Fragmentation in Nature
Fragmentation is a phenomenon that pervades nature — nothing stands alone. At any scale of observation, everything that exists is a fragment of a bigger whole comprised of a number of the same, or similar fragments.
Human society is made up of people. Our bodies are made up of cells. A forest is made up of trees. A colony is made up of ants. The universe is made up of atoms.
Why does this happen? Often, the individual fragments come together to create a greater entity with characteristics not present in any of the individual fragments, called emergence. For example, a collective school of fish behaves with intelligence that is not available to any one individual fish. The same goes for crowds of people, in a phenomenon called the ‘Wisdom of the Crowd’.
Why does this happen? If the purpose is to come together to create a single whole, why do the fragments remain separated instead of merging into one?
A closer look at this reveals how nature uses fragmentation to create yield and resilience, and how we can learn and apply these secrets into real estate development.
Fragmentation and Yield
“If the bee disappeared off the face of the Earth, man would only have four years left to live.”
This quote by Einstein once again stresses interdependence, and how important bees are as a fragmentary unit of our planet’s biodiversity.
Besides counting on them for the survival of our species, turns out we can learn a thing or two about maximising yield from real estate from these buzzy creatures as well.
As we know, most species of bees build their hives as a collection of hexagonal cells made of beeswax. These cells are used to store food and protect the larvae.
The hexagonal formation doesn’t only add to the structural integrity of the hive, but it maximises the yield bees get from it as well.
In real estate, rental yield is generally calculated as the amount of rent received against the value of the asset. Looking behind the numbers, however, we can more accurately recognise yield as a representation of the amount of usefulness of the specified real estate to the people who are willing to pay to rent it.
To increase yield, make the space more useful to more people (or bees). One of the ways to achieve this is through fragmentation.
Imagine if the beehive didn’t have hexagonal cells, but instead was completely hollow inside. The usefulness of the hive would immediately diminish. You would have larvae and food all piled up at the bottom of the hive along with the queen, and most of the space would remain empty, like a bag of unopened potato chips. Hexagonal fragmentation greatly enhances utility.
Likewise, if you have 1,000 square footage of commercial space to rent, you will generally receive a higher yield from the asset if you fragment it into smaller units and rent them out individually instead of renting the whole space to one tenant.
This is partly because a single tenant will have more bargaining power if they rent the whole space, but mostly because the total usefulness of the space will be increased via fragmentation.
Fragmentation and Resilience
A sperm whale is the biggest creature on Earth. An adult male can weigh up to 45 tonnes.
Snappers are fish that swim in schools. An average snapper can weigh around 12 kg.
It would take a school of 3,750 snappers to match the biomass of a single adult sperm whale.
Which is more resilient? The single sperm whale or the school of snappers?
The sperm whale could die from a single injury from a harpoon. The school could lose hundreds of fish to a fishing net and recover.
If a single snapper gets sick from eating a poisonous creature, the school lives on. If the sperm whale gets poisoned, it could mean 45 tonnes of dead flesh.
This is not to say that there are no benefits to being very large solitary unit. But we can see that fragmentation is one of nature’s tools to augment resilience.
In the context of real estate, this could be paralleled to the difference between a multifamily apartment block vs. a mansion for rent. If a single family moves out of a block of 30 apartments, the multifamily property as an entity remains resilient. If the only tenant moves out from a massive mansion, it could be a different story.
We explores some simple examples of how fragmentation aligns with nature’s path toward yield and resiliency, and how it can be applied in the context of real estate.
But this doesn’t mean that we can come to simple conclusions, such as “more fragmentation = better”.
Fragmentation can sometimes be taken to extremes, as with the case of micro-apartments in Hong Kong.
Additionally, some large properties such as a mansion, might hold unique value as a mansion with historical significance and would not merit undue subdivision.
Part of the beauty of real estate development is that every project is unique. Keep the tool of fragmentation in your arsenal, and when appropriate, divide and create.