5 Cool Real Assets Trends for 2012

Posted on February 6, 2012


Shamefully, it’s taken me an entire month to wade through 2012 predictions from assorted economists and commentators.  The consensus calls are much as one would expect; neither oil prices nor the US economy are going anywhere fast, nothing substantive will be achieved on federal policy in the teeth of a tough election year, investors aren’t rushing to invest in solar and wind, though their strategic counterparts will be picking up some decent deals in SmartGrid and biofuels and we should get a couple of IPOs out of the gate.

More interesting are the quirky predictions for real asset trends:

1. Farm to table gets bigger

Farm-to-table and farm-to-fork have been buzz words for some time, but the actual number of restaurants practicing the art is pretty small; restaurant food & drink sales totaled $604bn in 2010, yet local food sales to all outlets were only $4.8bn a couple of years earlier.  It’s unsurprising given how busy chefs are; there’s not a whole lot of time to be seeking out local farms and suppliers when your priorities are getting customers through the door, sending out decent food and making finances work in a tough market.  Large hotel chains are now getting in on the act; they often benefit from their own buyers and more flexible buying practices where they’re striking deals for numerous outlets.  One example is the Four Seasons, whose Miami based hotel debuted a farm-to-table restaurant in November; the chain picked the theme as one of their top food trends for 2012.  The real question is, of course, how we’re going to fulfill this demand outside of areas with the climate to provide steady year round supplies of produce.

2. Environmental sensors gather new data

At last week’s Cleantech Summit – a VC-heavy annual gathering in the Palm Desert – Lorie Wigle, the long-time Intel exec who heads up their Eco-Technology initiative, commented that: “we’re going to see a good deal more data gathered through environmental sensors”.  The most common of these at the moment is moisture sensors used to automate watering on farms and for residential lawns; an example is startup Ugmo Technologies which is backed by Ben Franklin Technology Partners among others.   What’s going to be really fun is to see what other data sensors can gather, and where that data can take us.

3. Consumers wrestle control of their own utility data

The White House’s ‘Green Button’ initiative, which allows consumers to download their utility data in one click, is being trialed in California at the moment.  In turn, this has led to much talk of consumers taking control of their own energy usage, using tools from SmartThermostats (Nest and its ilk) through to energy management software, all part of SmartGrid 2.0.  The snags to date are that consumers don’t spend much time worrying about their energy bill – Rick Needham of Google says the average person spends less than 3 minutes per month on it – and that it’s not even clear what the 51% of consumers who’ve heard of the SmartGrid want from the darn thing.  One recent study found that they valued a range of benefits, from integrating renewable energy into the home to straight cost savings.

4. Fracking moves into tight oil

The most controversial exploration and production practice of recent years isn’t going away any time soon.  Fracking is the practice of pushing water, sand and additives into underground formations to cause fissures and thereby release ‘tight gas’ that was unreachable with traditional drilling techniques.  Despite heightened emotions on both sides of the debate – the pros point out the step change in domestic gas production, the cons to the potential for damage to nearby groundwater – Dan Yergin, of industry consultants IHS CERA, predicts that the technology will show up in tight oil formations in quantity.  The government’s Energy Information Administration agrees, citing the availability of tight oil as one of the drivers of higher domestic production forecasts.

5. Vertical & rooftop farming grows

The ‘do-it-yourself’ movement in farming is gathering pace as our concerns about the source of our food continue to rise.  HuffPost’s My Garden School forecasts more rooftop and vertical gardens in large urban areas this year, and notes that the waiting lists for allotments are rising.  Traditionally, it’s been hard to find business models in these areas that are scalable so investors have shied away or ventures have chosen to go non-profit.  One of the benefits of the growth of the movement may be that we finally find sustainable business models in the area.