The future of retail and office space is up in the air, and proptech investors are optimistic
The malls and grocery stores of the 20th century are being converted into industrial conveyor belts of goods and services traveling from the internet to your home. The customer is no longer even allowed inside, as Connie Loizos details this week in a closer look at Amazon and other online-first companies taking over commercial spaces near you.
Americans sort of knew this was coming. Still, the pace at which buildings of all sizes are being either built or converted into e-commerce fulfillment centers — and closer to city centers — has become a bit breathtaking. According to the commercial real estate services firm CBRE, since 2017 at least 59 projects in the U.S. have centered on converting 14 million square feet of retail space into 15.5 million square feet of industrial space, and that trend is “absolutely going to continue,” says Matthew Walaszek, an associate director of industrial and logistics research at CBRE.
Some huge portion of existing retail space is disappearing from public life. Meanwhile, remote work is simultaneously gutting office demand, the even more lucrative part of commercial real estate.
No doubt there will be wonderful new in-real-life experiences that commercial spaces provide for work and any other function. But the sector is taking massive systemic cuts and destroying landlords in one of the historically slowest moving industries in the world. This alone makes it incredibly exciting as a topic for TechCrunch to cover. The impact on startups makes the changes today profound. Will superstar cities and startub hubs retain the pull they’ve had in recent decades? Even if you want to be remote-first, what if you want to get out of the house and your team does too? What if you don’t want to live in a house, actually?
To get more answers at the bleeding edge, Kirsten Korosec and your faithful correspondent did a fresh survey of 9 of the top investors in real estate and proptech (based on our TechCrunch List and other research). Extra Crunch readers can check out what they think will happen to startups soon in the middle of pandemic changes, and where they see proptech going along with the rest of the trends longer term. Here’s one of my favorite excerpts, from Brad Greiwe of Fifth Wall:
We don’t believe that abandonment of central business districts will remain an issue following the pandemic. Because the concentration of startup and entrepreneurial activity occurring in cities such as San Francisco and New York is on the decline, we can expect smaller metro areas throughout the U.S. to benefit from a surge in innovation, and the pandemic only stands to accelerate this trend, with many entrepreneurs and knowledge workers having already discovered the benefits of remote work and life outside of high-density areas. While this will not alter our investment strategy, we’re spending time with the office landlords in our network considering alternative spaces for work (e.g., flexible workplace solutions, flex passes, smaller and scattered HQs, cross-purpose retail and dynamic food venues), advances in collaboration technology and the ways in which physical assets can accommodate strong connectivity.
Original article by: Eric Eldon
Image by: Yura Timoshenko