Street Culture: Startups Bring the ‘Sharing Economy’ to Commercial Real Estate
Commercial real estate has so far been slow to adopt technology solutions, sticking with many of its traditional roles and processes to navigate a crowded, demanding market.
But new companies like PivotDesk, TheSquareFoot, Fundrise, and PeerRealty are starting to change that, filling gaps left by the limits inherent in long-established commercial real estate practices. The companies’ platforms are letting smaller investors in on big projects; efficiently finding small, short-term spaces for renters; and handling administrative work that usually needs multiple phone calls and emails to sort out. Some of these companies are also utilizing their own solutions, signaling an ongoing disruption in the commercial real estate industry.
Startups, for instance, often launch with a few people and then add funding and scale fast — this means they can often outgrow their current office space in less than a year.
“There’s an untapped sublease market that no one really knows how to navigate,” said Michael Euperio, vice president of operations at PivotDesk. “Our target customers are folks who have either graduated from working from home or coworking spots but are not quite ready to sign up for a three- to five-year lease, or just don’t want that liability over their head and need a transition space as they scale.”
A shift is happening in that sublease market, but slowly. Euperio said that often PivotDesk employees work more with the company’s platform than the clients do. Commercial real estate giants CBRE, JLL, Cushman & Wakefield, and Colliers have expressed interest in partnering with PivotDesk. At the same time, many landlords are accustomed to longer-term leases, and aren’t interested in renting out the in-between space that startups need.
“A lot of our clients really want the one-year deal, but that’s not how the world works,” said Jonathan Wasserstrum, co-founder and CEO at TheSquareFoot. “These landlords have been in real estate for a while. Just because you raised $30 million yesterday, that doesn’t impress the landlord. And because the market’s so tight, they really have that power. If you don’t like it, go someplace else.”
PivotDesk sees some success in those short-term leases, finding leased space for as short a term as six months. The company previously shared space with its PR firm, and currently shares an open-space office with its design firm, Emerson Stone, in Boulder, Colo.
“Andy Stone, he was an independent consultant when he first started,” Euperio said. “He had one desk in here right before I started and about six or seven months later he met his current partner, Jamie Emerson. Now they’ve grown to about seven or eight people. It’s nice having them here in the office because they do design work for us. That’s what we encourage in a lot of our host-guest matches, synergies between folks sharing space.”
Both PivotDesk and TheSquareFoot are growing rapidly, employing 19 and 20 workers respectively in January. PivotDesk is currently hiring for three positions and TheSquareFoot anticipates growing to 35 people by June.
Like most startups, Wasserstrum said that TheSquareFoot is looking for people who fit in well with everyone else, such as the company’s new head of marketing, Chris Walker.
“People say that someone hit the ground running, well the word I use is sprinting,” Wasserstrum said. “Chris hit the ground sprinting. He’s working well with different teams, with three big parts of the business. If each of those aren’t playing well together, we start seeing big problems.”
Marketing, technology, and transactions are the three parts, and in a five-year-old, 20-person company, that means lots of problems to solve.
“As my dad would say, the important thing to know is where the rocks in the river are,” Wasserstrum said. “When you’re going through the initial building at a startup, you don’t know where the rocks are. Depending on what the particular challenge is, there are just completely different rocks. With marketing challenges, there are certain rocks to think about as you navigate that. On the transaction side, there’s a whole other set of rocks.”
Wasserstrum said that looking back, there is nothing specific he would approach differently – but he would warn himself about just how many rocks exist in the river for startups.
“There’s always something new,” he said. “It;s what makes my job the best job in the world. There’s always a new challenge to work through and think about, ‘How do we solve this problem?’ There is always going to be a new problem, and you have to think, when faced with one, ‘Hey, this is awesome.’ You have to want to solve problems, because there are an infinite number of them.”
April Nowicki is a contributor to Street Fight.