How CRE Pros Can Embrace the Sharing Economy
You can’t stop technology, but you can leverage it.
The sharing economy is changing the world, and it’s naive to assume that incumbent industry professionals haven’t noticed.
While some industries have been slow to adapt, much of the commercial real estate business has successfully adopted new technology within the past five years. Office listing platforms in particular have taken off, with companies like ourselves making it easier for businesses to sublease their unused space. While the sharing economy represents a threat to some sectors of CRE, it also represents an opportunity.
Jerre Riggs, co-founder of a startup-focused real estate brokerage called Firstbase, acknowledges that CRE isn’t always ahead of the tech curve. In an interview with GlobeSt, he explains that flexible office listing platforms “help companies… identify and rent space within the gap markets often overlooked by traditional practices such as executive suites, co-working centers, and the sublease market.”
We’ve seen that problem all too many times. Coworking spaces are fantastic, but they’re not right for everyone; executive suites don’t offer the right vibe for startups, and subleases have to be fished out of the Craigslist abyss (plus they come with a boatload of paperwork).
For many startups and independent workers, the alternatives to the home office aren’t much of an improvement. And it’s a shame because there are plenty of suitable spaces out there, but they were difficult to discover before the current wave of real estate tech platforms.
Firstbase understands the mindset of their startup clients, and they’re eager to adopt new technology to fill the gaps that they’ve identified. On the opposite end, Joseph Derhake, CEO of commercial real estate consultancy Partner Engineering and Science, admitted that the sharing economy presents “new risks” for the industry. Even if older companies aren’t willing to embrace technology, it’s necessary that they adapt.
ResiModel‘s Eliot Vermes has a more data-driven approach. As the CEO of a real estate data company, it’s not surprising that he sees analytics as the biggest draw that the sharing economy offers. With every property listed in a database, it’s easier to perform analysis on large batches of transactions.
Real estate is traditionally a non-standardized industry: every lease is different, and it’s difficult to calculate profit after splitting costs across brokers, taxes, and fees. With the rise of the transactional space, property owners are leasing space with less paperwork, and these transactions are stored digitally.
A coworking space would have an easy time calculating the relative value of its various plans; a real estate broker has no good way to predict the value of their various leads. More data and increased standardization makes quantitative analysis more feasible for the entire industry, including potential investors.
Fortunately, established members of the commercial real estate industry are not in direct competition with the sharing economy. Even brokers, who might feel obsolete in the face of property listing platforms, still play a valuable role. The industry will ultimately have to learn to cooperate with the sharing economy rather than fight it. If they figure out how to leverage their skills in the current market, we’ll all be better off—tech companies can’t do it alone.