Asked in 1930 to speculate about the world his grandchildren would inherit, the economist John Maynard Keynes foresaw a society of “three hour shifts or a fifteen hour week”

In 1867 Karl Marx predicted that in the future we would “hunt in the morning, fish in the afternoon, rear cattle in the evening, discuss philosophy after dinner”.

Confronted with the same question, these prominent thinkers gave the same answer – future productivity gains would be taken out as more leisure, less work.

Now we know that they were both wrong.

Productivity growth opens up multiple options. Increased leisure is only one of them. The past hundred years suggests that we have chosen to take out the benefits of productivity not as leisure, but as increased consumption. We work the same, even longer, hours. But we trade off working hours against two cars in the driveway, an electric toothbrush and an annual holiday in Bali.

The serious question for property investors is how we take out the benefits of productivity gains, because this has long-term impacts on investment returns and on the location and type of assets likely to be highly valued in the future. As the illustration above suggests, technological progress is predictable, but forecasting how it will play out is hazardous.

Activity-based work (ABW) is a recent response to advancing technology in offices. ABW promises flexibility, enhanced mobility and an escape from the tyranny of being anchored to a desk in a particular building.

How will the benefits of ABW be taken out?

Many hands are in the air:

• Landlords look for higher rents, reflecting increased productivity
• Leasing agents explain that increased efficiency will offset higher rents, combined perhaps by a reduction in space requirements
• HR departments predict lower staff turnover, fewer sick days, greater worker commitment
• Clients expect improved services
• And, another ghostly spectre – the tax collector will skim off a percentage of everyone’s winnings.

The benefits of ABW (and there may be costs also) are still emerging.

How will the cake be sliced? Does increased productivity support higher rents? Does ABW necessarily give an advantage to modern, large floor-plate, office buildings? Maybe the major winners will be clients with access to staff who are more mobile, with better on-line information. Or perhaps it’s a combination of all of these.

Pragmatically, and with deference to Comrade Marx and Lord Keynes, the last is probably the right answer.

Further, winners from ABW are likely to vary between markets and through the business cycle. It is possible that the early adopters of ABW, as with many new technologies, will derive big benefits before gains are competed away by later arrivals. Losers will be those slow to adopt and adapt. The other lesson from history is that it’s very hard to capture the benefits of technological progress in the long term. In the end the final customer is usually the winner.

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