It’s been a year now since Institutional Real Estate, Inc. produced its last live face-to-face event, its VIP (Visions, Insights, Perspectives) Europe program, conducted at the Hotel Arts in Barcelona, Spain.
One of our keynotes for that event was Chris Kutarna, an Oxford Adult Education scholar and professor and co-author of the bestselling nonfiction book, The Age of Discovery. In the book, Kutarna draws parallels between what was going on during the Renaissance in Europe at the time of Michelangelo, and what is going on in our world today.
He began his session by putting up a map of the world on the screen, with all of the major global air routes and air hubs superimposed. “Ninety-five percent of the world’s population now lives within 200 miles of a major airport hub,” he noted. “We are entering an age of pandemics.”
I should mention that the coronavirus pandemic was just beginning to spread at that time, but no lockdowns were yet in force in the Americas or on most of the European continent.
Here’s an excerpt from the book: “Recent simulations have shown that a contagious airborne pathogen (like H5N1) carried into any major airport, on any continent, would be global within three days at most. If the infected individual took just two plane journeys prior to a public health quarantine, more than 5 billion people (75 percent of humanity) would need to be vaccinated to prevent a global pandemic. After three flights, global vaccination would be required. The concentration dilemmas are getting thornier. It is not a question of if, but when, a pandemic will strike a major political, financial or industrial center and force its complete (albeit temporary) isolation from all physical flows in the global system — with hard-to-predict consequences.”
What’s the point?
The point is most of us are longing with great anticipation the end of the current pandemic. We can hardly wait for the time when the restrictions on social distancing have been lifted and we once again can resume gathering and visiting with one another on a more intimate basis. And hopefully, that time will be coming soon, ideally, later this year or early into 2022.
Unfortunately, the end of this pandemic may not signal the end of what Kutarna fears might be a long-term trend. Global spread of pandemics may in fact become more of a fixture of our daily lives over the next 10 to 30 years.
Now, certainly, we will learn from our experiences in managing our way through this one. We will figure out what worked — as well as what didn’t work so well — when it comes to government policy with respect to issues such as social distancing, personal insulation (mask use and hand washing), travel restrictions and economic shutdowns. And we will also most likely learn how to even further accelerate the development and widespread rapid deployment of safe vaccines.
On the other hand, while our response to future pandemics may be more effective and help shorten the duration while lessening the severity of negative impacts, the disease agents themselves — bacteria and viruses — will almost certainly become stronger and more resistant to treatment.
I know many investors have resisted the temptation to start to deploy remote and virtual due diligence practices, in hopes that soon this particular crisis will pass, and you’ll soon be able to resume your past practices of traveling to conduct onsite due diligence of new managers and prospective property or portfolio acquisitions. But if the future is likely to be one characterized by continued periodic disruptions in our ability to travel and conduct this kind of face-to-face onsite due diligence, the more prudent path would be to embrace and explore new means of conducting due diligence remotely and virtually. We all need to become more resilient, more, as author and mathematical statistician Nicholas Nassim Talib would say, “anti-fragile.”
Are there limitations and problems associated with relying on remote independent sources and virtual meeting technology to conduct these kinds of activities. Absolutely. That’s why it’s critical that we start exploring how to overcome these limitations and problems now, before we’re faced with the next new set of challenges.
As Talib points out, the way nature prepares for the unanticipated — for black swan events — is to build in redundancy. This may not always lead to the most efficient use of resources, but it works.
Something, at least, to think about. Meanwhile, of course, it’s important to be careful. Be very, very careful. It’s a whacky world out there.
Geoffrey Dohrmann is president and CEO, publisher and editor-in-chief of Institutional Real Estate Inc., parent company of Real Assets Adviser.