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How Will 5G Impact CRE?

5G seems to be the hot buzzword currently when talking about technology, but what exactly does 5G mean? And, how will it impact commercial real estate?

5G has officially been semi-implemented as of October of this year. Verizon launched 5G in-home, nonstandard service in various cities such as Houston, Los Angeles, Sacramento, and Indianapolis. This sort of beta style implementation has opened the door to 5G as our “new normal” in connectivity. 5G is an abbreviation for fifth-generation wireless. Beginning at 1G with the simplest cellular technologies, each generation is defined by their cellular speeds. 5G promises to be faster, more responsive and able to connect more devices at once.

How Does 5G Work?

5G works similarly to other cell networks but also has some unique differences. It utilizes a system of cellular towers to send data through radio waves. It uses an encoding called OFDM which provided lower latency and faster speeds than our current 4G LTE. It will provide more accuracy which can help locate devices down to their exact location or help self-driving cars finally become a feasible reality. The catch is the cell towers need to be much closer together, there may be a need for millions.

How Will This Positively Impact Commercial Real Estate?

As aforementioned, 5G needs densely positioned cell towers. These towers do not necessarily need to be giant, Eiffel Tower-esque structures, but they can be smaller additions to existing buildings. Experts are estimating that these towers may need to be located on every, or every other street corner to provide the kind of connection we need. This is huge for commercial real estate because it creates an opportunity for additional income on existing, as well as newly constructed properties. These towers are also not limited to only skyscrapers, but lower buildings as well.

Currently, ground leases for cellphone towers are estimated at a $47,000 per year lease rate. Think of this on a more numerous scale, and landlords and investors could be in for an income boost. Commercial Real Estate brokers could also tap into a brand new market, facilitating these sales. Additionally, 5G could finally make autonomous vehicles a reality. Experts expect this will have a great effect on land usage, thus creating even more opportunities in the commercial real estate market.

Any Cons?

However, with all the good and optimistic benefits, there will always be cons. Some have been concerned with the impact the densely placed cell towers and increase in radio waves will have on biological and agricultural health. In fact, California, which is known for its strict health-based regulations has already begun opposing some installations. That being said, developers and landlords will have to be educated and up to date on all laws and information surrounding 5G towers, so that if a connection between them and illness is found, owners are not liable.

So, What’s Next?

With the increased amount of capital being invested into 5G, it seems like an imminent and inevitable part of our future — one that takes us to a new level of connectivity and technology. As CRE professionals and members of society, we will have to stay up on new developments and wait to see what 5G has to offer in the future.