{"id":1004355563,"date":"2019-09-26T02:10:21","date_gmt":"2019-09-26T10:10:21","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004355563"},"modified":"2019-09-29T23:13:58","modified_gmt":"2019-09-30T07:13:58","slug":"proptech-explosion-fracking-are-transforming-cre","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/proptech-explosion-fracking-are-transforming-cre\/","title":{"rendered":"Proptech Explosion, \u201cFracking\u201d Are Transforming CRE"},"content":{"rendered":"
\"Steve<\/a>

Steve Weikal, Head of Industry Relations at MIT’s Center for Real Estate. Image courtesy of Michelle Weeks<\/em><\/p><\/div>\n

Using technology to add property value, the creative expansion of coworking and the impact of the new workforce on commercial real estate are the main points discussed at DLA Piper\u2019s 15th Global Real Estate Summit, held in Chicago this past Tuesday. The event kicked off with a fast-paced, insight-packed presentation by Steve Weikal, head of industry relations at the Massachusetts Institute of Technology\u2019s Center for Real Estate.<\/p>\n

Two of the key trends he focused on are what he calls the startup tsunami and real estate \u201cfracking.\u201d<\/em> As to the first of these, Weikal said that currently there are 7,000 proptech startups globally. In 2012, he noted, there was less than $1 billion in funding for proptech, but the figure for 2018 was about $18 billion, with about a further $6 billion just in the first quarter of this year.<\/p>\n

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See our full coverage of the 2019 DLA Piper Summit<\/a><\/p>\n

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In just one example, he said, venture capital firm Fifth Wall Ventures, which focuses on proptech investments and has partnered with CBRE, Hines, Equity Residential, Prologis and Macerich, recently raised $500 million. \u201cWe\u2019ve never had R&D for our industry,\u201d<\/em> he said. \u201cThis is our version of R&D. It will have a tremendous impact.\u201d<\/em><\/p>\n

Using tech to dig out value<\/h2>\n

The second major trend, real estate \u201cfracking,\u201d<\/em> was defined by Weikal\u2019s MIT colleague Prof. Dennis Frenchman as \u201cusing technology to break either the use of real estate or the actual physical asset into smaller pieces and reconfiguring it into higher-value combinations, unlocking overlooked asset value.\u201d<\/em><\/p>\n

The two big examples of that are WeWork and Airbnb. WeWork is the largest non-governmental tenant in NYC and also the largest tenant in London, Weikal said. \u201cThey lease low and license high and play the spread. That is the source of the profit\u2014or not,\u201d<\/em> he said, to a surge of laughter from the nearly 500 attendees. Airbnb, of course, is the world\u2019s largest hospitality company, despite not owning a single bed.<\/p>\n

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READ ALSO:<\/strong> Airbnb Acquires HotelTonight<\/a><\/p>\n

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Shifts in coworking<\/h2>\n

Weikal pointed out a shift that shows how mainstream coworking has become: From 2010 to 2017, the share of the coworking market made up of freelancers dropped by well over a third, while the portion taken by companies with more than 100 employees increased six-fold. \u201cThe enterprise solution of coworking has caught on, and companies really like this,\u201d<\/em> he said. \u201cOccupiers really like this flexible space, so it\u2019s not going to go away.\u201d<\/em><\/p>\n

Another data point Weikal cited is that Microsoft subsidiary GitHub, with 600 employees, has no central office and no big occupier leases. Further, the coworking industry is branching out in creative, even surprising ways, he said. \u201cWe\u2019re starting to see these specialized solutions primarily to help startups, but not always.\u201d<\/em> There are starting to be coworking offerings specifically for lab space (BioLabs), cannabis businesses (We Grow CA), warehouse space (Saltbox), pop-up retail space (AppearHere) or space solely for women (Hera Hub and The Wing).<\/p>\n

\"Steve<\/a>

Steve Weikal speaking at DLA Piper\u2019s 15th Global Real Estate Summit. Image courtesy of Michelle Weeks<\/em><\/p><\/div>\n

In what Weikal calls \u201ccoworking convergence,\u201d<\/em> Industrious is opening coworking space in two malls owned by Macerich and Taubman and at some Equinox Fitness Club locations, Staples has been opening Staples Studio coworking spaces in some stores, and the Lifetime Fitness chain is opening Lifetime Work. Even more creatively, Why Hotel is essentially a pop-up hotel in apartment buildings still in lease-up.<\/p>\n

Weikal quoted Mark Grinis of EY: \u201cCommercial real estate is no longer a fixed asset. It\u2019s fluid.\u201d<\/em><\/p>\n

The human factor<\/h2>\n

Weikal then discussed the human interface of real estate, also known as \u201cstickiness,\u201d<\/em> in an era when tenants are beginning to have substantially weaker ties to specific buildings or spaces. \u201cThe stickiness is critical,\u201d<\/em> he said. \u201cNow that they\u2019re mobile, and they\u2019ve got all this information, we need to understand [tenants] to make sure that they stay around, because they can easily jump, especially as leases turn into licenses. That can be a real challenge to our business models.\u201d<\/em><\/p>\n

One factor that hasn\u2019t changed, Weikal cautioned, is that \u201cthere\u2019s still this need for us to be together,\u201d<\/em> at least for certain kinds of tasks, such as innovation.<\/p>\n

\u201cThis new workforce doesn\u2019t make long-term commitments, and they want everything now, and they want just what they want, and they\u2019ll only pay for what they use,\u201d<\/em> he concluded. \u201cThat is not exactly aligning with our industry, where we\u2019re used to 10-year leases with two five-year renewals. And obviously that impacts everything. It impacts underwriting. It impacts what we build and where we build and how we build it.\u201d<\/em><\/p>\n

Weikal, who got his start in real estate by redeveloping historic theaters in Detroit\u2019s Fox Center entertainment district, holds a master\u2019s degrees in real estate development and city planning from MIT and a law degree from Suffolk University Law School.<\/p>\n","protected":false},"excerpt":{"rendered":"

Multinational law firm DLA Piper\u2019s latest in its long series of one-day conferences sped off to a quick start with an in-depth look at some of the technological and demographic trends that are shaking up CRE. <\/p>\n","protected":false},"author":882,"featured_media":1004355575,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[23891,21742,21744,21787],"tags":[33035,42461,33026,46511,33678],"class_list":["post-1004355563","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-national","category-latest","category-people","category-technology","tag-airbnb-inc","tag-coworking","tag-dla-piper","tag-proptech","tag-wework"],"acf":[],"yoast_head":"\nProptech Explosion, \u201cFracking\u201d Are Transforming CRE - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/proptech-explosion-fracking-are-transforming-cre\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Proptech Explosion, \u201cFracking\u201d Are Transforming CRE\" \/>\n<meta property=\"og:description\" content=\"Multinational law firm DLA Piper\u2019s latest in its long series of one-day conferences sped off to a quick start with an in-depth look at some of the technological and demographic trends that are shaking up CRE.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/proptech-explosion-fracking-are-transforming-cre\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2019-09-26T10:10:21+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-09-30T07:13:58+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2019\/09\/Steve-Weikal-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"900\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Scott Baltic\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/proptech-explosion-fracking-are-transforming-cre\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/proptech-explosion-fracking-are-transforming-cre\/\",\"name\":\"Proptech Explosion, \u201cFracking\u201d Are Transforming CRE - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/proptech-explosion-fracking-are-transforming-cre\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/proptech-explosion-fracking-are-transforming-cre\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2019\/09\/Steve-Weikal-1.jpg\",\"datePublished\":\"2019-09-26T10:10:21+00:00\",\"dateModified\":\"2019-09-30T07:13:58+00:00\",\"author\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/61ac1450f3ffaa0e850b834c28526555\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/proptech-explosion-fracking-are-transforming-cre\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.commercialsearch.com\/news\/proptech-explosion-fracking-are-transforming-cre\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/proptech-explosion-fracking-are-transforming-cre\/#primaryimage\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2019\/09\/Steve-Weikal-1.jpg\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2019\/09\/Steve-Weikal-1.jpg\",\"width\":1200,\"height\":900,\"caption\":\"Steve Weikal, Head of Industry Relations at MIT's Center for Real Estate. 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