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The next frontier in real estate technology – TechCrunch



From entertainment to transportation, technology has upgraded every major industry ̵

1; with one notable exception: real estate. Instead of disrupting the sector, the last generation of real estate technology companies primarily improved efficiencies of existing processes. Industry leaders Zillow / Trulia and LoopNet * helped us search for homes and commercial real estate better and faster, but they didn'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 it's an unattainable dream. A third of millennials live at home, and as a cohort, they spend a greater share of their income on rent than previous generations – about 45 percent during their first decade of work. This leaves little money left over for savings, much less for home ownership, the largest financial expenditure of most people'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. 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. Landed, funded by the Chan Zuckerberg Initiative, helps educators afford homes in the communities they teach. Homeshare divides luxury apartments into multiple more-affordable units, and Bungalow takes a similar approach with houses. Both companies have built technology platforms to manage their tenant listings and to allocate expenses and streamline payments.

Consumers are just craving affordability, they are also seeking company.

Another segment of startups is to reduce the costs of building new homes, such as with modular, prefab housing to reduce construction costs. Katerra, which just raised $ 865 million, is aimed at creating a seamless, one-stop shop for commercial and residential development, managing the entire building process from design and sourcing through the completion of construction. Taking a full stack approach to every step of the building process should enable them to find efficiency and reduce costs.

If the economy weakens, the need for more affordable housing will grow, making these startups not only recession-proof but even recession-strong. Collectively, they are helping Americans right to something more broadly attainable

In search of community

Consumers are just craving affordability, they'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 builds organically, so many millennials place value on employers and landlords who facilitate it for them.

Airbnb and WeWork 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 as more targeted providers like The Assembly *, The Wing and The Riveter offer speaker series, classes and other free member events aimed at building connections. 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. StarCity provides dorms for adults, common and hub homes rented to be shared by roommates and Ollie offers luxury micro apartments in a co-living environment. These companies are supplying technology to foster in-person connections. For example, Common uses Slack channels to communicate with and connect members, and HubHaus uses roommate matching algorithms.

Within the hospitality sector, Selina offers a blended travel lodge, wellness and co-working platform geared toward creating a community for travelers and remote workers, complete with high-tech beachside and jungle-side office spaces. Life House * connects guests through 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 who tend to change jobs frequently. Short job tenures are especially common within the growing gig economy workforce. People who don't know how long their jobs will last do not want to be burdened with long-term lease commitments or furniture that is almost as expensive to move as it is to buy

The next frontier in real estate technology is as boundless as it is exciting.

Companies like Feather, Fernish and CasaOne rent furniture for people seeking flexibility in their living environments. Among consumers ready to buy their homes but looking for some extra help, Knock, created by Trulia founding team members who 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, OpenDoor, valued at more than $ 2 billion, pioneered "instant offers" for homeowners looking to sell their homes quickly, delivering algorithms to determine how much specific houses are worth.

It's not just residents who seek flexible leases; many companies 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 possible through commercial real estate leases, enabling tenants to quickly add or shrink office space as needed. WeWork allows members to pay only for the time periods when they come in to work. Taking flexibility to a even greater level, Breather 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, they are fundamentally reimagining how we live, work and play at 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.


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