Creating urban platforms — Opportunities and challenges for innovation in commercial real estate development

Abstract

Current theories on commercial urban development are dominated by the concept of linearity, which does not adequately take into account the demands of adaptation posed by the pace of change in digital developments, a pace that stands in marked contrast to the pace of change in physical developments. In the hi-tech sector, platform ecosystems have been employed to accommodate innovation and change. This paper explores the potential application of platform ecosystem theory to the commercial urban development process, where there is now great uncertainty regarding the future economic implications and societal requirements of physical commercial space. The boundary conditions for value creation in platform ecosystems are as follows: modularity, standardisation, complementarity and connectivity. Each is explored through a survey of key actors in recently completed commercial urban developments. The analysis identifies significant differences in the capacity of public- and private-sector actors to promote the creation of platform ecosystems, particularly in the complementary actions of development participants. Applying an approach to urban development based on a platform ecosystem might offer great opportunities, but will also be limited by the major challenges identified in this paper.