I saw a tweet by Richard Florida that piqued my interest.
1. Lots of people saying driverless cars & deliveries will someone how reduce demand for urban living.
— Richard Florida (@Richard_Florida) June 19, 2017
I created a Twitter Moment out of Richard Florida’s tweetstorm. His tweetstorm isn’t particularly profound but it is worth paying attention to.
Way back in the 1990s before the internet bubble, we used to talk about this in the trading pit. Tom Gariti (TUG) stood next to me grew up in the suburbs but was living and raising his kids in the city.
Was the march of technology going to drive people to a city? Or, was the march of technology so advanced that people didn’t need a city?
Back then, I thought technology would be awesome for small towns. People would leave cities and flock to wide open spaces. Tom disagreed. He said it was all about the amenities of the city.
Tom was right.
He pointed out historically there has always been a rush to cities. As China has developed, where are people going? India? Being organized in a city is part of the human condition because it’s a lot more efficient.
Another friend of mine who stood right next to us was Doug Koster (DDK). He grew up on a farm and lived in the suburbs. He wasn’t going back. He said there were nice things about country living but he wasn’t going back.
One of the things I didn’t consider was the challenge of getting the technological infrastructure out to the country. It’s not a flip of a switch. There is a lot of money going into Ag Tech these days. One of the diligence issues better is whether there is bandwidth out on the farm for the stuff to even work.
Another factor I didn’t consider was network effects. There are network effects that come with cities. That doesn’t happen the same way in rural areas. It’s not nearly as efficient and technology hasn’t made it more efficient yet. I qualify it because it takes 30 years for an innovation to really take hold and be utilized to its full capability. Social networks and connection over bandwidth are still quite young.
I have noticed the differences between rural and city as I have traveled over the last ten years. There is a technological divide. One of the things that will be interesting to me as we rehab our cabin up north and spend time there will be how technology affects the experience. We have fiber internet there, and Amazon Prime delivers.
The current big things in tech like driverless cars are going to impact cities big time. One of the most frustrating things about a city is the congestion and logistics. Driverless cars can make a lot of that go away. They also will free up a lot of space since every individual won’t choose to have a car.
In Chicago, we have a lot of building going on right now. It’s not that there is a huge demand to get into Chicago today. There isn’t. We are losing population, not gaining it. But, interest rates are cheap, land is vacant, economic incentives tilt toward commercial real estate construction and the city needs property tax revenue so it is issuing permits like crazy.
The trend for Chicago though is good. Historically, those apartments will fill up. Technology will help them fill up. That is, as long as city government doesn’t screw it up.