Sharing economy has disrupted many industries, and commercial real estate is no exception. Find out how it disrupted office, industrial and retail property.
Sharing economy: uses and impact on commercial real estate
What is a sharing economy?
The simplest definition of the sharing economy is as a system in which assets and services are shared between individuals.
This economic system has disrupted many industries, and commercial real estate is no exception. In the context of office, industrial and retail property, this can take many forms, including co-working space, short-term rentals and pop-up shops.
Impact of sharing economy on commercial real estate
Sharing economy platforms, such as Uber and Poshmark, have created a new mindset amongst consumers looking for flexible and cost-effective solutions to their everyday needs. Similarly, the mindset has spilt over to other areas, such as the office space market, with an increasing number of workers and businesses seeking flexible solutions for their workspace needs.
Below are some of the areas where this economy had the biggest impact.
Rise of co-working space
Sharing economy has paved the way for the coworking space, by making it easier for these spaces to find customers. Many platforms offer coworking space membership that allow their users access to multiple locations, making it more convenient for people who travel frequently or those who like to change their scenery.
They also offer enhanced value propositions to their customers, for platforms that rely on sharing economy by partnering with services, such as Uber or Airbnb, to offer discounts and perks.
The rise of platforms such as Airbnb and VRBO has led many property owners to consider the potential benefits of offering short-term rentals in commercial spaces. The impact of sharing economy is that it has increased competition in the market – with many companies looking to rent out offices and other commercial spaces on a short-term basis, property owners must work harder to differentiate their offerings and attract tenants.
It has also led to a shift in the way that tenants approach their workplace strategy. Instead of committing to long-term leases, some organizations are opting for short-term rentals, as they offer more flexibility.
Pop-up shops are another way the sharing economy has impacted commercial real estate. They are temporary retail spaces that are used for a short period, typically a few days or weeks. They’ve become popular with both established brands and emerging businesses looking to test out new products or markets. Property owners can benefit from the revenue generated by pop-up shops and the increased foot traffic they bring to their properties.
New opportunities for property owners
The sharing economy has also created new opportunities for property owners to monetize their underutilized spaces. For example, a parking lot that’s empty on weekends could be rented out as a venue for events. A rooftop terrace could be turned into a space for yoga classes or other activities. These creative uses of space are becoming more common as property owners look for ways to maximize their revenue.
Impact on traditional leasing models
However, the sharing economy has also raised concerns about the impact on traditional leasing models. Some landlords may be hesitant to embrace co-working spaces, short-term rentals, and pop-up shops due to concerns about security, liability, and potential disruptions to other tenants. It’s essential for tenants to communicate with their landlords about any plans to participate in the sharing economy to avoid potential conflicts.
Sharing economy is still evolving, and it will be interesting to see how it continues to impact real estate in the future.
Tenant Improvement Allowances (TIA) can be a game-changer for businesses looking to create the perfect workspace.