Moving On

Michael Raphael

by Michael Raphael, AIA, LEED AP Raphael Architects – The climate has changed dramatically in the past four years for all product and service providers in the real estate and construction industry. An understandable response is to complain about the decreased demand and the rising costs; attempting to assign blame to those responsible for the change. A more practical response would be to learn from the lessons of other businesses that have undergone dramatic change. Buggy whips, eight track tape machines, fax machines, encyclopedias, drafting products, and hammers all used to be in high demand. Technology has decreased the demand for all of these instruments. There are great opportunities ahead of us. How we chose to respond to those opportunities is within our control. We can choose to embrace change or cling tightly to our past practices.

In the next few decades the world population will increase from 7 billion to about 10 billion people. A majority of the growth will take place in urban areas. The US population is already changing from a suburban family lifestyle. Today, this market accounts for only 24% of our population. Households without children account for 76% of the market. There are more single person households (30%) than households with children. Currently there are 74 million baby boomers (51 to 69) in the US. There are 83 million millenials (19 to 37). Both groups desire invigorating places to live. They already desire places to go (“Third Place”) when they aren’t sleeping (“First Place”) or working (“Second Place”). The closer and more convenient these places are, the greater the likelihood they will be successful.

Major drivers of change within the next 20 years include: decreased carbon footprint and dependence on oil and gas, intelligent transportation, living with nature, climate change, carbon neutral living (net zero), renovation or rehabilitation of the 111,000,000 existing residential units and 4,900,000 commercial units.

There is great financial opportunity to live more efficiently. Currently suburban households spend about 25% of their family income on transportation. Urban households spend about 11% on transportation. Americans spend approximately 32% of the total life cycle cost of their buildings on maintenance and operations. This amount is nearly identical to the 33% they spend on land acquisition and construction and the 31% they spend on interest. Indirect costs account for 2.5% and design for the remaining 1.5%.

Originally posted on Monday, December 5, 2011 4:05 pm | Updated: 8:54 am, Tue Aug 7, 2012.