Emerging Trends in Real Estate 2020 is hot off the presses and, as always, the latest in this series is an informative and comprehensive look at developing trends in the real estate market, and filled with actionable content. One thread that is woven consistently throughout is the growing conceptualization of “community” as a driving theme in all contexts of the market. What does that mean for investors and portfolio holders? Let’s take a closer look.
Coworking Continues to Trend Up
The future of coworking and shared commercial space is bright. While the debacle at WeWork has garnered the lion’s share of headlines, that company should be viewed as a high-profile failure in leadership rather than as proof that coworking is a not-ready-for-primetime concept.
From the real estate development and investment perspective, coworking spaces may provide for market opportunities and healthy portfolio growth. Transforming an existing traditional office building or commercial space into a coworking space is relatively simple and provides forward-looking investors the opportunity to capitalize on otherwise unused properties. For urban environments, there’s a flexibility benefit: rather than being locked into the limited tenant pool offered by a single purpose space, you can instead draw from a larger target crowd of entrepreneurs, freelancers, mobile workers and other potential tenants.
Who are the typical coworking space users? It’s a more diverse and sustainable target group than you might think:
Freelancers are likely the first group you think of when envisioning coworking spaces, because it pairs perfectly with the ability to choose working hours and the desire to have networking opportunities near at hand. Shared work spaces create a community that pays off for freelancers.
Start-ups and coworking spaces are also a very suitable match, combining flexibility and affordability with the capacity to scale up when needed. Start-ups also benefit from community and interaction opportunities that help them evolve and grow.
Small and mid-size businesses are increasingly looking at coworking spaces for one very important reason: to help manage costs. Traditional office leases don’t make sense for many of these businesses, especially those that are geographically diverse or rely on remote workers.
Large enterprises are using remote workers more than ever. Where proximity and density allow, it’s often preferred to keep them in a single location (for meetings and collaboration), but the economics of a traditional office are still less than ideal. A coworking space provides cohesion, cost efficiency and flexibility, especially for enterprises that endure fluctuating office space needs.
Co-Living Is About More than Just Sharing a Home
Co-living, led by companies like Common, is poised for a huge increase in capacity in urban markets across the country. Like coworking spaces, co-living spaces are easily adapted on the fly from currently existing buildings: the renovations necessary to transform a traditional apartment building or condo complex into a co-living space are generally modest and affordably accomplished.
Supporting the acceleration of co-living developments is a simultaneous surge in reorienting urban communities to meet the needs of not only a more diversified population, but also a population that wants greater cohesion within their community. Emerging Trends in Real Estate 2020 spotlights one way communities are amplifying their intrinsic appeal, with the proliferation of urban green markets:
As “foodies” become more a feature of our society, it might be worth highlighting the growth of urban green markets, which now exceed 8,700, up from just 2,000 a quarter century ago. These are essentially “pop-up retail,” as well as a powerful link of farm to city, much appreciated by locavores. – EtiRE 2020, p.14
Part and parcel with co-living is increasing acceptance of collaborative consumption as a vital part of the sharing economy. Collaborative consumption is the implementation of integrated platforms of products, services, and experiences that consumers provide to one another. Traditionally, flea markets, swap meets, garage sales, etc., occupied this space, but social media has created an explosion in the number of tools, platforms and solutions designed to connect people within a commercial context. As the sharing economy continues to built on the sharing of underused assets and under-exploited relationships in communities, you can expect traditional commercial enterprises to increasingly struggle to compete as communities are designed and managed to more readily foster deeper connections and mutually beneficial sharing.
One final note: it’s not just the hipsters that are drawn to an enhanced sense of community and a greater desire to connect more closely with their neighbors. The “Golden Girls” model of senior retirees living together is being promoted by developers and embraced by tenants for benefits of increased experience of community, mutual decision-making, shared ownership and affordability.
Collective Concepts Can Connect You with Community-Oriented Opportunities
How is your portfolio being affected by community-oriented development trends in the real estate market? Are you keeping pace with evolving needs, or are you settled into a traditional mode of thinking that might not recognize opportunities for more profitable and less risky investments?
The community-oriented marketplace is thriving and we have more to share with you! Use the form below to contact us directly – a member of our team will get in touch with you as soon as possible.