Moore’s Law in Commercial Real Estate

By Published On: August 26, 20212.8 min read

Moore’s Law is a postulate by Gordon E. Moore — the co-founder of Intel — about transitions in the tech industry. In 1965, he observed that emerging computer technology would reduce in price by half every two years. At the same time, the transistors in the microchips they contained doubled in the same period. In other words, Moore’s Law indicates an inverse relationship between the quality of computers and the cost: As machines improve, their price declines.

Part of Moore’s Law states that this relationship is exponential and not limited to computer technology. Moore’s Law had a guiding effect on research in the budding semiconductor industry. Investments in the industry acknowledged Moore’s observation that an increase in computing power would not equate to increased overhead production costs for manufacturers or retail consumer prices.

In fact, it indicated the opposite: Technology became more reliable every two years. Major decisions in technology still use Moore’s timeline to plan each window of investment.

Moore’s Law Today

Practically every person interacts with transistors in their daily life, from the smartphones in their pockets to their smart TVs and video game consoles at home. All these devices operate under the umbrella of Moore’s Law.

The phone industry is highly indicative of its principles. As double the transistors could be placed on each square inch of integrated circuit chips every two years, smartphones became more advanced following that timeline. Their operating costs to the manufacturer and their retail costs to the consumer simultaneously fell on the same schedule.

This impact allows Moore’s Law to play a major role in the economic partnerships that manufacturers of equipment, computer chip manufacturers, and the consumer market maintain in the face of changing technology. The two-year window defines how this relationship is paced.

Moore’s Law in the Future

Moore’s Law can now be used to predict technological revolutions. As microelectronics transitions to nanoelectronics, exponential growth in technological proficiency vs operating costs can be seen to follow Moore’s schedule. This continues to guide how semiconductor manufacturers optimize their investments.

As computers have become integrated with all consumer technology sectors, Moore’s Law has become a guiding factor in far more than the progress of computing technology. Education, transportation, energy, healthcare, the food industry, economics, and financial technology – as these sectors rely more on automation, Moore’s Law can be increasingly useful in predicting the expansion of any industry under its umbrella.

Moore’s Law in Commercial Real Estate

Applications of Moore’s Law extend beyond the tech industry. In commercial real estate, readily available automation changes the real value of space.

For example, office buildings can be more closely monitored and optimized for temperature regulation using data management tools that run on computer chips. As this technology becomes more readily available according to Moore’s Law, the demand for physical space will decrease.

Commercial real estate increasingly favors selling reduced space at higher rates over selling larger spaces. Real estate managers can monitor changes in technology according to Moore’s Law to make smarter investments.

Note that all investors — in real estate and elsewhere — should keep tabs on how wireless communication and cloud computing could change the progress of computing technology in the near future. Smaller, smarter technology could eventually evolve to a point beyond the growth cycle described by Moore’s Law.

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