Ray is looking much happier nowadays. Every week brings news of another collapsed dotcom; another failed technology initiative; another high-tech company drenching the market with surplus space.
Ray is no Luddite. He surfs the Internet as avidly as any teenage geek. But he hated the way new technology took over the property world. ‘We had people dancing in the office because they let vast amounts of space to some company no-one had heard of. We had investors screaming down the phone because we couldn’t let a bog-standard warehouse at a huge premium to one of those outfits producing weird telecom centres. We had kids lording it because they understood all that technology stuff.’
He is in good company. Even the top geeks now admit it all got out of hand. Wendell Weeks, president of Corning Optical Communications says in the current McKinsey Quarterly: ‘People began to shift everything over to the Internet without paying attention to fundamental economics, such as having to actually pay for it.’
But the pendulum has swung too far in the other direction. Another 1m people went online in the last three months, according to MORI, pushing penetration close to 50% of households. BT has just announced it will slash costs for high-speed broadband services. Business customers will begin soon be crowding in. The biggest barrier to ecommerce and videoconferencing has been the snail-like speed of dial-up lines, says Weeks. But what is the property industry doin? Licking its wounds.
‘Wiring up’ office blocks was announced with fanfares but quietly dropped after tenants refused to pay. It must come back on the agenda. So should provision for wireless – still seen as an obscure backwater. Demand is already exploding, according to latest surveys from Cahers, and investors face falling property values unless they bite the bullet.
Co-location centres housing endless rows of computers may appear an even more expensive folly as companies like Global Crossing crumble, but after the September 11 disaster, many businesses want their technology out of the office. Why else should Global’s competitors be fighting for its assets? Revival may take a year or two. Values will not reach the same ludicrous values because so many buildings were thrown up during the mad, bad years. But it would be folly to consign this whole sector to the dustbin.
Property people should realise more than anyone how these markets work. Developers see an opportunity, rush in and fret over the fact that everyone else has followed. West End offices, business parks, retail warehouses – all have been victims of glut and famine and all ended up making money for someone.
Technology is no different. There is an old saying that people always over-estimate the speed of innovation but underestimate its impact. Vultures like Ray will make the real money because they do neither. He stayed off the bandwagon until the wheels fell off. But he knows that once fixed, it will roll further than anyone imagined.