From entertainment to transportation, technology has upended nearly every major industry — with one notable exception: real estate. Instead of disrupting the sector, the last generation of real estate technology companies primarilyÂ improved efficiencies of existing processes.Â Industry leaders Zillow/Trulia and LoopNet* helped us search for homes and commercial real estate better and faster, but they didnâ€™t significantly change what we buy or lease or from whom or how.
The next generation of real estate technology companies is taking a more expansive approach, dismantling existing systems and reimagining entirely new ones that address our growing demand for affordability, community and flexibility.
The increasing need for affordability
Home ownership has long been integral to the American dream, but for many young Americans today itâ€™s an unattainable dream.Â A third of millennials live at home, and as a cohort, they spend a greater share of their income on rent than previous generations did — about 45 percent during their first decade of work. This leaves little money left over for savings, much less forÂ home ownership,Â the largest financial expenditure of most peopleâ€™s lifetimes.
The increasing need for affordable housing is driving some creative tech-enabled solutions. One segment of startups is focused on making existing homes more affordable, especially in high-cost markets like New York and the Bay Area.Â Divvy helps consumers, many of them with low credit scores, rent-to-own homes, which are assessed for viability by a combination of contractors and machine learning.Â Landed,Â funded by the Chan Zuckerberg Initiative, helps educators afford homes in the communities in which they teach.Â Homeshare divides luxury apartments into multiple more-affordable units, and BungalowÂ takes a similar approach with houses. Both companies have built technology platforms to manage their tenant listings and to allocate tenant expenses and streamline payments.
Consumers arenâ€™t just craving affordability, theyâ€™re also seeking company.
Another segment of startups is aiming to reduce the costs of building new homes, such as withÂ modular, prefab housing toÂ reduce construction costs. Katerra, whichÂ just raised $865 million, is aiming to create a seamless, one-stop shop for commercial and residential development, managing the entire building process from design and sourcing through the completion of construction.Â Taking a â€œfull stackâ€� approach to every step of the building process should enable them to find efficiencies and reduce costs.
If the economy weakens, the need for more affordable housing will only grow, making these startups not only recession-proof but even recession-strong. Collectively, theyâ€™re helping Americans right-size their dreams to something more broadly attainable.
In search of community
Consumers arenâ€™t just craving affordability, theyâ€™re also seeking company. More than half of Americans feel lonely, and the youngest cohort in their late teens and early-to-mid-twenties are the loneliest of the bunch (followed closely by millennials). Millennials are the first generation to enter the workforce in the era of smartphones and laptops. While 24/7 connectivity enables us to work anywhere, anytime, it also creates expectations of working anywhere, anytime — and so many people do, bleeding the lines between work life and personal life. Longer work hours make community harder to build organically, so many millennials place value on employers and landlords who facilitate it for them.
Airbnb and WeWorkÂ were early to capitalize on the demand for community, with one changing how we travel and the other redefining the modern office space. Co-working companies like WeWork, as well more targeted providers likeÂ The Assembly*,Â The WingÂ andÂ The Riveter,Â offer speaker series, classes and other free member events aimed at building connections. Airbnb, once focused only on lodging, has broadened its platform to include community-building shared experiences.
Shared living and hospitality startups are also investing in community to attract and retain customers. StarCityÂ provides dorms for adults,Â CommonÂ andÂ HubHaus rent homes intended to be shared by roommates and OllieÂ offers luxury micro apartments in a co-living environment. These companies are leveraging technology to foster in-person connections. For example,Â Common uses Slack channelsÂ to communicate with and connect members, and HubHaus usesÂ roommate matching algorithms.
Within the hospitality sector,Â Selina offers a blended travel lodge, wellness and co-working platform geared toward creating community for travelers and remote workers, complete with high-tech beachside and jungle-side office spaces. Meanwhile, experience-driven lifestyle hotel companyÂ Life House* connects guests through onsite locally rooted food and beverage destinations and direct app-based social introductions to other travelers.
Modern life requires flexibility
Life can be unpredictable, especially for young people whoÂ tend to change jobs frequently. Short job tenures are especially common within the growingÂ gig economyÂ workforce.Â People who donâ€™t know how long their jobs will last donâ€™t want to be burdened with long-term lease commitments or furniture thatâ€™s nearly as expensive to move as it is to buy.
The next frontier in real estate technology is as boundless as it is exciting.
Companies likeÂ Feather,Â FernishÂ andÂ CasaOneÂ rent furniture to people seeking flexibility in their living environments. Among consumers ready to buy their homes but looking for some extra help,Â Knock,Â created byÂ Trulia founding team membersÂ and which recently raised a $400 million Series B, provides an end-to-end platform to enable home buyers to buy a new home before selling their old one. Also emphasizing flexibility,Â OpenDoor,Â valued at more than $2 billion, pioneered â€œinstant offersâ€� for homeowners looking to sell their homes quickly, leveraging algorithms to determine how much specific houses are worth.
Itâ€™s not just residents who seek flexible leases; many companies do as well, particularly those accommodating distributed employees or experiencing periods of uncertainty or rapid growth. To enable flexibility, several commercial real estate technology companies have developed platforms that balance pricing, capacity and demand.
Knotel, a “headquarters as a service” for companies with 100-300 employees, builds out and manages office spaces at lower risk and with more flexibility than is typically possible through commercial real estate leases, enabling tenants to quickly add or shrink office space as needed. WeWorkÂ allows members to pay only for the time periods when they come in to work. Taking flexibility to an even greater level,Â BreatherÂ lets workers rent rooms by the hour, day or month.
The next frontier in real estate technology is as boundless as it is exciting. A whole new generation of startups is designing innovative solutions from the ground up to address our growing demands for affordability, community and flexibility. In the process, theyâ€™re fundamentally reimagining how we live, work and play by transforming the modern workplace, leisure space and even our definition of home. We look forward to seeing — and experiencing — what lies ahead.
*Trinity Ventures portfolio company.
Source: Techcrunch Disrupt