For the past year, I have been emphasizing a movement from "physical" real estate to "digital" real estate. When I originally studied and valued Home Depot stock, I spent time studying the locations, the structures and the private valuations of those. This "physical" real estate anchored my understanding, valuation and analysis.
Since then, I have moved to the value of "digital" real estate, preferring digital real estate because of its scalability. Physical real estate became valuable due to its toll road nature, but that limitation also became a limitation in value. Digital real estate is expandable with little limitation on scale. This scalability creates an amazing "winner take all" characteristic powerful network effects drive a financially virtuous cycle of growth.
All of this converges with a growing sense that the "real world" is made up of an interplay between the two. This convergence has hit me as recently I have been considering the sale of my home. I received a beautifully written note from a realtor expressing interest in my "stunning, magical and picturesque" property and, based on her poetically stated interest, agreed to meet.
I originally selected the property because of its connectivity in an active and busy area of town. However, as I watch the development of the digital world from Zoom to Instagram to LinkedIn to emails, I find that my main connectivity, especially during Covid-19, to be through the digital venue and my physical location was less significant. Perhaps the flight path of the jets of Love Field as well as my neighbor's daily obsession with gas-powered leaf dampened my ardor. Now I grapple with what is my best life?
I'm not sure yet, but I believe that physical real estate patterns will be affected on individual basis in the same way as retail space has been disrupted by Amazon. It seems as if the primary shift in residential will be a greater sprawl when suburban concepts are appealing. For those who are attracted to inner cities, the metrics are altered to an increase in space as office dedicated space is important. But it looks like the grind of daily suburban commutes are likely to be reduced.
A capstone of this trend is Facebook's recent pivot to the metaverse. As the physical and the digital converge, it seems clear to me that the metaverse will play a multidimensional approach like the facetime dynamic. The convenience factor will be important. Over time, there are signs that zoom, google meeting and skype are tiresome and awkward. Why not simply write a lovely note like this realtor? However, if the newly named Meta can drive interactions as easy as those between iPhone owners, then physical reality may become even less relevant and allow for an expanded suburbia.
