13 Things to Watch in AI: Market Shifts

We are wrapping up our 4-part series with an exploration of how the evolving AI landscape may drive broader market shifts with wide-ranging potential impacts on the value of built world assets. We expect to publish more detailed thinking on these impacts in the coming weeks, so stay tuned!

To get up to speed, check our macro trends, product evolution, and technical advancements.

09 Population Shifts & Leisure Markets

As increasing investment in AI technologies and accelerating innovation drive labor productivity rates higher, what will we do with all our newfound free time? Some reject the notion that AI will unlock additional leisure time. However, research into long-term data trends suggests higher productivity often leads to a reduction in working hours and recent think tank publications have explored how AI technology can lead to a four-day workweek.

If these trends persist and broad swaths of society spend less time working, we might observe the increasing popularity of leisure activities. As people have more time to fish, hike, run, bike, ski, etc., traditional leisure markets may become hubs of primary residences with greater economic power. Autonomous driving technology and hybrid work may further compound the expansion of leisure markets by limiting the pain and productivity loss of longer commutes into traditional city centers. Predicting population migration is a difficult exercise (see COVID-era trends), but the next twenty years may result in increasing population flows from Los Angeles to Santa Barbara, from New York City to the Catskills, and from Chicago to the Lakes.

10 Growing Energy Demand & Virtual Power Plants

Generative AI technology, such as Large Language Models (aka LLMs), has incredible capabilities but also requires incredible amounts of electricity. In October 2023, Alex de Vries published a peer-reviewed analysis estimating the expected electricity requirements for AI servers in the coming years. According to this analysis, by 2027, AI servers may increase the worldwide electricity consumption of data centers by 65% — equivalent to the total annual electricity used in Argentina, the Netherlands, or Sweden. Although Moore’s law and the continuous advancement of AI models may improve efficiency, Jevons paradox may result in ever-growing demand driving consumption even higher.

Companies like Optiwatt are already pursuing this vision by helping homeowners better optimize their electrified devices to minimize peak demands on the grid. Similarly, Gridium helps commercial building owners better manage energy spend and prioritize key retrofit projects to boost sustainability. In an ironic twist, such energy optimization solutions often rely on machine learning models. So, we may find ourselves in a circular scenario where AI models optimize the energy consumption used to train other AI models 🤷

11 Job Dislocation & Retraining

AI’s potential to drive productivity enhancements may also have negative consequences for some segments of the labor economy. Most jobs and industries are more likely to be complemented, rather than replaced, by AI. However, as AI adoption widens, some jobs may be entirely automated away, displacing traditional workers. According to Goldman Sachs, replacement in legal and administrative fields is particularly likely.

This potential shift will not happen overnight but may represent a long-term trend. Historically, job dislocation from new technologies has been roughly offset by the creation of new roles and tasks. For example, many GenAI models are trained using a technique called “Reinforcement Learning from Human Feedback” (aka RLHF) that relies on workers to train and test model outputs. Similar jobs and tasks related to AI can create new labor opportunities. But displaced workers may require onramps to these new opportunities in the form of job (re)-training programs and/or access to temporary affordable housing. The built world will undoubtedly play an important role in any such a shift in the labor economy.

12 Longer Life & What It Means For Living

Although Navitas is primarily focused on the impact of artificial intelligence on the built world, the potential within health care and life sciences cannot be ignored. Over the next decade, medicine will likely increasingly rely on AI to better monitor patients, predict outcomes, develop novel drugs, and research alternative treatments. The ultimate impact on human life expectancy is a big unknown, but surveys indicate some Americans expect AI advancements to increase their lifespan by a decade or more. Increasing life expectancy coupled with the current senior living crisis may trigger long-term trends that suggest cause for concern. It will fall to the built world to help find answers for an expanding population of seniors. More affordable housing, tech-enabled ‘age in place’ solutions, community development, and family engagement are all active areas of innovation within senior living. As trends tied to artificial intelligence further magnify existing challenges, AI technology may also become the engine to pioneer new potential solutions.

13 Perceiving Exponential Rate of Change

“The greatest shortcoming of the human race is our inability to understand the exponential function” — Albert Allen Bartlett, physicist.

We are programmed to think linearly and struggle to conceive the implications of truly exponential growth. This global shortcoming was on recent display as governments tried to predict and plan for the impact of COVID in early 2020. In observing the current pace of AI innovation, we can highlight trends and conjecture implications, but we are ultimately ill-equipped to accurately predict the future impact. It now seems that we hear about a new breakthrough in AI research every month. With increasing AI investment, the pace of innovation may further accelerate. In this rapidly evolving technology landscape, we are often asked to estimate timelines for AI’s impact on the built world. Given the vast amounts of uncertainty involved, we view this as a near-impossible task. Although predicting the specifics of the future state remains murky, we do expect AI’s impact on the built world to be profound and enduring.

Over the past 15 years, Navitas has pioneered technological innovation in the built world. With unique expertise spanning venture, technology, and industry, Navitas has earned its market reputation as the partner of choice for start-up founders and leading executives. Artificial intelligence will reveal new opportunities and challenges within the built world. Consistent with the advent of any new technology, there will undoubtedly be winners and losers. As a trusted, engaged advisor, Navitas helps its partners navigate the shifting technology landscape to emerge as category winners, charting the course for the next wave of innovation.