London Living - Sharing is Caring

As the sharing economy continues to grow, this life lesson certainly feels like one that Millennials have picked up and run with. But what are the opportunities in real estate for this relatively new way of interacting with products and services? Jessica Mueller, Analyst at DTZ Investors considers some options.

In last week’s LondonLiving I looked at why the value of ownership is decreasing and how the renting trend is growing in the younger generations. Over the last few years, the ‘shared economy’ has been mentioned countless times in meetings and presentations and there’s a good reason for it – technological advancement has given us the ability to become more efficient with our products and services. The sharing economy is an economical model which is defined as ‘a peer-to-peer based activity of acquiring, providing or sharing access to goods and services’, and is often facilitated by a community based online platform. This has the bases to cover the needs of younger generations.

This type of transaction has become fashionable over the years for Generation Rent, with the introduction of platforms to: buy time in someone’s house (Airbnb); buy peoples clothes (Depop); borrow someone’s car (Drivy) and even borrow someone’s pet (Borrow My Doggy). These platforms create a sense of community with the members whilst also creating a form of revenue for them.

Airbnb has become a great way of being efficient with residential real estate, especially for people owning holiday homes or for people who have a second home they move to for 6 months of the year. Both parties benefit from the platform, by either finding a comfortable, well located, modern flat/house or by earning some cash while your home is empty.

Drivy is one of the newest platforms, advertising all over London. The concept is the same as Airbnb but for your car instead and if it’s not something you use regularly, why not share it with someone else? Zipcar was developed before this, which is based on a business to consumer model whereas Drivy has established itself as a platform for peer to peer activity, which tends to build more flexibility, convenience and has a community touch.

Sharing or renting out our possessions is not something new, technology has just changed the way we do it. Jumble sales, B&B’s and renting cars have existed for decades, but these modern platforms have increased the ability to advertise and widen each person’s market. The population is also becoming more environmentally conscious and the sharing economy is a great way to be more efficient with the goods we own. It’s creating great opportunities in cities like London where space is scarce. Most of the platforms which are successful at the moment are typically peer to peer, but focusing on real estate, there must be more opportunities from business to customer.

The office sector has introduced co-working, which is a much more efficient use of space, the providers have simplified leases so that you can sign up quickly. This could be worked through to retail units and warehouses, for retailers or small companies starting out ‘sharing’ vacant retail or warehouse space for the short term could be a be great way for them to test their model. It would create income for the vacant property which could turn into a full lease if the location and building worked for the temporary tenant. Maybe it is better to let companies have a trial run when they invest into a new area?

There are many ways we might see this play out across all sectors, but one thing is for sure, sharing is both caring and cost saving, two things that Millennials demand from their lives, and landlords should be looking for new opportunities to incorporate this approach into their real estate portfolios.