Do notable global firms like Airbnb, WeWork, and Uber have any possibilities for existing real estate businesses? Steve Weikal from the MIT Center for Real Estate says that it might be helpful to investigate various cultural and technological shifts to get some answers. At the recent IREM 2017 Global Summit, he actively hosted a discussion on something he refers to as “realty fracking”.
What is Realty Fracking?
According to Weikal, real-estate fracking refers to the act of utilizing technology for breaking your real estate property and monetizing it in a completely new way. You could compare this process to the act of injecting high-pressure fluids into a rock formation in order to release the oil contained in them.
Realty fracking, however, requires something more than just innovative entrepreneurs. It is critical for the society to transform their old beliefs and attitudes and adopt a fresh perspective on doing things. Remember how it seemed rather strange to ride in someone else’s car, an unknown person, a few years back? But today, it is as normal as breathing for most people. This transformation in attitude and habit has happened over a period of time.
Jason Fudin is the CEO of WhyHotel, a Washington-based company that works to monetize unoccupied units in newly developed luxury apartments and transforms them into chic pop-up hotels. Similar to how some neighbors had objections to adjoining residential properties being given to Airbnb, there are people who are uncomfortable with having guests in the new apartment building for an overnight stay. The good news is that if executed properly, it is possible for neighbors, developers, and potential clients to get used to the new concept.
Benefits of cost reduction
Convene, a New-York based company started operation in the period after the recession. At this time, there were numerous corporations shedding space for reducing costs. Even after recovery from the recession, several companies realized that most of the space that was given up, particularly the huge conference rooms, required significant maintenance costs and remained unused for the larger part of the year. Convene and other similar firms then started building amenity centers that served entire buildings and the tenants no longer had to provide conference centers, meeting rooms, cafes and various other facilities which are now needed for attracting talented employees.
Convene’s clients primarily include big organizations and it recently started offering its services to Willis Tower in Chicago. This is the biggest office property in the city.