Real Estate

Smart cities as commercial real estate’s new urban environments

Written by lketr

It might appear as a paradox that an idea as prevalent as
smart city does not come with a standard definition and
wide agreement about its meaning (RICS, 2017a). Batty
et al. (2015) acknowledging the broad, and noticeably
vague, scope of the smart city concept explain that ‘‘smart
cities is a label that is now being used generically to cover a
wide range of applications of computers, sensors, and
related computation and interaction that has any link whatsoever to the city.’’ According to Kitchin (2015), one of the
hurdles preventing a clear understanding of smart cities is
the lack of detailed genealogies of the concept, thus allowing global high-tech companies and smart city vendors,
such as Cisco and IBM, to promote their own vision of the
‘‘corporate smart city’’ (Hollands, 2015).
Smart cities find their roots in the 1970s when researchers first advocated urban cybernetics and later in the following two decades with the smart growth movement and
new urbanism (Townsend, 2013). Glasmeier and Christopherson (2015) explain that while the smart city concept is
linked to long-standing ideas about urban technological
utopias, contemporary smart cities are different insofar as
they put ‘‘the emphasis on places transformed by the
application of technologies rather than places where new
technologies are born such as Silicon Valley.’’ Smart cities are ‘‘the receptacles for technology, the target of its
applications.’’ The authors select two essential attributes
to identify a smart city: first, the use of technology to
facilitate the coordination of fragmented urban subsystems; second, ‘‘urban places where the lived experience
calls forth a new reality.’’
This new reality could materialize into ambient intelligence, giving rise to the concept of ‘‘sense-able city,’’ that
is, a city that can sense its inhabitants thanks to a myriad of
sensors (Ratti and Claudel, 2014a). Sensing through the
dissemination of electronic systems in smart cities allows
urban environments ‘‘to sense and respond to people.’’
Pervasive sensing creates a ‘‘feedback loop between the
city itself, the city management and the citizens’’ (Resch
et al., 2012). This process turns cities into ‘‘complex near
real-time control systems’’ dominated by data-driven
operational governance.
Broadly, there are two parallel perspectives on smart
cities. First, the smart city is a city enabling real-time monitoring, efficient management of urban services and utilities, the enforcement of public safety and security using an
extensive ICT infrastructure (Townsend, 2013). Second,
the smart city is a city fostering technically inspired innovation, creativity, and entrepreneurship by smart people,
that is, the epitome of the knowledge economy.
Kitchin (2015) explains that smart cities are often seen
as an urban panacea for business where ‘‘smart politics and
judicious investment in appropriate fiscal measures, human
capital and technological infrastructures and programmes
will attract businesses and jobs, create efficiencies and savings and raise the productivity and competitiveness of government and business.’’ This is especially the case in the
corporate vision of urban smartness where ‘‘IT can make
cities more economically prosperous and equal, more efficiently governed and less environmentally wasteful.’’
A key element of the smart city model is ‘‘the ability to
promote economic growth’’ (Shelton et al., 2015). Smart
cities’ growth relies on urban innovation ecosystems
which are green, smart, open, intelligent, and innovating
(Zygiaris, 2013). This leads smart cities to be frequently
identified with six dimensions: smart economy, smart
mobility, smart environment, smart people, smart living,
and smart governance (Caragliu et al., 2011). Many models of smart city, notably in Europe, put a special emphasis
on sustainability and quality of life, whereby the six
dimensions of urban smartness fuel sustainable economic
growth and high quality of life with a ‘‘wise management
of natural resources.’’
To make sense of the smart city concept, some researchers have developed taxonomies of smart cities. For
instance, Neirotti et al. (2014) researching European smart
cities propose a taxonomy built around application

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domains. Smart cities are broken down into ‘‘hard’’
domains (office and residential buildings, energy grids,
natural resources, energy and water management, waste
management, environment, transport, mobility, and logistics) and ‘‘soft’’ domains (education, culture, policies promoting entrepreneurship, innovation and social inclusion,
and e-government enhancing communication between
local public administration and the citizens). Interestingly,
commercial real estate might play an active role in many, if
not all, subcategories of the hard domains.
The abundant academic literature on smart cities contains many attempts by geographers and planners to make
sense of ‘‘smart city imaginaries’’ promoted by purveyors
of smart city systems. While they acknowledge the power
of futuristic visions to capture the minds of corporate
actors, policymakers, and citizens, they also recommend
focusing on how cities use technology to deal with actual
urban issues. For instance, Shelton et al. (2015) assert that
the ‘‘actually existing smart city’’ is very far from the corporate smart city. ‘‘Rather than the construction of new
cities from scratch or wholesale importation of universal
ideals into existing cities, the smart city is assembled piecemeal, integrated awkwardly into existing configuration
of urban governance and the built environment.’’
From the viewpoint of commercial real estate, this
means that most smart cities will not require building
new urban environments. Instead, they will materialize
into renovation of existing urban environments and
infrastructures (Glasmeier and Christopherson, 2015).
Ratti and Claudel (2014a) assess that ambient intelligence and sensing networks will change ‘‘the contained,
not so much the container.’’
This is in contrast to the impact the first industrial revolution had on cities in the 19th century when railroads,
among other innovations, reshaped urban landscapes.
Markedly, infrastructures of urban smartness underpinning
the fourth industrial revolution have a radically different
impact on space than innovations that accompanied previous industrial revolutions. Although their footprint in physical space might be light, one can expect their impact on the
real estate sector to be extremely pervasive as demonstrated
in this article

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