How Recent Announcements From Google & Microsoft Might Impact Commercial Real Estate
Recent product announcements in the last few days from Google and Microsoft show a clear trend that is becoming bigger when it comes to the internet, business and productivity. Basically, more and more is moving to the “cloud” or the web.
Google recently announced the development of a Chrome Operating System to help users simply boot up a PC and get on the web quickly because Google believes most of your work that you used to do on your desktop will now be done over the web such as email, word processing, online banking, blogging, etc.
A few days later Microsoft announced their Office 2010 suite will be available online (similar to Google docs). This is definitely a response to the moving of users to Office-alternatives, most of the web-based.
So what does all this mean? Well, more of our lives are moving onto the web, and more of our information is being accessed through the good ol’ web browser. This includes more than just web sites now. It includes documents, email, spreadsheets, notes, etc.
The Bigger Trend
I view this as a piece of a larger trend. The decentralizing of business as a whole. Working remotely has definitely picked up due to technology advancements and this is only picking up steam. With being able to collaborate on almost everything over the web, users can be just as productive from any computer as they could be sitting in a cubicle in an office.
With revenues down in almost every industry, businesses are looking for ways to cut costs. Reducing (and even eliminating) office space is a logical choice given the cheap (and sometimes free) technologies that make it just as easy to work from elsewhere. This can’t be good for the already troublesome commercial real estate industry.
I know companies that decided to completely go virtual, eliminating expensive office space in major cities. And, these are the companies that are still operating. Others merely don’t exist anymore. With a lack of economic growth on the horizon and more remote/virtual productivity technologies being rolled out by even the biggest of players such as Google, Apple and Microsoft, what reason is there to bet on commercial real estate right now?
I’m currently short Vornado (VNO), SL Green Realty (SLG) and Simon Property Group (SPG).