In the latest of our Property Futures blogs, Mitchell Wall, an analyst in our Research team, explores how the growth in technology, as well as the significant demographic shifts in our society, is changing the way in which we work and play. Although much is already evident, the impact on the wider economy and the real estate market still has a long way to go and will continue beyond what we are able speculate.

The last decade has seen the internet begin to fundamentally shift how we work, play and interact with one another – the rapid adoption of smartphones and tablets has accelerated behavioural changes exponentially. Although the impact of the internet economy is already evident, its growth has a long way to run and is likely to continue to affect the wider economy beyond what we are able to speculate. Alongside this, shifting demographics have a role to play. In the next decade we will witness Generation-Y become dominant in the workplace, and increasingly influence the consumer economy as their spending power increases. Baby-boomers will impact in different ways, as they move into retirement and a new services economy arises to cater for the needs of a generation vastly different to the retirees that preceded them.

The number of people using the internet has grown from 6.5 billion in 2005 to 7.1 billion in 2013 (International Telecommunications Union, 2013) and smartphone users are expected to reach 2.5 billion by 2017, a growth of 48% on 2014 (eMarketer, 2013). The growth of technology and its adoption in daily life has served to liberate us from the most mundane of tasks. It has become a tool to increase our productivity and efficiency that has blurred the previously fixed boundaries between personal and work time. As the world becomes increasingly globalised and better connected, the workspace is changing into a more flexible working environment to meet the needs of businesses and their clients. Technology growth is driving this trend by allowing us to access information whether, as an employee or consumer, through multiple digital platforms.

The impact of the internet on the retail and leisure sector has been significant, with online sales in the UK currently accounting for 12.5% of total consumption and forecast to account for 21.5% by 2018, the highest online retail share in the world (Centre for Retail Research, 2013). However, whilst retailers have done their best to acquiesce to these changes by adopting e-commerce into their retail strategy, it is being met with complex logistical challenges that only technological growth will solve if retailers are to meet the needs of their customers.

Further to this, a study by Eventbrite (2014) highlighted that Generation-Y and the Millennials are turning away from materialism and traditional measures of success, and instead focusing their disposable income on experiences. This will lead to leisure and retail operating hand in hand to create an ‘experience economy’. They have harnessed the era of technological boom, creating a society of ‘Digital Natives’ (Prensky 2001; Bennett, 2012) where ‘on-demand’ is the status quo. Their behavioural attitudes are changing, demonstrating a shift to convenience, flexibility and instant consumerism. The move to flexible work environments has accelerated as Gen-Y continues to enter the workforce. This generation now constitutes 21% of the workforce and its proportion will peak at 42% in the next decade (Dexus, 2013). They are far more open to blurring the lines between work and play as long a flexible and enjoyable workplace come with it.

Finally, baby-boomers are expected to have just as significant effect on the economy as Gen-Y, as they move out of the jobs market and into retirement. Their lifestyle expectations are radically different to the previous generation and are expected to drive a new range of services to cater for their retirement. Along with this, they have the greatest purchasing power of any generation in history, harbouring £1.28 trillion in housing equity (Demos, 2014). This has given them large disposable incomes and it is expected that two-thirds of all retail expenditure will come from this generation in the next 10 years (KPMG/Ipsos Retail Think Tank, 2013).