PODCAST: The meaning of physical space in the age of AI

James Cook: I don't know how you feel about this, but for me, artificial intelligence seems like something very impersonal. And we have this concern around AI and other growing technologies that they will separate us from others that will feel more isolated and disconnected. Now my colleague, you Han Wang has an interesting take on this.

Yuehan Wang: If we rethink human connection as AI generated contents overwhelm our daily life and the trust becomes such a costly assets, we might actually witness a revolution on the meaning and purpose of physical space.

Where we regain the value, and it will make a comeback what people might need physical space more than before.

James Cook: Yuehan Wang leads the technology research program at J L L. And I'm going to be diving into a conversation with her and Eric Solomon. He's the founder and CEO of the human oh, S and we're going to be discussing the unforeseen consequences of AI. How is it going to change our relationship to physical space?

How's it going to change how we trust each other? Will it revolutionize our jobs?

So today we're going to get ready for an AI future.

James Cook: This is Trends and Insights: The Future of Commercial Real Estate. My name is James Cook, and I am a researcher for JLL.

Eric Solomon: My name is Eric Solomon and I'm the founder and CEO of a company called the human operating system or the human OS.

I led global business marketing for Instagram. And before that I was at Spotify one thing that we never really thought through or had much conversation about was for all the positivity that we were going to bring to the world, what could potentially go wrong or what could potentially lead people down a wrong path.

And now we're at a place again, if you just look at social media where the U S surgeon general has now propose that we put warning labels on social media. Again, we can discuss whether or not that's a good idea, but that'll take us down the wrong path. So the question with AI is just, I'm not hearing a lot of people talk about for every action that we're taking, what could be an unintended consequence of that action.

So if we're just looking to increase efficiency and make people more productive. What could go wrong is that we could design machines that quickly develop artificial general intelligence or AGI without us having any idea that they've developed AGI or artificial general intelligence because we won't know that they've developed it. you go down that path you're really talking about developing systems that have a different kind of intelligence that we do. And one that we don't recognize as human intelligence.

James Cook: What could that mean? Basically, there's an intelligence, there's a whole new alien intelligence, if you will, that we don't even understand.

Eric Solomon: Just on a practical level, right? could lead to unintended data breaches. Go to disruption of current systems that we have in place, like airline reservations, restaurant reservations, badging into and out of buildings, you name it. We could have systems define their own goals without us knowing what those goals are.

And again, this is taking us in extreme direction. It probably won't happen. But again, what are the unintended consequences? We don't know unless we think about them.

James Cook: That's a great point. If your ultimate goal is efficiency, like you've got to define what efficiency really means and it can mean, depending if you're a being without morality, that can mean some very bad things. But anyway, so you Han. What do you think might be some of these unintended consequences?

Yuehan Wang: I think this is a really interesting mind exercise for us to think about, especially for people who operate in the actual physical space and to assess people's future demand for physical space when most of the things can be done virtually is a very interesting to think about. So, for me, the key point that really strike the balance between people's demand to finish certain things efficiently online and people's demand in space lies in the cost of trust.

So, as we say AI could make things more efficient for us to do certain tasks. It is also making a handy tool for the criminal underground. For example, I'm not sure if the fraud that happens not long ago with the British construction company, Arup. That's a deep fake scam. And so, when this becomes so easy, you would need to think about getting that trust back into your business process or your daily interaction with people, which an actual physical interaction is the key.

The thing that is the easiest to do, but it's the most powerful proof point. So, for me, instead of being an unintended consequence, I think this would be an unexpected results for space, because if we rethink human connection as AI generated contents overwhelm our daily life and the trust becomes such a costly assets, we might actually witness a revolution on the meaning and purpose of physical space.

Where we regain the value, and it will make a comeback what people might need physical space more than before.

Eric Solomon: I think that point around trust is. Dad on, we're already at a place where people are having a hard time telling the difference between real and fake and hallucinated and not hallucinated. And I was just taking a quiz this morning.

If I could tell the difference between AI photos and I got about 50 percent right. So here we are, the problem or the thing that I think about is, are we going to get to a point where people that are growing up now are going to be so used to not being able to tell the difference between these things that is not going to matter as much anymore.

We're already in a place where people give away. I'm guilty of this. You're guilty of this. We're all guilty of giving away so much of our data every day. I don't see any signs of that slowing down. So, I don't know what this means for trust. I think a really interesting point that you and I was mentioning is the role of physical space and saying, as we become veracity of online experiences, will we see a gravitation towards physical?

Meeting and human to human interaction as the ultimate prize, because then we at least know that what we're getting is a real person and a real experience behind it. And we're going to need physical space in order to do that, because the virtual space is going to become very confusing. It already is.

Yuehan Wang: Yeah, I think we can maybe look at this from several different perspectives. So, on the macro level, we would see a change of demand for space as Eric just point out. That's a really good point. An interesting point on generational differences. What is the baseline demand? This might actually change. And that also means that when we talk about human centric in the future.

It's not an abstract, uniformed image or persona of human, but it really needs to be break down into different demographics, different age groups with very different baseline expectations for space. And yeah, demand on that might actually needs to be studied closely. More closely to be able to provide them.

And also, in terms of demand to support all of these AI functions, we need computing infrastructure, and this is actually one of the largest growth areas in recent 2 years for real estate data centers and power structures, power facilities. These are the things that we need to always keep in mind when we talk about digital and AI.

Computational virtual things. And the other macro perspective is on the location. So, when people start to adopt AI for their productivity It's going to be through a complex mechanism of powering your current tasks or replace your tasks, or it would help you improve the matchmaking between people and job and all of these labor market churn is going to have an impact on the demand for certain locations for certain sub markets for real estate.

So being able to see that. Based on the industry sector composition and on the labor impact, we can probably start to assess for a particular market what that actually means. Would it mean growth, or would it mean decline? It could happen simultaneously. You mentioned the design and form of space, so that's another interesting topic.

I've heard a lot of discussion with real estate professionals. So now, when you think about a high-tech building or intelligent building, it's still pretty normal to gravitate towards an image that's hi fi in the sci fi films. But if we look at the most intelligent buildings that exist now is actually going towards the opposite direction where they want to hide all the technology.

Even though there's sensors everywhere, the building would update itself according to people's demand. You don't see them happening. Some people call it shy tech. I think that's a very interesting concept. And the other one is design operates and built. That is something about how the real estate industry do work ourselves.

It's about in the design process. If we consider all the climate challenge or the sustainability challenges, how can we design building from scratch considering all these factors and to use A. I. and other computing tech to simulate a scenario and to, Iterates and to improve the design so that from the starting point, it is already a higher probability of performance after it's actually delivered.

So, all of these things are really happening simultaneously.

James Cook: It's so interesting. Like I think about, all our depictions of the future are of the shiny sleek technology, The great amenity might be creating an organic space that feels free of technology, where we can feel like we can get away from it. So, Eric, maybe I'll switch this over to you, it sounds to me like human connection, creating community, how we're going to create a great future. So how do you feel about technology and AI, can it help to foster

Eric Solomon: We know that young people in particular, so Gen Z and Gen Alpha are less interested in starting out their careers and fully remote environments because when you're young, this is how you develop social circles. This is how you find potential partners in life. You want to be in built environments at least part of the time.

We're going to see more and more demand, I think, from younger people saying, you know what? Maybe I don't want to be glued to all of these devices all of the time. What I want is the organic, physical human experience because that's what's really important. The only concern or the thought that I have is I've been hearing a lot about how, especially as.

Digital and advanced technology gets more and more mainstream. The idea of physical space in general could be less inclusive in the future. It could just be for people that have a tremendous amount of privilege because a lot of people will be happy strapping on. Their virtual devices, sitting at home, having the experience of feeling like they're in a physical space without actually having the human interaction.

So, I really think about, okay, there's this demand that's going to be there for the physical space. Will we have built environments that are going to feel inclusive and welcoming for everyone and enticing enough to pry them away from really compelling digital experiences that feel richer and richer by the day.

So, these are the tensions we have to grapple with here.

James Cook: That's such a great point that these new digital. And augmented, virtual realities could split us between haves and have nots, Yuehan any thoughts about how virtual and augmented reality might impact and shape, the built environment is all of that going to be integrated into say apartment buildings and office buildings in the future?

Yuehan Wang: I think if we look at how previous technologies have shaped our demand for space and what do we want to actually deliver. Put in our homes if we're talking about housing and residential, then previously we don't have all those smart appliances at home that helps you clean your floor at certain time to feed your pets at certain time, but then it becomes the demand.

And for many people, this is the baseline expectation.

And now that in the future, if all those mixed reality applications becomes convincing and people do enjoy them as part of their daily life, then I do believe the space provider have to take consideration of these things. So that's where they would have that competitive advantage.

If you want to attract the people who have the willingness to pay. But I think the willingness to pay has to come first. So, the demand has to exist first. Isn't an intricate interaction. Some people might argue that just like how Apple reinvented personal device, your phone. It might be that some company.

Start a design that people find appealing without even realizing that they needed this before, but I do feel on the larger scale. The demand has to be there for real estate to respond.

James Cook: Yeah, that makes sense. Okay, so we know that in the future people will accept things as normal. That maybe they don't today. And it sounds like one of those is maybe less expectations around privacy. Another one is around having a smart helper to help you do different tasks. I think that might be an expectation.

Eric, are there other expectations that, our future generations will have that we don't have today?

Eric Solomon: Yeah, I think we've already started to see that shift in expectations, right, there's a reason why everything everywhere all at once was such a prominent part of our culture is this is the expectation. Now we get deeply, deeply frustrated when things don't work the way that they should seamlessly all of the time.

And, the expectation, I think that we're going to see from AI is, I don't know if even on the generative AI side, if either of you have played with clod 3.5 yet, this just released and. You can literally say, write me a letter in the style of everyone and does the most, shockingly convincing job I've seen yet of generating something that feels not just human but deeply human and maybe better than I could do.

And I think that as we see. These systems get better and better at doing the things that are baseline for us. The expectation is that's going to be the first place we go. That's going to be the portal to the internet. We're not going to have searching anymore. We're going to have. Generative AI is the answer for it.

And it's just hard to know how that's going to shift our behavior overall and our expectations overall. We could have never predicted 20 years ago, how this version of the internet shapes our behavior today. And to think about. Think that we have any handle on truly how this is going to shape our future.

We just have to look at the science and the direction that things are going now. And right now I have, for example, a lot of friends that teach either in elementary school or at the college level, people are reverting back to oral exams because we can't even. Trust that students are not going to be using these systems in ways that are perhaps over the line for what we would consider reasonable ethical behavior, this pertains to built space, because if you think about environments where people truly have to. Not hide behind their screens or hide behind the systems that they're using, but rather run into people, look at each other in the eye, sit down with them and have real conversations.

This is going to be a sacred thing. Place in a lot of ways that this much we know is going to be true is, we're going to be demanding and thirsty for environments where, as you say, technology is not directly in front of us, but hiding in the background a little bit. So, I don't know if we can predict it, but the mindset that we have right now is everything, everywhere, all at once.

James Cook: which can be a little bit overwhelming if you ask me, but it's what we're dealing with.

Okay. So, Yuehan, we're envisioning a future with a lot of new technology that uses a lot of computing power and a lot of electricity. There's got to be a danger, for sustainability and resources. How do you envision that working?

Yuehan Wang: So, I think there are really also two sides to this one is that we have to admit that computing is extremely energy hungry. A stat that I recently read about is from the International Energy Agency, which forecasted that by 2026, the energy use related to AI will be equal to the amount used by the entire country of Japan.

So that is huge. But in response to that, there are also various actions. People want to also explore AI in helping develop new energy sources and to make energy consumption in buildings, for example, more efficient. And we can see that data center are being designed in different ways and onsite energy generation and clean energy sourcing.

These are all things that people explore. For example, like companies like Microsoft are exploring. energy strategies such as the small modular nuclear reactors that is aimed at making data centers self-powered. Instead of being plugged in into the grid. And there's also location aspect to this.

Where do we put these data centers? We see two things happening in parallel. Really? One is there are more data centers in the Nordics because it's colder climate. And you don't need that much cooling. In those climates, and also, they have more stable green energy supply there. But on the other hand, places like Southeast Asia is also in this picture of growing data center construction and demand because they have.

In general, just cheaper energy prices and more space.

James Cook: And that's a great example of how this changing technology is going to impact different geographies. Okay. So we are quickly running out of time, but Eric I've got a final question for you.

And then you hunt, I'm going to ask you the same thing. We've got busy executives that listen to this podcast. What are some practical action items? That they can take to make sure that at least they're on top of these topics that we're talking about.

Eric Solomon: We see this all the time when there's a dawn of a new technology that's really taking over is people rush to execution and really rush to execution. And I'm saying that what we really ought to do in the tactical advice is to double down on the. things that make us uniquely human, and we can think about what all of those things are, but I really bucket into three things.

One, we have to make sense. We do sense making, make sense of the world around us and understand where we are at right now in that world and what it means for both virtual and physical space. So, you know, we make sense. We make choices. As human beings that are based on discernment, based on the values that we hold and what we actually want out of it.

So, if making sense is about asking, where are we at, making choices about what do we want out of these systems? And I don't hear a lot of this conversation of people taking a step back and saying, okay, what would a perfect outcome look like for us? What would it look like if we were able to harness the X technology for human flourishing?

So, you make sense, you make choices. And then the third one is we're incredibly good, almost too good as human beings that making changes, we adapt to things almost too quickly. And so, the big question is thinking about what do people need in order to future proof? What is it that they would need to adapt to feel comfortable with the fact that AI technologies become more integrated into our lives, into our homes, into our offices, into our physical and virtual spaces.

Yuehan Wang: I, first of all, need to really agree with what Eric just said because I feel because we cannot really predict what the changes where it will go in 10 years, for example, you can't do that and then try to deduct back what you need to do today, but we are able to keep vigilant and to recognize that this change is inevitable.

So, when a change is inevitable, you just need to keep watching closely where and how these impacts unfold, especially for real estate in terms of, let's say, where do new demands emerge? What are some of the new design trends that could cater to those new demands? What are the changing functions of buildings, not just from a single assets perspective, but on an urban scale?

Do people's changing lifestyle have impact of their location choices within a particular market? And what does that mean for your operations? These are the things that you really need to keep close watch and to also consider what kind of business model you can develop with this change and use. These new technology, and now it's just cliche, but still, we need to admit that the real estate industry is not the fastest in adopting new tech and innovation in general, but this is something we have to challenge ourself to start to see if there's.

This faster iteration mindset, instead of I build an asset, the building is going to stay there for 50 years. And so that I don't need to think too much about how I change these things. But with the increasing pace of tech, we might need to try that faster iteration approach. To consider a integration into the life cycle, because instead of being the passive receiver of all the changes and respond to those, we are also The user of this new tech, we need to consider how we prepare ourselves for the use of these technologies throughout the entire real estate value chain.

And that means that we probably need to start digitize now start to build up your technology capabilities. You need to assemble this talent pool for your operations that have the capability to do all these things with the new tech. And the talent aspect is something that I think for real estate, it's quite important.

James Cook: I love it. Let's focus on humanity and of course, expect and prepare for change because we don't know what the change might be, but we know it's going to happen. It always does. This has been a fascinating conversation. Eric, Yuehan, thank you so much for joining me today.

Eric Solomon: Thanks so much. This has been really fun.

Yuehan Wang: Thank you.

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This episode of trends and insights was produced by Bianca Montes.