Tonight's class largely focused on the potential impact of technology on real estate. Specific topics included retail markets, the world wide web and technology, social networking, and software trends and issues.

Several issues arising from the discussion really caught my interest.

First, the role of the internet and social networking in the brokerage industry was interesting. From a residential real estate perspective, the vast amount of information available online for potential buyers has to affect the role of the broker. Articles submitted for class included information on the increasing depth of information available - to the point that a greater and greater percentage of potential buyers are searching online, and searching with more and more specific, "long-tail" searches. This search string includes very specific data about homes desired, including number of bedrooms and baths, school districts, and neighborhoods. With 80-90 percent of real estate searches starting online, is the role of the buyers broker being reduced as well?

The discussion veered into the territory of economic theory with Dr. Forgey noting that, in this economic downturn, the normal relationship between declining interest rates and increasing real estate prices is not manifesting. This raises the spectre of further and potentially dramatic declines in price as interest rates are inevitably raised. I wonder if, with the withdrawal of governmental stimulus from the economy, the continued pressure on personal incomes and wealth will combine with reduced real estate values and similar macroeconomic developments to produce deflation.

The next interesting discussion from this evening concerned current developments in the retail market. With lease rates declining in the area, and vacancies rising, the future looks turbulent. One trend discussed was traditional retail demand being displaced by more entertainment related business such as restaurants and bars. Arlington Highlands is an example of this, with the first phase primarily consisting of traditional retail with highway pad sight restaurants, while the second phase is entirely restaurant tenants.

This displacement could be happening because virtual stores are expanding their market share at the expense of brick and mortar locations. Class members noted that this seems particularly true in the case of mid-level retail. Upscale and premium stores offer more than their physical product. They offer an experience and/or a level of personal service that creates and maintains demand. Discount outlets also seem to be maintaining their market share.

The concept of retail centers offering an experience in addition to just physical products finds its expression in the lifestyle center. Whether the trend towards outdoor retail in an idyllic "Main Street" setting is long term paradigm shift or merely fashion, lifestyle centers seem to be all the rage. This development model has some good things going for it. First, the outdoor setting lowers the need for air conditioning and heating large volumes of public space, as in a traditional mall. Second, depending upon the nature of the anchors and big boxes associated with the center, there is an opportunity to approach genuine walkability and pedestrian friendliness. This can be problematic in practice. Witness the center section of Arlington Highlands in comparison with the outer portions of the center. Note the vast expanse of parking lot that dominates much of the Highlands aside from the middle row of buildings.

The future of the retail center is uncertain. Despite online retail, and growing importance of discounters, there will likely always be a place for the one stop shop, either as an indoor mall or a lifestyle center. I think it likely that people will always want to go out to "shop" for the experience and the interaction/people watching.