Ready for Take-off

Drones. A buzz word that many hear all too often. But what are its real-world applications? And what do drones have to do with real estate?

New technology constantly disrupts all industries. Keith Knutsson’s position is that “technology continues to influence our everyday lives more and more whether we are paying attention to it or not.”

Prime Air is Jeff Bezo’s, CEO of Amazon, answer to reducing the time between the click of your mouse and the moment you can enjoy your purchase. The drone delivery program is capable of delivering the majority of orders Amazon processes under 30 minutes, granted you don’t buy a paddle board or refrigerator. The first trial took place outside of Cambridge, UK on December 7th  last year. It was a success, delivering the customer’s purchase in a mere 13 minutes from the time he placed the order.

It is inevitable this technology and others like it will push the limits of what is possible to compete for customers in the retail marketplace. Drone delivery will never completely replace current forms of delivery systems for logistics companies, but it does signal a shift in the direction of the industry. Drones, robotics, big data and algorithms are all changing the way Amazon and other retailers operate. As their operations change, so do their needs for the spaces they occupy.

Robert Charles Lesser & Company (RCLCO) states e-commerce retailers industry will adopt a common form, with distribution “based on three types of facilities: regional mega distribution centers; mid-sized distribution centers at the market edge; and small, urban and suburban warehouses for last-mile delivery.”

However, in ICSC’s article “The True Value of European Real Estate in An Omni-Channel World,” there is a much different tone, denying the “apocalyptic” prediction for brick and mortar. Reviewing the market analysis in 2015, brick-and-mortar dwarfs e-commerce with 2.95 trillion euros in sales compared to 185 billion euros. This indicates brick-and-mortar are likely not going anywhere fast. However, according to Statista, e-commerce brought in 216.3 billion euros in 2016 and is revenue projected to grow in excess of 250 billion euros this year. A growth rate of 15.6% indicates that e-commerce will impact retailers tomorrow if not today, and investors should consider its implications in the coming years.

However, is that the whole story for drones?

Drones will not only impact the consumers of real estate and their business, but also how real estate itself functions. “Technology continues to mold the way in which we conduct business,” states Keith Knutsson. These aerial machines are a 21st century tool enhancing real estate companies to bring more value to clientele. Surveying, site data collection, and mapping out potential regions for development are just a few of the growing applications. It is evident drones are a symbol of the rapid advancement of modern technology and the ripple effect of technology globally.