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 procurement, development and design, argues Prew Lumley a real estate partner at Squire Patton Boggs in Leeds.

The delivery of real estate and infrastructure development is changing. Cities and other 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 better use of big data to target public service resources, to Internet of Things (IoT) connectivity and autonomous vehicles preparedness—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 significant flexible and evolving partnerships between city authorities and technology and infrastructure delivery partners.  This challenge will affect strategic planning across the real estate and infrastructure industries.

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 been optimised for driven vehicles?  Will the interface 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 need to be their backbone. More than ever, delivery of the Smart Cities vision will require close cooperation and collaboration between local authorities, and developers and investors in the technology which can vastly enhance the quality of life in the cities of the future, but which might otherwise disrupt 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 IoT network, with more than 3,000 sensors integrated into city infrastructure aimed to optimise parking and traffic, as well as enhance public safety and living standards.

Las Vegas is working with an automotive company on a traffic-light countdown system, while the Nevada government is working with Nexar to build systems for vehicle-to-vehicle communication. 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.

Closer to home, Leeds City Council has been shortlisted with four others for the National Infrastructure Fund “Roads for the Future” Competition. The Leeds proposal is about examining how the data generated from digitally connected cars could be used to improve traffic light systems, allowing highway authorities to better manage traffic on their roads and reduce tailbacks.

Pioneering models for the delivery of the Smart City vision such as MK:Smart 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.  Traffic management systems will be integrated to reduce congestion and optimise the use of existing infrastructure.  Where city transport systems interface with the national road network for example the interface between Smart City technology and interfacing smart technologies such as Smart Motorways will deliver the ability to manage transport and commuter flows across regional travel-to-work geographies.  This will have a fundamental effect on how and where real estate and infrastructure developments are invested and delivered.

Smart Cities raise many other questions concerning land usage. 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? What will become of parking provision? According to some international estimates as much as one-third of urban centres are currently taken up by parking spots, so such a change could have a dramatic impact on real estate value. Planning laws will have to change to reflect this new reality, and the challenge will be significantly increased by the fact that the implementation of the Smart City vision will interface with other technology driven change, such as the impact on physical retailing in city centres.

In this context, as the development of Smart Cities proceeds, real estate investors will require developers to ‘future proof’ new developments, by ensuring that parking provision for example is capable of being repurposed.

In addition, real estate and technology companies are forming joint venture partnerships. Retail developers are working with technology firms to create ways to better automate the shopping experience— from drop-off to pick-up.

Another issue that real estate developers and investors alike will have to consider is how they will safeguard against cybersecurity incidents. So-called “smart buildings” and the increased inter-connectivity of management systems make real estate assets a target for cyber attacks. As the functionality of ‘smart’ buildings and their interface with IoT increases, 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 require safeguards be addressed when planning permission is sought.

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