Hotel Disruption
The hostel option has long been a saving grace for traveling in Europe. Airbnb has created the same safe harbor in the US and abroad. Airbnb is an online marketplace accessible from websites and its mobile app. Members on its site can use the service to arrange or offer to lodge. Airbnb itself does not own any real estate, it merely receives a small portion of the cost of each booking. Currently, lawsuits are being held around the US and around the world around the Airbnb shared space business model. Guest love the new more economical option. Hosts enjoy the additional income opportunity provided by this platform. Landlord and neighbors who do not enjoy the financial benefits but has a role in participating are not as happy about this engagement. The hotel industry is quietly opposed to this newfound competition as well. The legal cases and ramification of legal fines will play itself out over the next couple of years. This will be interesting to watch. New condo boards and landlords of newly built buildings will begin to react to this new reality of the shared economy.
Office Space Disruption
It’s hard to go into a commercial real estate network function and not have the topic of WeWork come up some point in the conversation. New York-based, WeWork’s business model is to provide shared workspaces or “cowering” spaces for startups, freelancers, entrepreneurs, small and large enterprises. It is currently valued at over $20 billion and manages over 10 million square feet of office space. These tenants are able to lease coworking space for a short lease that was previously unable in the commercial real estate business. Space is also delivered mostly furnished and with amenities. The tenants can basically show up plug and play, literally. US and International companies have also been able to take advantage of the opportunity to quickly set up regional offices without long-term leasing and office setup costs. The coworking business model is largely dominated by WeWork has seen some growth in competition from companies such as Knotel, Instant Offices in London, and UCommune with 128 locations in China.
Real Estate Captial Disruption
Many were surprised last week to hear that RealtyShares has been unable to secure additional funding and is winding down operations, laying off staff and stopped accepting new investments. It is currently a crowdfunding platform has $900,000 million in investment capital. There has long been worry inside the industry as to the viability of the crowdfunding real estate business model. These platforms provide access to investment in commercial real estate for a massive pool of investors who may not have been able to participate previously. These platforms are essentially democratizing commercial real estate investing. They have struggled to provide enough deal flow for both investors and project sponsors. The real estate fintech leaders include the likes of Fundrise, EquiltyMultiple, Prodigy Network, and Realty Mogul, the winner in this space is still to be determined.
