequently do we focus on how population centres are led and guided by wise people and what the leadership imperative is for a place that is not a nation and not a business venture. The leadership of cities is a niche discussion.
In our post-pandemic, climate-alarmed world, city leadership is just about to become the most important job on the planet. The next 50 years will be a great reckoning, and it has already started. Can we equip our cities to avoid the extinction of our species?
Three ideas should drive our quest:
Cities are seriously underpowered
Most of our cities are subjected to an inadequate version of democratic government that leaves them with the wrong municipal geographies, insufficient financial resources, weak policy frameworks, short-term mandates and overly dominant national governments that do not understand the interactions of different forces locally, in a given place. National governments recognize the opportunity of a century of urbanization but are largely unwilling to couple it with the decentralisation of power it requires. So, cities are orphaned by nation states.
Place leadership is a collective task
Public bodies, civic groups, asset owners, investors and businesses must work together with citizens to shape choices and frame change together. Cities are both a means to optimise the interplay of different changes such as in energy, transport, environment and public health, and also a platform for collective behaviour change amongst citizens and businesses. Cities can motivate and inspire the changes we need because they enable and require sharing of the same place for multiple purposes by large numbers. Place-based leadership can induce innovation.
Soft power is therefore essential for cities to succeed
Cities need to be convening platforms for innovation and joint endeavour. They cannot achieve the changes required without building and driving coalitions. The more collaboration, the easier the big reforms that build greater formal competence are acquired. Well-orchestrated soft power leads to reforms that generate hard power.
National governments recognize the opportunity of a century of urbanization but are largely unwilling to couple it with the decentralisation of power it requires. So, cities are orphaned by nation states.
We can already see a new generation of city leadership platform types beginning to emerge in multiple locations:
Over the past 20 years, Manchester, UK, has steadily built a grand coalition of nine neighbouring municipalities working together with universities, investors and businesses committed to a place-leadership agenda that has enabled delegation of new authority, the acquisition of new financial powers, and creation of a new leadership structures in a “combined authority” for the city region.
The Greater Sydney Commission is a new kind of city regional leadership platform where civic leaders are selected for their expertise to shape a long-term agenda beyond the short-term mandates and political cycles but accountable to, and influential upon, them.
Barcelona Global has been established as a coalition of corporations, institutions, entrepreneurs, academics, skilled migrants and investors who want to help shape the Barcelona of 2050. The coalition is working at the spaces within and between the formal levels of government: municipal, state, national, and EU levels of formal governance.
In China, the emergence of the great city clusters in the megaregions of The Greater Bay Area, Yangtze River Delta and Jing-Jin-Ji regions shows a new scale for subnational leadership to oversee and coordinate networks of interdependent cities.
In Colombia, we observe proactive citizen leadership in Medellín and civic-minded business leadership in Bogotá fostering new tools and platforms for place leadership to emerge.
As we emerge from a global pandemic, the quest for effective city leadership is more important than ever. New models of shared leadership are finally arriving, but is it too late? We need these models, as well as other innovative ideas and approaches, to become the fabric of our global urban infrastructure to have successful cities. Our collective future depends on it.
As we emerge from a global pandemic, the quest for effective city leadership is more important than ever.
NY Comptroller: If COVID can’t kill a city, can it make it stronger?
NY Comptroller: If COVID can’t kill a city, can it make it stronger?
NY Comptroller: If COVID can’t kill a city, can it make it stronger?
Thomas DiNapoli is the 54th Comptroller of New York, a cabinet officer of the state of New York and head of the New York state government's Department of Audit and Control. As Comptroller, DiNapoli is the State’s chief fiscal officer ensuring that state and local governments use taxpayer money effectively and efficiently to promote the common good. Employing more than 2,700 people, the office’s responsibilities include serving as sole trustee of the $254.8 billion New York State Common Retirement Fund, one of the largest institutional investors in the world; administering the New York State and Local Retirement System for more than one million public employees and more than 3,000 employers; administering the State’s approximately $16.7 billion payroll and overseeing the fiscal affairs of local governments, including New York City. In 1972, DiNapoli became the first 18-year-old in New York state to hold public office when he was elected a trustee on the Mineola Board of Education. In 2007, DiNapoli was elected State Comptroller. He was re-elected Comptroller by New York’s voters in 2010, 2014 and 2018. Joe Kornik, VISION by Protiviti’s Editor-in-Chief, sat down with DiNapoli in May to discuss New York City’s future.
Kornik: I’d like to start talking about how COVID-19—and the economic crisis it’s caused—has the potential to alter a city’s finances for a long time. Now that we’re nearing the end, how’d we do?
DiNapoli: Well, I certainly think compared to where we were a year ago, we've done much better than any of us could have imagined at the time. When you think of the depths of the economic fallout from COVID and the severe job loss, it was devastating from an economic point of view. And New York City was the first and the hardest hit of the U.S. metropolitan areas. We experienced a severe spike in unemployment and a severe drop in sales tax revenue, and I think everybody was expecting the worst. So here we are about halfway through 2021 and we’ve seen the picture improve in terms of unemployment and sales tax revenue, but we’re certainly not back to pre-pandemic levels. The big game changer for the city was the support that came from the federal government and the American Rescue Plan Act of 2021. The change in the presidency, the change in the Congress and certainly Chuck Schumer as Senate Majority Leader were all big factors helping lead the city through the crisis: We’re actually on target to end the year with a surplus. That doesn't mean there still aren’t major concerns, but it’s a much better picture from where we thought we’d be a year ago.
Kornik: Honestly, that’s more optimistic than I expected. It seems like there are so many headwinds in terms of lost tax revenue, unemployment, real estate and other factors to consider.
DiNapoli: You know the employment numbers are still going to be off and revenue numbers are going to be off, and the property tax loss is significant—the city's projecting the highest drop in property tax collections in its history. And we’re concerned that may continue well into the future. In terms of real estate, that depends a lot on how business moves forward with bringing people back to the office. There's still a lot of uncertainty, but one of the bright spots has been the resilience of financial services. When the markets tanked in March of 2020, everybody thought Wall Street was going to tank, too. But it didn’t; bonuses were up, and that has helped maintain an important part of the city's revenue. So, that’s been a big key to financial stability. I’m optimistic. I was in Manhattan recently and there's more street traffic than I've seen in many months, and people seem to be returning to work and the office. And maybe we’re starting to get some day-trippers? I don't think we’re getting very much overseas tourism yet, but we’re all watching tourism because it’s so vital to the city’s overall economy. But even as Broadway starts to reopen and restaurants continue to come back with the help of federal support, the pace of the recovery is so important to the future of the city’s finances. So, we’re keeping a close eye on all of this. We’ve done a series of reports on the retail sector, the restaurant sector, the hospitality sector, the tourism sector and the forecasts are still way off. But if this recovery is slower than anticipated, we could be dealing with a lot of tough choices sooner rather than later.
Kornik: I know some of the biggest challenges are imminent, but if you were to focus a little farther out—maybe even something the next Comptroller will have on his or her plate a decade from now—what comes to mind?
DiNapoli: Well, first I would point out that I still have many years to go to beat Arthur Levitt’s run of 24 years of being New York Comptroller. A decade from now, I could still be Comptroller… now, I’m not announcing anything, I assure you. But if we’re looking a decade out, one of the key dynamics is, will New York City still be a place that attracts young, talented people—in the arts, or technology or the financial sector? And, even pre-pandemic, there's always been a concern about the out-migration of established upper-income New Yorkers, but I think we probably need to focus more on the migration of some of those younger talented people who are on the verge of launching their careers and perhaps settling down and raising a family in the city but because of this pandemic, we might have lost some of them. So, if we want New York to continue to be a vibrant, wonderful place 10 years from now, we've got to make sure we're focusing on that next generation. So that really speaks to some of those factors I was talking about earlier, safety and employment. Businesses will need to adapt to a new reality, even if that means a hybrid model of remote and in-person work—they need to be mindful of how younger people want to work. I do think if we address some of those broader issues, and if we focus on the next generation and make sure we're not losing them, I think the city has the potential to be stronger than ever in 2030. Look, New York has come through many crises over the years, including a pandemic, by the way. And history says we always end up better, not worse.
Kornik: Do you suspect that will happen again?
DiNapoli: Right after 9/11, there was nothing going on downtown. Now, lower Manhattan is humming in terms of business activity, but it's also become a residential community. Much more so than it ever was pre-9/11. It’s better than it was. And I think when we look back on this time a decade from now, there will be lessons learned and things about New York City that are better than they were pre-COVID. I'm very positive about what New York will be 10 years from now. And while it’s always difficult to look that far out, our history as a city says, almost without fail, that we’re better than we were the decade before. So, I have every reason to think that we’ll look back on this time as a big turning point to a better New York City.
Joe Kornik is Director of Brand Publishing and Editor-in-Chief of VISION by Protiviti, a content resource focused on the future of global megatrends and how they’ll impact business, industries, communities and people in 2030 and beyond. Joe is an experienced editor, writer, moderator, speaker and brand builder. Prior to leading VISION by Protiviti, Joe was the Publisher and Editor-in-Chief of Consulting magazine. Previously, he was chief editor of several professional services publications at Bloomberg BNA, the Nielsen Company and Reed Elsevier. He holds a degree in Journalism/English from James Madison University.
I'm very positive about what New York will be 10 years from now. And while it’s always difficult to look that far out, our history as a city says, almost without fail, that we’re better than we were the decade before.
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CEO panel: Africa’s predicted population boom a boon for urban real estate
CEO panel: Africa’s predicted population boom a boon for urban real estate
CEO panel: Africa’s predicted population boom a boon for urban real estate
Africa just may be the planet’s sleeping giant... at least from a demographic standpoint. Consider that Africa is undergoing, and will continue to undergo for the foreseeable future, a population boom that will alter the course of the continent over the next fifty years. The growth that’s happening in sub-Saharan Africa should make it the second largest region of the world by 2030 when it’s expected to have some 2 billion people, almost double what it is today, according to the United Nations. By 2050, that number is expected to top 3 billion, accounting for nearly a third of all people on Earth. There will be people—lots of people–and they’ll be born into a very different Africa. Advances in medical technologies and infrastructure, although not where they need to be just yet, will only help to accelerate Africa’s emerging market status. To discuss the continent’s opportunities, Joe Kornik, VISION by Protiviti’s Editor-in-Chief, sat down with three real estate CEOs in Africa—Steve Brookes, CEO of Balwin Properties; Bronwyn Knight, CEO and Co-Founder of Grit Real Estate Income Group; and Greg Pearson, CEO of Gateway Real Estate Africa—to discuss the future of the continent, its cities and its people. The panel discussion took place in July 2021.
Kornik: The African economy and real estate market was humming pre-pandemic, particularly in Nigeria, Kenya and South Africa. As we begin to emerge from COVID, where is the market now and how optimistic are you about its future?
Knight: I think people tend to paint Africa with a broad brush but there are 56 countries in Africa, all with different governments and different agendas. So, we need to keep that in mind. What we’ve seen is that different governments behaved differently during COVID, and different sectors and asset classes also have performed differently. With our portfolio we are exposed to 14 African countries and because we are so well diversified, it’s been interesting to see what’s done well and what’s struggled. With all these lockdowns it’s obviously been dismal performance from a hospitality perspective, but as we’re seeing borders reopen, we’re also seeing people eager to get back to travel and tourism, so that’s been encouraging. The other sector that we’ve seen struggle a bit is retail. But again, it’s been very country-specific–we own a very large asset in Casablanca. Morocco, like Europe, went through an exceptionally hard lockdown so it’s still off. But countries like Mozambique, Kenya and Ghana have been extremely resilient. Ghana opened up relatively quickly with a vaccination program, way ahead of any of the other African geographies, so Ghana has done quite well. It varies greatly.
Brookes: Balwin operates exclusively in South Africa, and it’s a really turbulent environment right now. We have three classes of brands: our green brand, which caters to emerging markets; our classic brand, and our high-end signature brand. In this environment, we’ve found that it’s been smart to focus on the green brand and sort of cater to that emerging market segment: the people coming out of the townships that have just gotten jobs and are starting their lifecycle. Our ability to be nimble and adapt quickly to market conditions has been a big key for us during this time. I also have a passion for green development, and we’re about to explode with a whole bunch of new green initiatives. We’re finding an incredible amount of good will, especially on the financial side where we’re finding we can borrow more money than we need. That’s a very good thing in a developing country like South Africa. We have tremendous confidence in South Africa, but it’s never going to be easy. Infrastructure remains a big challenge all across the country, but the market is there. Residential real estate and demand for our portfolio is strong, specifically in South Africa’s metropolitan areas of Pretoria, Johannesburg, Cape Town and Durban.
Pearson: Outside of South Africa, real estate was one of the first things that was negatively affected by the pandemic, and as Bronwyn [Knight] mentioned, retail was hit especially hard. Fortunately, we found that because of the track record we had across the continent, a lot of the multinational companies that had been trying to do things on their own came to us for expertise. So, we found that we had more development opportunities than we had previously, especially global firms looking for solutions across the continent. Part of our market is in data center development and there was so much demand for data and connectivity as people were trying to work from home during the pandemic. In places like Nigeria, where you’ve got close to 200 million people, the existing infrastructure of the country just couldn’t handle it. We’ve rolled out data centers in Nigeria and Kenya and are looking at Ghana. Another big part of our business has been focused on consolidating American embassies, which wanted to centralize during COVID. We’ve landed five of our biggest embassy contracts over the last 24 months. And then the last one, probably not surprisingly, is medical. Africa has always lacked good medical facilities outside of South Africa, and maybe Egypt and Morocco. We partnered with the Indian-based medical group Artemis, and together we have built hospitals and facilities across the continent. So, if you’re still looking at real estate as “buy a piece of land, build a building and get tenants,” well, that market is gone, at least for now. It will probably come back in two years or so, but we’re focused on creating real estate solutions across Africa. And in the last 24 months we’ve almost doubled the size of our development business.
We have tremendous confidence in South Africa, but it’s never going to be easy. Infrastructure remains a big challenge all across the country, but the market is there.
– Steve Brooks, CEO, Balwin Properties
More than half of the projected increase in the global population up to 2050 will be concentrated in just nine countries: the Democratic Republic of the Congo, Egypt, Ethiopia, India, Indonesia, Nigeria, Pakistan, the United Republic of Tanzania, and the United States of America.
Source: World Population Prospects 2019, United Nations Department of Economic and Social Affairs.
Kornik: That’s interesting, Greg. It sounds like all of you have sort of been forced to pivot your portfolio, or at least your strategy since the start of the pandemic. How has COVID impacted your business and its future?
Knight: Diversification is key. Our approach is that we don’t want to be more than 25% exposed to any one geography. We have exposure all over Africa, and we’re actually working with Greg on both the American embassies and medical facilities projects across Africa. When American embassies come to us, being in 14 countries makes us more viable. Same goes for healthcare: We are building facilities and like Greg said, the idea is to roll those out across Africa. The pandemic has made clear Africa’s lack of healthcare facilities, and governments across the continent are looking to us to bring in partners, like Artemis, to help develop those facilities.
Brookes: There are a couple of things that are absolutely critical to success as I look to the future; fundamentals that we need to get right. One is infrastructure. I am fanatical about infrastructure. I believe if we have the infrastructure, people will come. Infrastructure is critical for South Africa. We have backbone infrastructure in what we call our four nodes: Johannesburg; Pretoria; the Western Cape, which, in my opinion, is the most beautiful place in the world; and Durban, where we are exploding–we have about 12,000 apartments under construction. There are other nodes, but in those other places the infrastructure is a massive problem. Second is urban and community planning where we, as developers, really get to exert our influence into the community to help make an impact. That’s critical to our future success. And finally, the last thing that’s critical for us is lifestyle. I mentioned Durban; that’s a lifestyle place. And we’re really focused on lifestyle in our designs. For instance, we develop properties around lagoons so residents can have a place for watersports, or just a place to walk in the evenings surrounded by nature. That’s what we’re trying to create with our residential properties; that’s where the future is going; so that’s where we’re going.
Pearson: So just to add on to what Steve is saying… one of the big opportunities that we see on the continent is residential real estate, and Steve’s right when he says we need infrastructure investments, not just in South Africa but everywhere. And we need them both in and around cities. One trend that I think is going to be big is this idea of new “suburban cities” being created on the outskirts of larger cities. There are a lot of developments where you will drive along a dirty, bumpy road to get to something of significance, so there’s this gap between the city and the real estate development. We’re finding that it’s worthwhile for us to invest in the infrastructure in between; we’re bringing water to the area; we’re bringing data and communications; we’re bringing power in through green resources and upgrading local energy systems. And once that infrastructure goes in it’s crazy how quickly everything else follows. A perfect example is in Kenya where you’ve got 2,500 families now living on the outskirts of Nairobi, which was considered a long way out two years ago but not anymore. These developments on the outskirts of cities look and feel like cities; there’s new office buildings going up, there’s public parks, there’s schools being built. In the end, we’re creating these suburbs, and we see this as a big market opportunity right now and into the future.
Kornik: So, my last question is around the demographics and potential of Africa. The population boom that’s happening in sub-Saharan Africa will make it the second largest region of the world in a decade. Talk to me about Africa, its growth and its cities in 2030 and beyond.
Knight: I think we can confidently say that Africa is the last frontier of growth because of coming population growth. There are so few opportunities for growth left across developed markets that investment has to come to Africa, and we see ourselves as a gateway into the continent. We see huge opportunities in Morocco, Kenya and Ghana, for instance. In these places, we have good relationships and good partners. If you look at our portfolio today, it includes Exxon and Halliburton, companies that are very resilient to emerging markets. The middle market is growing and will continue to grow, and the need for both retail and residential product is strong because of this up-and-coming, highly educated population emerging in Africa. That’s really where I see the opportunity going in the years to come. We sit with a portfolio that’s just under R900 billion (South African Rand); can we triple this in the next couple of years? Absolutely. And it’s by no means coming from just the growth on the continent; it must come from outside Africa. And I don’t think, even in my lifetime, that I’ll touch the tip of the iceberg of opportunity in Africa.
Brookes: Bronwyn’s a hard act to act to follow, and I agree with everything she just said. But there’s one fundamental point that we haven’t discussed and that’s the idea of education. I believe Africa needs massive education reform. You drive past our schools and the sports fields are unusable, the grass is a meter high. I think we all understand education is not just about reading books; it’s about so much more of the complete experience. And when I see the lack of investment… I mean, are you kidding me? I think we have a long way to go; the level of education in Africa compared to other continents is extremely low. If we want to compete on the world stage, to me, that’s the next big frontier for Africa.
Pearson: I agree with Steve that education will be paramount. To look at it a little bit differently, I think we need more industrialists in Africa. That’s going to create the long-term opportunity. We need people to come in and change the way that we look at Africa with regards to GDP. If you look at the logistics across our continent, it’s almost non-existent. To get product we need in Ethiopia, sometimes it takes us as much as three months to ship it from South Africa because there is little to no rail and the road infrastructure is so bad. I think one point to be considered is the influence that China is having on Africa. Many people are not happy about it because they are taking a lot of our resources out of Africa, but they’re also providing a lot of infrastructure. Ports, rails and roads are being built because of the Chinese. They are one of the only foreign investors that we have here in Africa, and they are putting billions into infrastructure we all need for our businesses to succeed across the continent. Our long-term future and prospects are great, but we need that outside investment to keep coming into the continent. If that happens, as Bronwyn alluded, I think there’s too much opportunity in Africa for all three of us to realize in our lifetimes.
I believe Africa needs massive education reform. I think we have a long way to go; the level of education in Africa compared to other continents is extremely low. If we want to compete on the world stage, to me, that’s the next big frontier for Africa.
– Steve Brooks, CEO, Balwin Properties
Bronwyn Knight is CEO and co-founder of Mauritius-based Grit Real Estate Income Group, the largest pan-African-focused real estate group with a primary listing on the main market of the London Stock Exchange. Knight has substantial corporate finance and deal making experience. As co-founder and non-executive director of Grit she played a significant role in the listing and conversion of the Group to its current pan-African focus, underpinned by dollar-based leases. She assumed the executive leadership position in May 2016, and under her leadership, Grit grew from a portfolio of two assets valued at US $140 million in 2014 to 54 investments and assets totaling US $850 million.
Steve Brookes is CEO and founder of Balwin Properties Limited in Johannesburg, South Africa, a specialist, niche, national large-scale, residential property developer focused on the development and sale of sectional-title apartments as well as surrounding infrastructure in the mid to upper market segment. Brookes is also the chairman of the Balwin Foundation, a nonprofit company established in 2016 by Balwin Properties and aimed at making a social difference in the education, training and funding landscape. Brookes is also passionate about environmentally responsible building practices and is the driving force behind Balwin’s approach to minimizing its environmental impact by achieving green building ratings at its developments.
Greg Pearson is CEO of Mauritius-based Gateway Real Estate Africa, founded in 2018 to take advantage of the need for bespoke corporate accommodation on the African continent outside of South Africa. Prior to GREA, he co-founded Grit Real Estate Income Group and has been instrumental in sustaining its rapid growth since inception in 2014. Greg’s expertise includes development management, cost planning, procurement, time management and traditional project management of major engineering and building projects. He has successfully completed a series of developments across the office, retail, leisure, education and healthcare sectors and has experience in over 40 African countries.
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Pent-up demand in the U.S. lifts commercial real estate short-term
Pent-up demand in the U.S. lifts commercial real estate short-term
Pent-up demand in the U.S. lifts commercial real estate short-term
As we begin to emerge from the pandemic, it seems that what happens in the real estate sector, specifically the commercial real estate sector, will go a long way to determining how quickly cities recover financially. The pandemic accelerated perhaps two trends in terms of commercial real estate. One, offices in cities’ business districts sat basically empty for 18 months, and a lot of those tenants are evaluating how they’ll work in the future and how office space—specifically downtown office space—will factor into that. Two, the retail sector was changing prepandemic, but the explosion in online commerce during the pandemic may have altered brick-and-mortar shopping in a significant way. Given the pandemic, it’s not surprising that the commercial real estate sector was down some 1.5% in revenue from 2015 to 2020, but the forecast gets better from there. IBISWorld, in its latest Commercial Real Estate in the U.S. report, is forecasting a relatively flat 2021 commercial real estate market at $890 billion but is predicting growth of 4.8% in 2022, 9.8% in 2023 and 4.3% in 2024. It says the market will eventually hit about $1.15 trillion in revenue by 2026, a 25% jump over the next five years. Jon Critelli, Managing Director with Protiviti and an expert on the real estate market, sat down with Joe Kornik, Editor-in-Chief of VISION by Protiviti, to discuss the U.S. commercial real estate sector and how it’ll impact the future of cities.
Kornik: Jon, thanks for joining me today. Given all that’s gone on with the sector during COVID, those numbers from the IBISWorld commercial real estate report sound pretty optimistic to me. What do you make of them?
Critelli: On the surface, these numbers seem optimistic, but the reality is mixed when you consider what makes up the commercial real estate market. While traditional, high-end office space may be in less demand, especially in densely populated urban areas, other segments such as industrial, retail and hospitality could grow. There is a generally accepted idea that brick-and-mortar retail stores will be in less demand, but recent studies are showing that consumers are trending toward multichannel shopping experiences where they move seamlessly between online and in-person shopping. Industrial segments will also likely continue to grow, based on increased demand and need for distribution and logistics hubs, along with data centers and other technology infrastructure that is supported through commercial real estate.
Kornik: That nearly 10% revenue spike in 2023 sounds exciting for the sector. Do you think that’s a matter of pent-up demand and projects that were put on hold pre-COVID returning? Or new projects and post-COVID optimism?
Critelli: I think it’s likely a combination of both but probably leaning toward the resumption of projects that were put on hold pre-COVID now coming back online or being greenlighted. New, nonresidential construction starts are actually down 5% year-to-date, so I think it’s probably a reflection of a resumption of projects that were placed on hold or were already strategically planned for. I also think revenue generated from facilities management, facilities operations and facilities optimization servicers, especially in the industrial segment, will follow the new construction through 2022, peak in 2023 and then begin to level off beyond 2023.
Kornik: How about from a geographic standpoint? The IBISWorld report has the U.S. Southeast leading the way, with the West and Mid-Atlantic being close behind. As you look out, do you see anything happening from a geographic standpoint that could be significant?
Critelli: I see a potential trend related to movement away from the Mid-Atlantic and West regions in the U.S. Economic activity follows population movement, and domestic migration trends are starting to demonstrate that people are moving away from New York, Illinois, California, New Jersey and Michigan and moving to Florida, Texas, North Carolina and Arizona. This trend has been occurring since 2010 and was further accelerated by local restrictions and the reduced need to live where you work during COVID. These migration trends will likely shift revenues across the regions over the next five years until the population starts to “resettle” in the post-COVID environment.
Kornik: We’ve mainly talked about the next five years, but I’m curious to hear your thoughts about the commercial real estate sector in the U.S. longer-term—say, 2030 or even beyond. How bullish are you on the sector overall, and what could that mean for U.S. cities over the next decade?
Critelli: I think revenue will continue to increase but at a very modest or more traditional 1% to 2% per year. There will also be demand for services related to property management, property transactions, and property development or redevelopment. I think construction will slow from pre-2020 levels, but again, spending in the municipal and institutional segment—some driven by government investment—will also support this growth through 2030. I’m optimistic that the market will remain steady, but don’t expect any exponential growth beyond 2022 and 2023, and even some of those estimates put out by IBISWorld seem a bit too optimistic to me.
I’m optimistic that the market will remain steady, but don’t expect any exponential growth beyond 2022 and 2023, and even some of those estimates put out by IBISWorld seem a bit too optimistic to me.
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Sustainability and the city: Reinventing the future with high-tech and low-tech solutions
Sustainability and the city: Reinventing the future with high-tech and low-tech solutions
Sustainability and the city: Reinventing the future with high-tech and low-tech solutions
When it comes to our love of cities, there’s both good news and bad news: Cities have the distinction of being both engines of economic growth and the main culprits behind climate change and economic inequality. While cities occupy less than 2% of the world’s land surface, they are home to 60% of the population and nearly 80% of the carbon emissions, according to the UN. They contain deep pockets of poverty, a diverse middle class and a sliver of extremely wealthy individuals. The COVID-19 pandemic has exacerbated the trend towards economic inequality, but it also provides an opportunity to reinvent cities as we know them through both high-tech and low-tech initiatives.
For centuries, cities have been the fundamental nodes of economic activity and social life. They are hubs of talent, creativity, and dynamism. As Columbia University’s Saskia Sassen has noted, “cities do the work of globalization.” They are a repository of talent and vibrancy. No wonder that so many startups and established companies strive to tap into their seemingly inexhaustible dynamism. But for all the good they bring; cities are failing us in at least two ways. Many of them continue to reel from the long-term consequences of manufacturing flight. Vast swaths of American and European cityscapes are derelict wastelands full of despair. As a result, nearly every major city is “in fact, divided into two, one the city of the poor, the other of the rich,” as the Greek philosopher Plato once said.
"Pardon Me Boys… Is That ‘The Gig’ in Chattanooga?"
But post-industrial decline is not necessarily destiny. Consider Chattanooga, Tennessee, the city immortalized by Glenn Miller and His Orchestra in 1941. At the time, this city of 129,000 was home to prosperous textile, furniture, and metal-working factories. All southbound trains made a stop there. By the late 1950s, manufacturing was leaving elsewhere, and middle-class white families headed for the suburbs.
In 1969 the Federal Government determined that Chattanooga had the “dirtiest air of any city in the United States,” even after half of the city’s factories had shut down. The local government immediately instituted air quality targets and regulations, and businesses invested heavily in green energy.
It took three decades for local philanthropists and politicians to join forces with the aim of revitalizing the downtown area. The only possible strategy involved creating the conditions for such service activities as tourism, high-tech, healthcare, finance, and insurance to grow.
During the 1990s it was one of just 18 American cities to gain residents. This turnaround attracted a major investment by Volkswagen in 2008. Encouraged by these early successes, local government, business, and civic leaders decided in 2009 to think big by investing in a citywide gigabit-per-second fiber Internet network, the first in any American city (even today, fewer than 200 have been built). Known as “The Gig,” it boasts the fastest connection speeds in the country, a move that attracted numerous startups and gig workers from as far away as San Francisco and New York City, including telecommunications companies, healthcare equipment manufacturers, robotics designers, and 3D-printing pioneers.
The Environmental Protection Agency proposed the city as a national model to emulate. Since 2013 the city has cut energy use by 30%, propelling it to the top spot of the Department of Energy’s Better Buildings Challenge. Volkswagen, the local airport, and BlueCross BlueShield of Tennessee now generate more than 15 megawatts of solar electricity, equivalent to the consumption of 10,000 homes, or one in seven in the city.
30%↓
Since 2013, Chattanooga has reduced its energy use by 30%
But not all cities share Chattanooga’s success. The vast majority of cities struggle to meet expectations when it comes to sustainability.
Cities are much more energy-intensive than rural areas and urban residents much more wasteful. They are growing at the whopping rate of 1.5 million people per week worldwide. Simply put, there is no solution to the problem of environmental degradation and climate change unless cities become more sustainable.
Demographically speaking, the slowdown in the world’s population growth means that there is hope for a more sustainable planet. But the decline in the number of babies coincides with a swift expansion of the urban middle-class consumers, especially in Asia and increasingly in Sub-Saharan Africa. Every year, nearly 200 million people join the ranks of the middle class globally, resulting in more people engaged in a protein-rich diet, homes with air conditioning, automobiles, vacations, and other resource-intensive consumption patterns. Most of the world’s middle class lives in cities, and that is especially true in the case of the new middle class in emerging markets, where the concept of suburban life has yet to gain in acceptance.
Urban Agriculture in EMEA
It may seem paradoxical that, while most urban growth is occurring in the developing world (from Lagos and Nairobi to Dhaka and Jakarta), some of the most creative ideas to reinvigorate cities and make them more sustainable are also emerging from Africa, the Middle East, and Asia. Perhaps the best example involves urban agriculture. There are multiple benefits to growing food in the city, including reduced carbon emissions, improved air quality, and transportation savings. World War II’s “victory gardens” are back, with a vengeance.
Urban farming comes in two kinds, horizontal and vertical. “Food is now been grown in such unlikely places as old factories, abandoned warehouses, and industrial buildings,” says Ravindra Krishnamurthy, an expert on vertical agriculture. “Technological advances in vertical farming methods and indoor lighting is enabling to grow food alongside existing commercial and residential structures and making local food available for city dwellers.” Jack Ng built Sky Greens, one of the world’s first large and commercially viable vertical farms in Singapore. He grows vegetables like lettuce and spinach in A-shaped towers soaring 30 feet, with 38 tiers of growing troughs which rotate at a rate of one millimeter per second, “Which ensures uniform distribution of sunlight, proper air circulation and irrigation for all plants.” The true breakthrough lies in the efficient use of resources. Each tower needs only as much energy as a 40-watt light bulb. The water is recycled, filtered, and recirculated. All organic waste is composted and reused.
Vertical agriculture has the potential of revitalizing cities in decline. “Entrepreneurs are taking advantage of inexpensive former warehouses and factories in Detroit and transforming them for agricultural use to produce local foods,” reports The Detroit News. For instance, “Green Collar Foods mists the bare roots of kale, cilantro and peppers using an aeroponics system under fluorescent lights in its 400-square-foot plastic-encased greenhouse. The system is built vertically, stacking plants on shelves to grow above each other.” Jeff Adams launched Artesian Farms in 2015 at a 7,500-square-foot vacant warehouse. He uses twenty times less water to grow a bundle of lettuce than his California competitors. Most importantly, vertical agriculture in cities promises to reduce the carbon emissions involved in transportation and to shorten delivery times. “The food you’re eating right now, its seven to 10 days before it reaches Michigan,” Adams notes. His produce “is from here to the market in a day, at most, 48 hours... It’s going to be much more flavorful and much more nutritional.”
Urban horizontal agriculture will be crucial for meeting the needs of the rapidly growing cities of Africa, where transportation from the countryside represents a key bottleneck in the supply chain. For instance, city officials in Kampala and Nairobi, the capitals of Uganda and Kenya, respectively, have encouraged agricultural activities for years, with varying degrees of success. Some studies indicate that already “800 million people are engaged in urban agriculture worldwide, producing 15 percent to 20 percent of the world’s food.” They’re mostly in the developing world. In Africa, as many as 35 to 40 million people receive their food mainly from urban farms.
There’s also a low-tech and horizontal version of urban agriculture, as practiced in Sub-Saharan Africa, where 30% of the food is grown within the limits of major urban areas. Given the poor transportation infrastructure, the main advantage of urban produce farming lies in being able to reach the consumer without delay. Farming inside a shipping container is the latest trend. It allows for careful control of temperature and humidity and is much more efficient in the use of water than open-air agriculture. Solar panels can provide the energy needed in a part of the world where the electricity supply is unreliable or non-existent.
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Cities can become the solution to the problems of inequality, waste, and climate change, as opposed to the problem itself. Cities are the future more so than at any other moment in history, for better or worse.
Cities can become the solution to the problems of inequality, waste, and climate change, as opposed to the problem itself. Cities are the future more so than at any other moment in history, for better or worse.
Go! Mindblowing mobility driving transportation’s transformation
Go! Mindblowing mobility driving transportation’s transformation
Go! Mindblowing mobility driving transportation’s transformation
Many of the future of mobility’s shiniest toys—flying cars, robot taxis, electric airplanes—are on the horizon, but not necessarily practical modes of transport just yet. But big investment in other mobility technologies, such as electrification, autonomous vehicles (AVs), mobility-as-a-service (MaaS) platforms and in-vehicle commerce, indicate massive changes to our global transportation system are imminent and will disrupt transportation both inside and outside cities.
“Autonomous connected electric fleets of cars will expand in a zigzag nature as technologies and government regulations evolve unevenly,” notes ZoZo Go CEO Michael Dunne in the foreword to Evangelos Simoudis’s book Transportation Transformation (Corporate Innovators, LLC, 2020). “But by 2030, we should be witnessing changes to our cities that make us stop and say: ‘Wow!’ One thing is certain: The first transformations will occur in cities.”
Mobility’s "wow" moment should entice business leaders from many different industries to recognize the enormous potential for new products and services, and even new markets, that will present themselves as this transformation unfolds.
Current advances seem destined to produce mobility-as-a-service models in which a consumer—let’s go with a suburban resident named Fred—has an autonomous pod fetch him from his home, ferry him to the train (or hyperloop) station and then board an autonomous shuttle to his office. In this scenario, which Simoudis describes in his book, Fred’s subscription-based, app-enabled MaaS platform lets him work, shop and order dinner during his seamless 50-minute commute. Other mobility prognosticators say that’s only the beginning.
“You can even imagine a world where the vehicle is essentially a stand-alone company operating by itself, succeeding based on what it learns through its AI and machine learning, making a living off of its environment by providing mobility services,” Mobility Open Blockchain Initiative (MOBI) Founder and CEO Chris Ballinger told innovation expert and podcaster Grayson Brulte.
Similarly jaw-dropping snapshots of mobility’s future already exist in Singapore, Shanghai, New York, Istanbul, Seoul, Helsinki and other hubs. These developments are space-aged and, at times, chilling, but also surprisingly ordinary in some cases.
Yes, that Tesla Model S giddy-ups to 60 mph in 2.4 seconds and, yes, it still feels liberating to walk away from an Uber ride without the hassle of a traditional payment. But that robot taxi ride in Shenzhen, China? It feels and looks less Jetsons-y and more like you’re riding in the backseat of your brother-in-law’s Pacifica piloted by the Invisible Man. (The intentional familiarity should help adoption, experts say.) What’s less commonplace is awareness of the daunting risks that could hinder mobility’s rapid advance. The U.S.-owned Global Positioning System (GPS), a foundational enabler of many mobility advancements, turns out to be vulnerable to interference, both unintentional and intentional.
How these and other transportation advances, opportunities and risks converge will be determined by less tangible factors, such as public-private collaboration, policymaking, regulatory decision-making, non-stop machine learning, standards-setting and old-fashioned risk management.
"THE FUTURE KEPT ARRIVING. OUR BRIGHT NEW TOYS BEGAN TO RUST BEFORE WE COULD GET THEM HOME, AND LIFE WENT ON MUCH AS BEFORE."
— Ian McEwan, Machines Like Me
THE GLOBAL ELECTRIFICATION OF PUBLIC AND PRIVATE VEHICLES MAY BE THE SAFEST BET TO PLACE WHEN FORECASTING THE FUTURE OF MOBILITY.
Source: Electric Vehicle Outlook 2020, BloombergNEF
Autonomous
Self-driving or self-governing vehicles have been a subject of discussion, research and development for a long time. The question has always been the extent of driver supervision required.
“The shoulder area is very diagnostic of human intention,” venture capitalist James Gowers explained to an IEEE audience during a presentation showing how Perceptive Automata’s “state of mind AI” (SOMAI) model for autonomous vehicles can accurately assess whether urban pedestrians are aware of nearby vehicles and whether walkers nearing crosswalks intend to continue into the street. By consuming an endless diet of “training data” based on the social cues and other subtle signals human drivers reflexively use to make decisions, the algorithms propelling autonomous vehicles safely out of prototype mode and onto more streets are getting smarter every second.
Jim Adler, the head of Toyota AI Ventures told Wall Street Journal columnist Christopher Mimms that “software is eating the world, and cars are next on the menu.”
AV ventures have been devouring eager investment capital as technology companies partner with OEMs and start-up AV companies to produce new AV models and MaaS offerings. Three years ago, research firm IHS Markit projected that more than 33 million autonomous vehicles would be sold globally in 2040, up from 51,000 in 2021. This forecast now seems low, following a string of tech-automotive consolidations and partnerships (e.g., Microsoft and GM/Cruise, Amazon and Zoox, Google and Waymo, Aptiv and Hyundai, Argo AI and Ford/Volkswagen) and Apple’s not-so-secret AV initiative (Project Titan) looming in the wings. Plus, China’s production of autonomous EVs remains on track to surge past current U.S. production levels.
Connected
The U.S.-based International Society of Automotive Engineers (SAE) maintains a six-point scale that rates vehicles based on their degree of automation, from Level 0 (no automation) to Level 6 (full automation). In April 2021, the SAE updated its driving classifications to specify human drivers’ responsibilities while differentiating between the first three levels (grouped as “driver support systems”) and the second three levels (grouped as “automated driving systems”).
“Connected” describes the communication a vehicle conducts with external sources, such as other vehicles, traffic infrastructure, emergency services and other nodes. Sticklers will explain that an autonomous vehicle cannot be a connected vehicle because those interactions negate its ability to operate independently—which explains the term “connected automated vehicle” (CAV).
Vehicle-to-vehicle (V2V) and vehicle-to-everything (V2X) communications promise to provide some of the most dramatic future-of-mobility changes, risks and improvements across numerous areas, including highway/road safety, traffic congestion reduction, pollution control, infrastructure funding and more. The development of global connected-vehicle standards—massive, multi-stakeholder processes driven by organizations like Intelligent Transportation Society for America (ITS America) and its counterparts in Europe, Japan and elsewhere—involves the hashing out of programming codes, definitions and formats required to support interoperable, consistent and seamless communication exchange among shared information systems and devices.
V2X communications will facilitate highly calibrated, more equitable automated micro-tolling systems through which road users will fund maintenance and improvements. V2V communications will continuously transmit road conditions, traffic signal patterns, and speed changes among private and commercial vehicles, generating major reductions in congestion while enabling other movement efficiencies such as truck platooning, in which one or more freight-hauling trucks closely shadow a lead truck to improve route efficiency.
V2X technologies could eliminate or lessen the severity of up to 80% of non-impaired crashes, according to ITS America research, which in turn will reduce emissions given that accidents are the source of more than half of all U.S. traffic congestion.
80%
V2X TECHNOLOGIES COULD ELIMINATE OR LESSEN THE SEVERITY OF UP TO 80% OF NON-IMPAIRED CRASHES.
Embedded
The “X” in V2X communications will include a wide range of commercial vendors selling EV charging, parking services, maintenance, snacks, groceries, entertainment and other offerings. This V-commerce opportunity is huge: Global connected car payments will surpass $650 billion by 2030 when roughly 1.7 billion connected vehicles are on the road, according to PTOLEMUS research. MOBI’s Ballinger said that autonomous transactions will be more impactful than autonomous driving.
An embedded, connected and integrated in-vehicle payment capability is an essential building block of future MaaS offerings: “For the user, MaaS offers added value through a single application to provide access to mobility, with a sole payment channel instead of multiple ticketing and payment operations,” notes a recent ITS Europe paper.
As with other future-of-mobility developments, the size and challenges of the vehicle commerce opportunity hinge on a complex mix of interrelated factors, including the establishment of V2X communications standards, data privacy and security, major questions concerning data ownership, integration among numerous types of technology (e.g., payments, tax determination, e-commerce), regulatory responses and more.
GLOBAL CONNECTED CAR PAYMENTS WILL SURPASS $650 BILLION BY 2030 WHEN ROUGHLY 1.7 BILLION CONNECTED VEHICLES ARE ON THE ROAD, ACCORDING TO PTOLEMUS RESEARCH
Risks and roadblocks
Future-of-mobility opportunities remain fluid thanks to regulatory volatility, known and evolving threats, uncertainty related to emerging mobility standards and shifting human and societal factors. Business leaders evaluating mobility’s current trajectory for opportunities should keep tabs on the following variables:
Regulatory responses
Bans on combustion-engine vehicles mark one of the most common predictions in “future of transportation” articles and are increasingly a theme in national and state-level lawmaking bodies. A raft of other rules concerning different aspects of CAV manufacturing and usage are also on the way. “Getting the technology to make the vehicles is only half the challenge,” notes a report from the National Association of Insurance Commissioners (NAIC) in the United States, which also indicates that more than half of all U.S. states already have enacted AV-related legislation. “The other half will be creating a legal, liability and regulatory framework to govern their use on public streets.” Rules-making will cover strategic national interests, such as control over the battery supply chain, as well as fascinating legal matters. Who’s at fault if the “operator” of a Level 4 AV was reading at the time of an accident? Are DUIs possible in Level 5 AVs?
Agreement on standards
The scope of standards-setting activities surrounding connected and autonomous vehicles is mind-boggling. In recent months and years, vehicle cybersecurity standards along with good and best practices have been undertaken, or called for, by the Singapore Standards Council, Transport Canada, the United Nations Economic Commission for Europe, the National Development and Reform Corporation (NDRC) in China and the U.S. Automotive Information Sharing and Analysis Center (Auto-ISAC). The British Standards Institution Group, the Society of Automotive Engineers, the European Telecommunications Institute and the International Organization for Standardization (ISO) have also weighed in on vehicle cybersecurity. Global standards governing CAV-to-CAV communications—essentially a new language—are also underway. Given that the global transportation sector is the second largest producer of greenhouse gas emissions beyond electricity/heat generation, standards are also needed for carbon measures. In the United States, the NAIC has adjusted insurance coverage frameworks to adapt to ride-hailing activity; now its Innovation and Technology Task Force is examining how to treat bodily injury, property damage, liability coverage and comp and collision for autonomous vehicles.
GPS and V2X threats
Many mobility-venture pitches pivot on the rock-solid notion that if you know a vehicle’s or a passenger’s time and position, you can monetize that data in new ways. But what if time and positioning data is at risk? It turns out that GPS and other nations’ global-navigation satellite systems—Europe’s Galileo, China’s BeiDou and Russia’s GLONASS—are more vulnerable than most lay people realize. Airplane pilots and sea captains have experienced instances of GPS interference for years. In late 2020 through January 2021, pilots within the Wilmington, North Carolina airport experienced GPS-signal interruptions during critical phases of their flights. The culprit took weeks to identify: a wireless control system from a nearby utility company. Other sources of GPS jamming include natural phenomena (solar flares), domestic military exercises, military aggression (Seoul, South Korea regularly experiences outages), privacy jammers, and unintentional interference from public and commercial sources. Global positioning outages can have sweeping effects beyond transportation given that the global financial system relies on these systems to clock the precise time of transactions and that extreme-weather detection systems rely on GPS data. Rival nations would like to see GPS knocked off its perch as the world’s standard global-navigation satellite system. The radio frequency spectrum (75 MHz in the 5.9 GHz band) historically reserved for licensed intelligent transportation systems is also at risk, according to many advocates of vehicle safety and V2X communications. A late 2020 decision by the U.S. Federal Communications Commission (FCC) made a portion of that previously reserved spectrum available to unlicensed, commercial wireless applications. “In light of the increase in fatalities on American roadways last year, the Federal Communications Commission (FCC) made a dangerous decision to give away a majority of the 5.9 GHz spectrum previously reserved for transportation safety,” ITS America President Shailen Bhatt said in response to the FCC’s decision. “Not only has the FCC limited transportation use to 30 MHz of spectrum, it has failed to show that it will ensure that spectrum is usable by protecting it from harmful interference.”
Cybersecurity
As the software enabling autonomous vehicles gets ever more intelligent, concerns about physical safety will decrease, yet the need to focus on passenger’s data security and privacy will intensify. Earlier this year, the European Union Agency for Cybersecurity (ENISA) published a hefty report exhorting the AV ecosystem not to wait: “The automotive industry should embrace a security-by-design approach for the development and deployment of AI functionalities... It is important to promote a culture of cybersecurity (particularly on AI-enabled vehicles) across the automotive ecosystem.” Energy grids also will require stouter cybersecurity as more and more drivers rely on them to charge their EVs. Cyber attacks can become a show stopper if major incidents occur.
Behavioral resistance
For drivers, the transition from combustion-engine vehicles to EVs has been a smooth one, and this should hold as millions more drivers make the shift in the future. Aside from regenerative braking, engine silence and a slightly different start-stop cycle, the differences between piloting a 2021 Ford F-150 and a 2022 F-150 Lightning are minor. Autonomous vehicles will require deeper behavioral change from passengers and from vulnerable road users (e.g., pedestrians, cyclists, scooters, etc.). A nasty accident could cause adoption backlashes as it goes viral on social media. When it comes to micro-mobility vehicles that figure as important nodes in cities’ MaaS plans, a sizeable portion of the population remains unwilling to use electric scooters and bikes. A 2020 online survey of 2,000 South Koreans found that 35% of respondents were “likely” or “very likely” to use personal mobility devices (PMDs); 27% were “unlikely” or “very unlikely” to use PMDs; and 37% were on the fence.
As for changing behavior in the marketplace, consumer migration from awareness to acceptance to commitment to act takes time. Word-of-mouth, convenience, momentum and the experience curve engenders confidence over time. Over a century ago, the market transitioned from the horse and buggy to the automobile once mass production became a reality.
However, humans’ willingness to try new modes of mobility and other behaviors can, of course, change dramatically in short periods of time under the right conditions. This capacity was evident last year as crystal-clear blue skies emerged over the world’s most congested megacities thanks to the pandemic’s temporary impacts on greenhouse-gas emissions. Rapid mobility developments also occurred in old-school global cities: The leaders of London and Paris leveraged the pandemic’s vehicle-traffic reduction effects to quickly install kilometers and kilometers of new bike lanes.
Expect more of these rapid, unexpected developments to occur, says Texas A&M Transportation Institute (TTI) Director Gregory Winfree, who oversaw multi-modal transportation initiatives during his previous tenure in the U.S. Department of Transportation. “We’ve seen more dynamism in the past 10 years than we witnessed in the previous 100 years,” Winfree noted. “And that’s only going to increase over the coming decade.”
"EXPECT MORE OF THESE RAPID, UNEXPECTED DEVELOPMENTS TO OCCUR. WE’VE SEEN MORE DYNAMISM IN THE PAST 10 YEARS THAN WE WITNESSED IN THE PREVIOUS 100 YEARS."
— Gregory Winfree, Texas A&M Transportation Institute
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Sustainability strategist: By 2030, we’ll know what cities will be unlivable
Sustainability strategist: By 2030, we’ll know what cities will be unlivable
Sustainability strategist: By 2030, we’ll know what cities will be unlivable
Andrew Winston is a globally recognized expert on megatrends and how to build resilient, profitable companies by helping people and the planet thrive. He is one of the most widely respected strategists and speakers on sustainable business in the world and was selected for Thinkers50 Radar list of “30 thinkers to watch in 2020,” a global ranking of top management thinkers. His views on strategy have been sought after by many of the world’s leading companies, including 3M, DuPont, Johnson & Johnson, Kimberly-Clark, Marriott, PepsiCo and Unilever, among others. Winston has written four books, including Green to Gold, one of the best-selling green business titles ever, and has reached more than 100,000 people in seven languages. His fifth book, Net Positive, is due out later this year. VISION by Protiviti’s Editor-in-Chief Joe Kornik sat down with Winston to discuss Sustainability and Cities.
Kornik: Even before COVID, many cities around the world were dealing with a looming climate crisis. Then they got hit with a pandemic. What do you think will be the impact of COVID on cities?
Winston: We won’t really know for years, but in the short run there’s been an exodus from cities around the world. Mostly by wealthy people who have the means to do remote work from anywhere. I think we’ll see some people leaving expensive cities like San Francisco, New York, London, Paris and many cities in Asia. But I also think the trends that drive people to cities are still pretty much intact, so I think in India, China and Africa you’ll continue to see population gains. At the same time, cities are having to move aggressively on their own sustainability planning. There’s a bunch of cities in the world that are going to be dealing with rising temperatures and sea levels. And I’m not talking too far out: By 2030, I think we’ll have a pretty good sense of what cities are going to be unlivable.
Kornik: Is there a way to convince the C-level to be more focused on long-range thinking?
Winston: That’s a big ask. I mean, with climate we’re talking about consequences that may still be 30 or 40 years off, and that’s just not going to matter to executives. The typical CEO is only in charge for three to five years. The executive boards are the ones who should be thinking more long term, but you usually have to look pretty hard to find board members with a climate or green energy background. You know, they’re typically older, not very diverse and not really prepared for this challenge. Companies would be wise to make sure their boards more accurately reflect the people in the industries they serve and the places where they do business. But overall, I’ve been pleasantly surprised most companies have continued, or even accelerated, their climate initiatives during COVID. They have because it’s good business. People respond to responsible companies, and there’s a tremendous amount of pressure on them from the public and even their own employees.
Kornik: I would think the same would also be true of cities…
Winston: It is. The United States just rejoined the Paris climate accord (Paris Agreement) and there was very little leadership coming from Washington on climate the last four years, so cities responded by picking up the slack. In some ways, I think it made them more proactive. When thinking about their own future and future tax base, cities would be smart to embrace sustainable initiatives. Cities tend to get a bad rap for having a huge footprint, but they’re more efficient than other areas. In a city, each person has a smaller footprint because they’re using less space and sharing more resources. In cities, lots of people use public transport, bike or even walk to work and shopping. Many don’t even own cars, and the ones that do own electric vehicles. Car companies clearly see the writing on the wall; most will have given up on the combustible engine by 2030. We’re going to see electric vehicles start to drop below combustion engine prices in the next few years. Most people want that. Not just because it’ll be cheaper, but because driving an electric vehicle is a much better experience; it’s quicker, it’s more responsive, the maintenance is almost non-existent. It’s just a better car.
CAR COMPANIES CLEARLY SEE THE WRITING ON THE WALL; MOST WILL HAVE GIVEN UP ON THE COMBUSTIBLE ENGINE BY 2030.
Kornik: So, are we finally at the point where the technology makes sustainability good business?
Winston: For cars, I think we’re there. And other sectors are close if they’re not there already. People want the buildings they live in to be efficient and have better air quality. They want the buses around them to be clean; they want the Amazon and FedEx trucks to be electric, and as we get further along in this who’s going to want to go back? This is only moving in one direction and the momentum is unstoppable at this point. I do think cities will partly compete on the quality of life they offer residents, as well as services they provide and how they provide them. And the cities that do it better will be in more demand. Those cities will be the ones attracting the best companies, the best talent and the best jobs. Unfortunately, we didn’t start early enough and we’re late, so there’s going to be some bad things that happen and much of that is going to happen in cities first, unfortunately. But we’re moving in the right direction.
Kornik: Overall, are you optimistic or pessimistic about the future?
Winston: I get asked this question a lot: Are we going to be OK? Well, it all depends on who the “we” is. Plenty of the world is going to come out OK, but there are parts of it that won’t, and it’s kind of how we handle that as a species that will make the difference. It’s hard not to be optimistic about the cost of clean technology; it’s dropped so fast and it’s only going in one direction. There’s no additional cost to accessing the sun or wind, and there’s just no way for fossil fuels to ever compete with that; they can’t win. What worries me, however, is that we need massive collective action based on the premise that we’re all in this together. I think COVID increased that a bit, but not as much as I would have thought or hoped. I just don’t see that in society, but I am seeing it, maybe even more than I thought I would, in corporations. Companies may end up being our salvation here. They have stood up against injustice more so than people and communities. Companies are leading and defending a more just society than governments are right now. Companies get it; for lots of reasons they seem to want to make the world work better. And that could be a huge win for all of humanity.
ARE WE GOING TO BE OK? WELL, IT ALL DEPENDS ON WHO THE “WE” IS. PLENTY OF THE WORLD IS GOING TO COME OUT OK, BUT THERE ARE PARTS OF IT THAT WON’T, AND IT’S KIND OF HOW WE HANDLE THAT AS A SPECIES THAT WILL MAKE THE DIFFERENCE.
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