In 2007, when Apple launched the iPhone and various manufacturers launched their line of touch screen smartphones using Google’s Android operating system, many industry experts weren’t sure these new phones would have lasting appeal.
Blackberry, the premier premium phone maker at the time, scoffed at Apple and Android - saying people would never give up their physical keyboards.
Microsoft CEO Steve Balmer famously laughed on live TV when asked by an interviewer about his thoughts on the new iPhone, saying it was overpriced and that people would never pay a premium for touchscreen phones.
Fast forward to 2020 and Blackberry is no longer a smartphone company and Microsoft has repeatedly failed to gain a foothold in the smartphone market.
The smartphone trend started by Apple became more than a fad. It became a gigatrend:defined as a trend that radically changes our lives - whether, economically, socially or a combination of both - with a lasting power of 7 years or more.
Every gigatrend starts as a microtrend before transitioning to a megatrend before reaching legendary status as a gigatrend.
Microtrends are defined as trends that have been on the scene for less than three years while megatrends have been entrenched for 3-7 years. Once a trend moves beyond 7 years, it’s proven its staying power by continuing to be ingrained in the fabric of our lives.
Not every microtrend or megatrend is destined to become a gigatrend. They may fizzle out or lose favor with the public before establishing a firm foothold in our lives or the economy.
Oftentimes with microtrends, it’s still too early to judge its future as there may not be enough data to predict whether the trend will become a long-lasting gigatrend or just a short-lived fad.
Google’s search engine has established itself as a gigatrend along with Facebook and social media. Blackberry was a megatrend that faded away before reaching cult status and AOL’s dial-up internet service was a microtrend that fizzled out.
Of course,every investor wants to get in on the ground floor of a gigatrend. There’s money to be made in something that transforms society.
Everybody wishes they had bought Apple stock in 2007. Hindsight is 20/20 but many industry insiders who had analyzed consumer phone habits knew that consumers were relying more and more on their smartphones for many of their daily tasks and a touchscreen smartphone made complete sense since it would simplify these tasks.
Before Google launched its Android operating system, it had been developing its line of smartphones patterned after the popular Blackberry mobile phone with a physical keyboard. But once Apple announced the iPhone, Google abandoned its phone plans and went to work on a touchscreen operating system because they knew the touchscreen phone would be the wave of the future.
Investing in the right trends is a smart strategy and spotting a potential gigatrend can be highly lucrative.
How Can You Spot A Gigatrend?
Gigatrends don’t happen overnight. They start as microtrends before transitioning into megatrends. Some gigatrends are the convergence of a combination or one or more existing gigatrends, megatrends, or microtrends.
In simple terms, it’s possible to spot gigatrends because they may already be in front of our faces in quantifiable measurements. With a potential gigatrend, there is existing data and substantive proof to support its prospects for success.
Don't Fall For Unproven Microtrends That May Fizzle And Fade Away!
Investing in a microtrend in the early stages that lacks any quantifiable proof or data to back its long-term viability is just speculating or gambling at that point. With no established demand or track record, it’s nearly impossible to forecast the profitability or viability of an investment opportunity involving a microtrend.
Take for instance the legal Cannabis industry:
Cannabis is quickly becoming legal in many states across the country and attracting investment capital. It’s trending and is a hot investment, but is it a wise investment? Maybe not. It’s too early to tell.
Take, for example, the legal Cannabis retail industry in California. Legal dispensaries popped up like weeds across the state once Cannabis was legalized but it has been a bumpy road for most early movers.
In California, by the time you add up the various local and state cultivation, sales, and 15% state excise tax on marijuana, retailers end up with a 40% surcharge on the price of Cannabis that makes it hard to compete with the black market. While the black market continues to thrive due to its competitive price advantage, legal dispensaries fight to survive.
Cryptocurrency is another unproven trend. Is it attracting headlines? Yes. Is it going to replace traditional currency any time soon? Not likely.
Cryptocurrency has no intrinsic value, is not backed by any underlying asset, and is not protected by any government authority, etc.. It’s staying power is yet to be seen.
What Is The Next Big Gigatrend?
I am confident in saying that senior housing will be the next big investment gigatrend.
Why am I so confident about its prospects?
Because the impending boom in this space has been in the works for years if not decades just like the smartphone had been in the works for years as communication became more mobile with cell phones and organization, tasks and computing also became more mobile with handheld touch screen devices like the Palm Pilot. It was only a matter of time before the two trends would meet to form the smartphone.
That is why I am confident that there will be a boom in senior housing commercial real estate space shortly.It’s been in the works for years because of two trends- trends that have been brewing for years and poised to converge in a big way soon that will transform the economy, society, and our lives as we know it.
What are the two trends poised to converge to transform the commercial real estate investing space? TheRENTER NATIONandAGING POPULATION.
The Renter Nation.What are the numbers backing the notion that we’re becoming a renter nation?
- Renting a three-bedroom property is more affordable than buying a median-priced home in 59% of U.S. counties according to ATTOM Data Solutions.
- Median rent nationwide is up to $1,440, making saving for a down payment harder and harder on homes that keep getting more and more expensive and out of reach.
- Renting is more affordable than buying a home in the nation’s 18 most populated counties and in 37 out of 40 counties with a population of 1 million or more.
- More than 36% of all U.S. households rent.
- The growth of the renter population is now outpacing the owner population.
Alongside this boom in demand for rental housing has been a lack of supply to meet this demand. Since 2008, the gap has been only widening.
Aging Population.Baby boomers began turning 65 in 2011 and by 2029, the remainder will also reach age 65 and account for more than 20 percent of the total United States population.
By 2050, the 65-plus age group is estimated to equal 88.0 million, nearly double its current population (49.2 million). Additionally, by 2056, the 65-plus age group is estimated to be larger than the population under age 18.
Another contributing factor to the booming senior population is life expectancy. Driving this increased life expectancy, and as a result, the average population age is the advancement in public health strategy and medical treatment.
Life expectancy in the United States has increased by approximately 30 years over the past century, primarily due to the reduction of acute illness threats.
Another driving force behind the impending senior housing boom will be the desire by Baby Boomers to downsize because many are inadequately funded for retirement and will look to sell their homes to extract equity to make it through their twilight years. These seniors will need housing in which to downsize to.
Convergence.With Baby Boomers retiring in droves looking to downsize and the housing trends pushing people towards renting, there will be an unprecedented demand for senior housing the likes of which we’ve never seen before.
This gigatrend is poised to shake up the real estate market and society in general.Inadequate supply means no vacancies and consistent cash flow.
When scanning the investing landscape for potential gigatrends to latch onto,avoid the early-stage microtrends that are unproven and lack sufficient data and track record to properly forecast financial performance and the long-term viability of these microtrends.
Don’t be a speculator playing the lottery on an unproven trend. The successful investors understand the difference between enduring gigatrends and microtrends that will fade or fizzle.
Gigatrends like senior housing may not be as sexy as Cannabis, but the numbers behind the renter nation and the aging population back its chances for enduring the long-term.
When analyzing trends, keep the following in mind:
- Avoid microtrends, crazes, or fads with no established track record.
- Find a gap in the market that once filled will be sustainable for years.
- The investmentmust have intrinsic value: value beyond what somebody down the line will be willing to pay for it.
- Seek out data and quantifiable measurements to forecast financials and predict viability.
- Look at long-term viability and not short-term speculative gain.
