I love reading Allen Buchanan’s column here on The News Funnel. However, this week, he wrote an article titled Three Reasons Why CRE Will Never Be Disrupted and I couldn’t disagree more! For me, the question is not whether it will happen, but did it already happen?
First, let me state that the disruption of corporate real estate will look very differently for retail, industrial and office. Since my specialty is office space, I can only offer an outsider’s view of retail and industrial.
In my opinion, the advent of online shopping changed retail (disruption), and therefore, the supply chain and warehouse needs of retailers (disruption). With Amazon offering same day service and testing drones as a method of delivery, will those supply chain needs change again? Will Amazon partner with Uber to offer even faster deliveries? What will happen when there are driverless cars to make deliveries?
Regarding office space, the changing workforce is really what will disrupt the office leasing industry. The statistic that I hear over and over again is that by 2020, 40% of the workforce will be freelancers. While some can and will work from home, many want a place to go. They want to interact with their peers, share ideas, and feel like they are going to work.
WeWork, and other co-working spaces, have already disrupted the industry. WeWork’s corporate mission is “To create a world where people work to make a life, not just a living”. On their web site, the last line under “Our Story” is, “Community is our catalyst.”
They aren’t a real estate company. They are offering a service, but more than that, they are offering something you couldn’t get anywhere else before they started their business.
Just last night, someone asked me if they should move their six person company out of a co-working space and in to a more traditional office. After discussing the pros and cons for a very short five minutes, the answer was evident. It was a resounding “No”.
Is co-working the only disruption coming? That’s a resounding “no” also.
So maybe Allen meant that he didn’t think that there was a technology tool that could disrupt the industry. I am not going to tell you that all of the great tools being rolled out, seemingly weekly, are disrupting our industry. Certainly, they are enhancing it, as Allen would agree.
Millions of dollars are being invested in to “real estate technology”. In New York alone, $62m has been invested into tech companies focused on real estate in the first half of 2015. For example, VTS announced this week that they raised $21m in their Series B round. LA-based crowdfunder Realty Mogul raised $35m. Congratulations to both! Eventually, someone has to come up with the magic bullet that will change the world, right?
The revolution is coming. The revolution is here. The only constant is change.
Where do you see us headed as an industry?
By: Jeremy Neuer
Senior Vice President | CBRE New Jersey