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THE SHARING ECONOMY SHIFT

The sharing economy eliminates market inefficiencies. How does that affect you?

Consumer habits are shifting at a fast pace, disrupting our economy on all sorts of levels. Take the way we use space, for instance, or goods like cars, rental holiday homes and even music. With the rise of providers in the sharing economy, established industry players are having a hard time keeping abreast. And it’s all happening at lightning speed.

Sharing and coworking trends provide a more cost-friendly approach for consumers, while tapping into the demand for greater access. The short-term sharing of homes and vehicles is evolving into a pattern of longer-term sharing of retail space, flats and offices.

THERE’S THE TREND. AND NOW WHAT?

Companies pioneering in the sharing economy are thriving, with Uber hitting a record 85 billion valuation and Airbnb having such an impact that new laws have to be drafted to regulate its activities.

The trend is irreversible, as it offers a convenient answer to consumers’ needs. So where to from here? What are the ramifications and what lessons are there to be learned? Delve into the world of the sharing economy – and find out what’s in it for you as a real estate investor.

SHARING SOME VALUABLE INSIGHTS

The sharing shift is having an impressive impact on a wide range of industries. Ridesharing (e.g. Cambio, Poppy, BlablaCar, Uber, …) disrupted traditional car and taxi services, resulting in a significant decrease in revenue for conventional service providers. Ridesharing apps, on the other hand, have become increasingly popular and have established a solid foundation for future growth – or so it seems. But also micro-mobility knows a steep rise.

And what about the music industry? Music streaming services (Spotify, Soundcloud, Deezer) and video (Netflix, Hulu,…) may have initially pushed the conventional music industry out of the equation, but it ultimately created new revenue streams generating high growth. Traditional music sales have dropped, while revenue growth in the industry has peaked. Revenue from recorded music now largely stems from streaming services.

Finally, the hotel industry seems to have survived the rise of homesharing quite well. Global hotel brands continue to grow steadily, despite the arrival of actors like Airbnb on the market. Read also our Hotel report.

SHARING REAL ESTATE: IMPACT AND POSSIBILITIES

The industries mentioned above have reached a degree of maturation – growth is still likely, but the disruption stage is almost over. Younger industries still have that journey ahead of them. What future might be in store for them?

It’s a popular buzzword, but flexible office solutions have been around for decades. Traditional leases are often out of the reach of small businesses and freelancers, due to their cost and a lack of credit. As for larger corporations they can also benefit from coworking spaces, since these provide opportunities to leverage opensource talent networks, manage unpredictable headcounts and foster community engagement. Coworking is definitely here to stay and it’s a great addition to you portfolio as an investor.

Coliving

Coliving is a trend on the rise and seen as a way-of-living for the future. The sense of community and cost relief it offers are great benefits. For now, however, the trend doesn’t seem to be launching as predicted. One could say it’s still in the early stages of adoption and development, and the trend may prove unstoppable given the need to build and live more centrally, occupying fewer square metres.

pop-up stores

This is the best way for online brands to both create high-street visibility and build a human connection with new customers. For larger brands, it’s a gateway for testing new shop concepts and occupying space in high-traffic locations.

food halls

For dining out, the sharing shift involves sharing amenities like food courts and kitchens. Here, food service providers enjoy higher traffic, while customers are charmed by the wide range of options and the unique atmosphere that is often key to this kind of location.

warehouse and distribution

Shared services to assist companies with their warehousing and distribution needs have long been provided by third-party logistics providers (3PL’s). Over the past few years, different types of flexible solutions have emerged, with an emphasis on cost saving for tenants in ecommerce, retail distribution, inventory and overflow space. Contact our team if you are looking for warehouse solutions.

servers and cloud storage

Colocation has become a more significant model in the data industry, where companies can lease space and services for their computing needs. It’s a cost-efficient solution, without the hassle of managing IT services in house.

CONCLUSION: THE SHARING SHIFT IS HERE TO STAY

When looking at your real estate investment portfolio, you’d be wise to think about integrating properties and opportunities specific to the sharing economy. These flexible options blur the boundaries between living, working, travelling and shopping, a trend that fully meets consumers’ current needs and expectations. Occupiers and investors have a great opportunity to jump onto the bandwagon, diversify their portfolio and strategy, and to get their fair share of the sharing economy.

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