Ever since the turn of the millennium, we’ve been engulfed by digital technology. As such, almost every aspect of our lives is now consumed, controlled and cajoled by computers, smartphones, and artificial intelligence software. There are positives and negatives to the rise of machines. However, regardless of whether it’s good or bad, we’re now at a point now where the train can’t be stopped.
Swapping High Streets for Digital Highways
Pandora’s box is open and, according to tech analyst Petroc Taylor, all businesses can do is embrace it. Writing for Statista, Taylor notes that “digital transformation” is no longer a “luxury” for businesses but a “necessity”. Businesses transitioning from physical to digital entities has caused a spending surge. Taylor’s breakdown put “digital transformation” spending at $1.59 trillion in 2021. By 2026, it’s expected to hit $3.4 trillion.
This transition has been happening for a while. Real estate experts will have seen this all too often over the last two decades as companies up sticks and take their products online. Walk down any UK high street and you’ll see that a number of big-name brands have left. An obvious example of brands swapping the high street for the digital sphere are bingo halls. Bingo has been part of British culture for decades but, since the 1980s, live venues have slowly faded as people have gone online to find daily free bingo games, bonuses, and more.
Data from the UK Gambling Commission shows that the number of bingo halls in the UK has fallen from over 1,600 in the 1980s to under 600 in the 2000s. Despite the decline, bingo remains popular thanks to the internet. As mentioned, daily free games have become a primary source of entertainment. Running multiple times per day at leading bingo sites, these offerings run alongside progressive jackpot games and ongoing promotions. So, while bingo halls are a dying breed, the game itself remains popular thanks to the industry’s digital transformation.
There Are Still Real Estate Opportunities, Even in the Digital Era
Other great examples of the move from real estate to digital estate are retailers such as Cath Kidston and Debenhams. In 2020, Cath Kidston announced its digital transformation plan. Around the same time, Debenhams fell into administration. Boohoo swooped in and bought the brand for £55 million and soon announced plans to relaunch Debenhams as an online-only store. In short, evidence of digital transformation is all around us. The question, therefore, is what should you do as a real estate investor? The market has almost certainly contracted but that doesn’t mean real estate is dead.
There are, of course, opportunities within the private housing sector. However, as UK tax laws are less attractive for landlords than they once were, this may not be the best option. The way forward could be digital business hubs. Even though bingo companies, retailers, and other industries are going digital, they can’t completely fade into the ether; developers and tech teams require offices, and there is still a need for server rooms and call centres.
So, even though the public-facing sides of big businesses are going digital, the background operations remain rooted in the real world. As such, real estate remains a premium. Developers and those with real estate portfolios could tap into this. Naturally, as is always the case with business lets, PAT testing is essential. In fact, when you’re dealing with server rooms and offices from which websites are managed, safety is paramount. Therefore, even though the digital transformation has changed the real estate game, it’s not the end. Those who can pivot still have the opportunity to thrive, even as businesses move more towards digital estate.
