INDUSTRY VOICES
ROBOTS & REAL ESTATE
workers’ jobs. When the company announced plans to build a huge dis- tribution center in Moreno Valley, it promised to bring jobs to the area. But by the time it was open and operational, five other facilities in Ontario were shut down and the workforce of 1,200 was cut in half. Most of the people who kept their jobs sit behind computer screens and monitor the activities of the new workforce, robotic machines. David Weinberg, the company’s CFO, said “You have to become more efficient. It’s the only way to upgrade. You can’t al- ways be looking for cheap labor.” Weinberg added that Skechers has never been more productive or profitable than it is today. AI IS CHANGING EVERYTHING AI will also potentially affect buyers’ and tenants’ ability to make mortgage or rent payments. People who have been fighting for a higher minimum wage may be unpleasantly surprised to see their pleas could fall on deaf ears. Robots don’t need wages. Should you be afraid that robots will take over the world? Maybe. But there’s nothing you can do about it, so you had better be ready for it. Learn to be irre- placeable, even by automation, and your livelihood and investments will be safe. For example, investors who prefer commercial real estate should consider strip malls that offer services that can’t be outsourced to the internet or robots - at least not at this time. Restaurants, hair and nail salons, spas, and local medical services are thriving. One thing that probably won’t change: People will still need housing. I think it’s a safe bet that landlords won’t likely go out of style soon. •
The Robots are Coming HOW WILL ARTIFICIAL INTELLIGENCE AFFECT REAL ESTATE INVESTING?
who can sit by your bedside and read you stories, sing songs, and massage your feet while monitoring your heart- beat and vital statistics. AI is accelerating its learning every day, and it’s learning on its own. WELCOME TO THE FUTURE The coming changes will transform life as we know it, and no one can stop it. If robots can learn to do things better than humans at a much lower cost, businesses will choose what’s best for the bottom line. Even if President Trump succeeds in bringing factories back to the U.S., he may not be able to bring jobs back - at least not to humans. This brings us to a crucial question: Since real estate is so closely tied to jobs, how do we protect ourselves as investors? Since real estate is so closely tied to jobs, how do we protect ourselves as investors? We must stay current on the changes, or investors will get left in the dust. Think about this: Those who didn’t
see online shopping as a threat are no longer in business. That’s why so many shopping centers and big box stores are closing. Any one of them could have been an Amazon competitor if they had seen the change coming. Warehouses have taken the place of retail stores to meet the demands of online shop- ping. Amazon alone has built 20 new fulfill- ment centers in the last three years, but most warehouses don’t needmany human work- ers. Instead, 30,000 robots have been added to the workforce, which is sure to affect the 879,000 warehouse workers nationwide. Amazon, of course, is one of the bus- iest online retailers today. The company owns most of the advanced robots in the industry after buying Kiva Systems back in 2012. Kiva Systems makes the 320-pound robot that automatically retrieves items in the warehouse, knows exactly where those items are and is strong enough to carry even the largest and heaviest items (3,000-pound pallets) off the shelves and to the exit. Two years ago, Amazon had 15,000 of these Kiva ‘bots, but today they have more than 45,000. Skechers is another example of a company innovating for the benefit of customers at the expense of human
by Kathy Fettke
he most important factor affect- ing real estate is the job market. Job growth drives population growth, which drives demand for housing and commercial real estate. The unemployment rate is low right now, and the economy appears to be booming. But savvy real estate inves- tors must always be looking ahead for potential threats. ENTER THE ROBOTS As an employer, would you consid- er hiring someone who never needs a break, never gets sick, and never needs a bonus, but gets the job done right every time? If your answer was a resounding “Yes,” you are not alone. We’ve all heard that fast food compa- nies like McDonalds are gearing up to replace many workers with automation. T
for itself in only two years.
We’ve already seen airlines replace peo- ple with check-in kiosks, and more and more hotels are now issuing room keys from a computer screen. We’re hearing a lot about driverless cars that will take jobs from taxi, Uber and truck drivers, but white-collar jobs are also now in jeopardy thanks to automation and artificial intelligence (AI). For example, Fukoku Mutual, a Japa- nese life insurance company, announced it would replace 34 insurance claim workers this year. The company planned to spend $1.7 million for IBM’s Watson software, which is a question-answering computer system capable of answering questions posed in natural, conver- sational language, and expects to pay $128,000 per year on maintenance for the computer and program. According to Quartz, that equates to $1.1 million in annual savings. The move should pay
“NO OFFICE JOB IS SAFE.” Sebastian Thrun, CEO of the Kitty Hawk Corporation and a renowned innovator, recently said, “No office job is safe. Lots of lawyers, accountants, and even surgeons will be automated away.” Yes, even medical professionals are at risk. In just a few years, you may be asking your robot doctor for a prescrip- tion. Robots currently can get through medical school in less than two years and retain everything they learn during that period. They can know everything about your medical history and your current health. In fact, studies show that robots have had a 90 percent success rate of accurate diagnoses while human doctors hover closer to 50 percent suc- cess. There is even talk of robotic nurses
Kathy Fettke is the co-founder and co-CEO of Real Wealth Network. She may be reached at www.RealWealthNetwork.com.
18 | think realty magazine :: january 2018
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