New technologies are giving rise to the creation of ‘Smart Cities’

New technologies are giving rise to the creation of ‘Smart Cities,’ and real estate and infrastructure developers and investors will need to adjust how they approach future development and design, argues Mark Barker, a real estate partner at Squire Patton Boggs in Manchester.

The delivery of real estate and infrastructure development is changing. Cities and local governments across the UK are preparing for the impact of new technology that will change the way we go about our daily lives, as well as how cities themselves are organised, public services are delivered and real estate development and infrastructure provision is planned.

Smart Cities—the all-encompassing term that includes everything from the better use of big data to target public service resources, to internet connectivity and autonomous vehicles—are being actively developed and delivered across the UK.  There is no ‘catch all’ definition of a ‘Smart City’, but what is clear is that the delivery of the Smart Cities vision will require the public and private sectors to work in partnership with each other.

New answers to very significant questions will be required: What are cities for? What will be the future purpose of buildings in cities and how will their function be optimised?  What will be the role of autonomous and driverless vehicles? How will their use impact on the very design of cities which have previously focused on driven vehicles?  Will the use of Smart City technology and the remote working revolution affect the otherwise significant demand for new transport infrastructure?

Technological innovation is pushing the development of Smart Cities, but real estate will be their backbone. More than ever, delivery of the Smart Cities vision requires close cooperation and collaboration between local authorities and developers and investors to bring into use the technology which can vastly enhance the quality of life in the cities of the future but which cuts across the existing city business model.

In the UK, the delivery of the Smart Cities vision is being led by initiatives such as MK:Smart. There are also important global examples that highlight the various partnership and delivery models for Smart Cities. For example, San Diego has formed corporate partnerships to roll out an extensive internet network, with more than 3,000 sensors integrated into city infrastructure to optimise parking and traffic flow, as well as enhance public safety. Las Vegas is working with a car manufacturer on a traffic-light countdown system, while the Nevada government is collaborating with Nexar to build systems for vehicle-to-vehicle communication.

The state of Ohio has partnered with another automotive giant to build a ‘smart road’ on a 35-mile stretch of US 33 that will incorporate highways sensors and expand fibre-optic networks. Many of these examples mirror what is emerging as best practice in the UK, and it is important to recognise that the most successful Smart City schemes will have a global impact.

Pioneering models for the delivery of the Smart City vision have established a road map for the delivery of the concept in the UK.  The opportunities that will be delivered by the interface between data and transport infrastructure (road, rail, metro and light rail) are particularly exciting.  The integration of traffic management systems will help reduce congestion and maximise the use of existing infrastructure thereby improving transport and commuter flows and refocusing where and how real estate and infrastructure developments are invested and delivered.

Smart Cities raise many other questions concerning the use of land. Transportation has always been a major driver of real estate development. What impact will autonomous cars have on transportation patterns, and consequently, real estate development? According to some international estimates as much as one-third of urban centres are currently taken up by car parking, so such a change could have a dramatic impact on real estate use and values.

As the development of Smart Cities proceeds, real estate investors will require developers to ‘future proof’ new developments as well as ensuring new build schemes are safeguarded against cybersecurity incidents. So-called “smart buildings” and the increased inter-connectivity of management systems make real estate assets a target for cyber attacks. So stakeholders will need to work more closely together to ensure that data privacy, cybersecurity and privacy controls are built into Smart Cities, creating ‘privacy by design.’ Developers will increasingly be part of these discussions, and local government and planning authorities will no doubt require these issues to be addressed during the planning process.

While some people see technology as being the main driver for creating Smart Cities, in reality, the real estate sector has led the way by integrating smart technology into many of its new designs. This progression, however, continues to raise many questions for real estate developers and investors, from how to build cybersecurity protection into their new schemes to the redevelopment of existing city infrastructure. Times are certainly changing.