A new Netflix film studio in London, a hunt for hundreds of locations to park takeaway food delivery scooters and e-bikes, and JLL launching a global short-term apartment rental business. These disparate transactions, all in the last month, might seem unrelated, but they are tied together by a broader trend upending commercial real estate.
All of these transactions or strategies stem from the worldwide digital revolution, which is creating entirely new real estate assets classes and opening up vast possibilities in traditional sectors. The fact that an ever-growing part of our lives happens in the online world is, ironically, reshaping the physical world.
The shift from physical retail to e-commerce has been happening for a couple of decades, but now entirely new types of real estate like food delivery hubs and dark kitchens have been thrown into the mix. Property that has existed for more than a century, like film studios, is now on the radar of investors, and data centres are also evolving and growing in popularity as a real estate asset class. Even the humble vacation rental is becoming an institutional real estate type because of the impact of digitisation.
Whereas once a real estate investor’s portfolio might have been dominated by offices, retail, multifamily and industrial, asset classes that are tiny today are likely to play a bigger role as the world changes and real estate investment tries to keep up. Buying into them is not simple, but has the potential to put you on the right side of historical change.
“Many of us in real estate thought very little about what Apple was doing or what the iPhone was going to offer until Steve Jobs decided to break the glass ceiling and come up with an incredible product,” Real Corp Capital founder Chris Kanwei said.
“No one really took note of what companies like Amazon, Apple or Alibaba were setting out to achieve, and the amount of disruption that they were going to bring into the space," he added. "But fast forward to where we are today, that needs to be ingrained in our thinking as part of our investment processes. Because we're still looking at incremental changes, but the current world we're in is a world of complete disruption, where things change incredibly fast.”
Below is a tour through four real estate sectors that could not exist in the non-digital world and some of the key trends shaping them right now.