Sharing Economy Brings Shifting Priorities to CRE, Summit Panelists Say
With the sharing economy seeping into every corner of American life – including commercial real estate – one moderator at DLA Piper’s 2016 Global Real Estate Summit kicked off a panel discussion with what amounted to a rhetorical question.
“I would guess, if we asked people to stand who took an Uber to the event today, the response would be overwhelming,” said Jeffrey Shapack, CEO of Shapack Partners, who guided the panel discussion titled “The Sharing Economy: The Intersection Between Innovation and Space,” on May 3, 2016, in Chicago.
The volume of heads nodding at Shapack’s statement was remarkable, considering that five years ago most attendees likely hadn’t heard of the now-ubiquitous car-sharing service. But today the sharing economy is on the minds of many CRE executives; in DLA Piper’s State of the Market Survey, 79 percent of respondents said they were at least considering efforts to address the sharing economy and broader technology trends.
The panel included Kyle Barker, vice president and director of development-international for co-working company WeWork. In March, the company’s valuation reached a reported $16 billion. Pointing to WeWork’s high retention rates, Barker said the company’s large membership – which allows the company to offer members such benefits as discounted health insurance – was the biggest barrier to replicating his company’s success. WeWork has been able to leverage “Fortune 500 benefits for your fortunate five employees,” Barker said.
“The sharing economy is really the fundamental basis for a lot of what we do,” Barker said. “In our business model, being able to share resources and think of our business as a ‘we’ is very fundamental to how we interact and make our members more successful.”
Barker and the other panelists were asked whether a company like Tishman Speyer – represented on the panel by Senior Managing Director Michael P.M. Spies – could start a service that competes with WeWork. Barker said he wouldn’t blame the worldwide real estate building and operating company for trying, but said WeWork’s ability to leverage its global network would put upstart competitors at a disadvantage.
Spies said certain aspects of the sharing economy are changing the industry. Flexibility is more important than ever, he said, and buildings should no longer be thought of as “single use.”
“You can access anything, anywhere,” he said. “Buildings that don’t have the ability to accommodate and access anything anywhere are not really future-proofed.”
The panelists agreed that brands play a big role in the sharing economy. Jodie McLean, CEO of EDENS, which develops, owns and operates community-oriented shopping places across the country, said retailers must serve as the “curator and protector of the consumer.”
“In retail, I would tell you that the sharing economy is really coming down to trust,” she said. McLean noted later that as the sharing economy and e-commerce grow, the retail sector must “start thinking about how to use our space to bring people together again.”
The panelists were asked whether Millennials’ income levels would change the degree to which they engage in the sharing economy – for instance, whether someone making $75,000 a year would be more likely to use shared-economy services than someone earning $2.5 million. Barker said that for Millennials especially, good products could drift across the salary spectrum, and McLean argued that time efficiency likely has value for all income types.
Spies added, “I don’t think necessarily it will be driven by how much money someone makes, but how resourceful they are.”