People are going back to the office — except in the Bay Area

Over the past decade, startups migrated north from Silicon Valley to make San Francisco the country’s hottest tech hub. The streets of the city were bustling as throngs of — mostly tech — workers walked or caught Ubers to their next meetings. 

Then the COVID-19 pandemic hit, and things slid to a halt. Now, more than two years and several vaccines later, San Francisco’s office scene has still not rebounded and the city’s streets remain eerily quiet. 

If you think it’s even more sparse than other cities you’ve visited lately, you’re right. San Francisco is seeing the lowest attendance rates for office employees in the United States, according to Colin Yasukochi, executive director of real estate brokerage CBRE’s Tech Insights Center. Silicon Valley is not far behind.

Turns out the region’s heavy reliance on tech workers has also slowed down its recovery, with many local employees continuing to insist on remote work, and employers grudgingly allowing it. 

Tech companies, said Yasukochi, have “been the most accommodating in terms of offering flexibility and not requiring their employees to come back for any number of days. Some certainly have [asked staffers to come back]. But what their policy is and what their compliance is are two different things.”

He added: “They’re saying you need to be back three days a week, and if you’re only back two days of the week, or one day a week, or not at all, what are they doing to enforce that? And the answer to that question is, not a lot at the moment.”

Why tiptoe around the issue? Well, despite the fact that the tech industry has seen tens of thousands of workers laid off in recent months, Yasukochi believes that a still-strong labor market that provides employees with plenty of options has “a disproportionate amount of influence” over remote work policies. 

As he explained it, “It’s still very difficult to hire, unemployment remains pretty low, tech workers have been traditionally difficult to hire for, and so many employers are worried about accelerating the normal turnover that they already have.”

Bottom line, they’re scared. And it’s not just startups that are worried about losing employees. Some of the biggest and most powerful companies have backed off, or at least delayed their return to work plans, because of pushback they received from their employee base. Examples include Apple and Google, among others.

So just how low are attendance rates for office workers in San Francisco? 

According to Kastle Access Control, in mid-to-late August, San Jose had the lowest attendance rate at 34.8% compared to pre-pandemic levels. San Francisco was not too far behind, at 38.4%, including the East Bay and the Peninsula. By contrast, emerging tech hub Austin’s attendance rate stood at 58.5% in mid-August.

Supply way up, rents only slightly down

Despite so few workers actually going in to the office and the amount of supply on the market in SF having gone up dramatically, rent prices are only down 13.1% since the first quarter of 2020 — from an all-time high of $88.40 per square foot annually then to $76.86 in the second quarter of 2022, according to Yasukochi. 

It’s astonishing, considering that San Francisco’s office market was 4% vacant. It’s now 24% vacant.

Meanwhile, vacancy rates in San Jose stood at 6% at the end of 2019. They are now at 12.5%, which is “not very high relative to the city,” noted Yasukochi.  And office rents have remained the same compared to the end of 2019.

If you’re curious why San Jose is faring better than its northern neighbor, Yasukochi says it owes to the types of businesses in both cities. While San Jose is home to stalwart businesses like eBay and PayPal that were established over two decades ago, San Francisco has a higher concentration of less established startups that had a harder time surviving and thriving in the pandemic, from companies involved in mobility and transportation to retail to restaurants.

“When there was a shutdown, business went south, and though they have since recovered, many have laid off and reduced office space,” he told TechCrunch. “And also when many companies decided they were going to go remote first, they needed a lot less office space than before.”

Either way, employees still have the upper hand for now. But things will gradually change, Yasukochi believes.

“The pendulum tends to swing in different directions based on different conditions in the marketplace,” he said. “We will eventually start to see more influence in the hands of employers as the labor market may be loosened up a little bit, although there’s no sense that the labor market is going to change dramatically anytime soon.”

In the meantime, the question on many people’s minds is — with an ongoing housing shortage and an oversupply of office inventory — why more office buildings aren’t being converted into residential units.

Yasukochi suggests some space could potentially be converted in the future, but that right now, it’s too bitter a prospect for commercial building owners.

“We’re not anywhere close to that yet because the values of these buildings need to come down dramatically,” Yasukochi said. “If you bought your building for a certain price — say $700 or $1,000 a square foot, you’re not going to want to sell for $200 or $300 a square foot to make a residential conversion feasible.”

“It’s completely logical to put it to more productive use, but tell that to the person who paid for it — that they have to take a loss, right?”

Maybe landlords have reason to hold out hope. Not all employers in San Francisco are letting employees mostly work from home.

The Information recently reported that startup Merge “has chosen to go all in on in-person work.” The company — which aims to give B2B enterprises a unified API to access data from dozens of HR, payroll, recruiting and accounting platforms — is mandating that all its employees be in the office five days a week, a rarity in the Bay Area. 

Meanwhile, Axios recently reported on customer service startup Front “welcoming employees back into its Mid Market headquarters in late June.”

Some 75% of the company’s 450 employees are required, unless exempted, to come in to the office on Tuesdays and Thursdays. The remaining 25% “will either be in the office full-time, completely remote or mostly remote,” reported Axios.

Chief people officer Ashley Alexander of Front told TechCrunch that the nine-year-old company — originally founded in France — has had an office in San Francisco for about eight years.

Front reopened its U.S. offices in March 2021 on a voluntary basis. After “extensively” surveying its team to hear what they wanted in a new post-COVID work structure, Front determined it made the most sense to require people to come into the office on the same days, even if not every day.

Image Credits: Front

“We wanted to be deliberate about this because having just a handful of people spread across a big empty office doesn’t achieve what our team is looking for. We want to ensure that on days when employees come to the office, they’re feeling the bustle, energy  and warmth of their team around them,” she said. “If everyone could select their own days to come in, we might have small groups every day of the week — and employees that didn’t organize when to come in together might never get to meet.”

Still, she acknowledged that Front is only a couple of months in on its new approach, and is “monitoring the return to office process closely” to see how it will need to adapt and adjust. 

Just how this tug of war will play out over time remains to be seen.

People are going back to the office — except in the Bay Area by Mary Ann Azevedo originally published on TechCrunch

Keyway secures funding to buy property from a small business owner and lease it back to them

Keyway, a startup that buys property from small and medium-sized business owners and then leases it back to them, has secured $70 million in debt financing on the heels of a $15 million equity raise.

Founded in September 2020, the New York-based company – which was previously named Unlock – says it uses data science to “identify, underwrite and close transactions 10x faster than incumbents.” It describes itself as a “managed marketplace.”

Keyway’s first product is a sale-leaseback offering for business owners. The company buys an owner’s building and then signs a long term contract with him/her.  CEO and co-founder Matias Recchia says this allows the business owners to free up capital to expand their business while staying in the same location.

“We close transactions with 100% cash payments in 4 weeks or less with no fees,” he said. “Generally, sale-leasebacks on the long tail of commercial real estate take 13 months to close, with 10-15% of the transactions go towards fees. And 20% of transactions fall through because the buyer didn’t have guaranteed financing.”

So far, Keyway has entered into contracts to acquire over $50 million in properties in several states including Georgia and Texas. Recchia estimates the company will transact “at least $200 million” by year’s end.

“We transacted more in February of this year than in all of last year compared,” he said. Keyway currently has 15 customers with closed transactions and an additional 100 customers in its short-term pipeline. Recchia said the company is initially focused on the medical sector with plans to expand to dental and veterinarian businesses.

The $70 million in debt financing – which was led by Cross River, i80 Group and several community banks – will go toward securing more property across the U.S. Canvas Ventures led the company’s seed round in late 2021, with participation from Montage Ventures, FJ Labs, and Crosscut.

“We plan to scale up the acquisition of portfolios dramatically over the next months,” Recchia said. “In addition, we are launching an expansion product to help business owners expand to a new location. We will acquire a new location for them and finance buildout costs and sign a long-term lease for them.”

Keyway says it is focusing on the “under $20 million in assets” segment, which it feels is underserved. The company says the majority of real estate investment trusts (REITS) focus on deals above $10 million dollars, but properties valued at less than that price account for one-third of the U.S. commercial real estate value.

“There is a large opportunity within the CRE industry for a tech enabled capital solution to streamline underwriting processes and to shorten transaction timelines,” said Peter Frank at i80 Group, in a written statement. Keyway claims that by using data and machine learning it can reduce closing time by 90% and fees by 50%.

There is some concern whether the sales-leaseback model is ultimately fair to the business owner in that the property is no longer considered an asset, which may impact his or her ability to obtain future credit lines or loans. A leaseback also means that a seller can’t deduct property depreciation, real estate taxes and mortgage interest from his or her tax liability. Still, the model does seem to be growing in popularity. TechCrunch recently reported on withco raising $32 million for a similar offering with the biggest difference being that it buys properties on behalf of a business owner — rather than from them — and then rents it back to them, giving them the option to buy it back from them in the future.  EasyKnock, a startup that buys homes and rents them back to sellers, recently raised $57.2 million in Series C funding. 

Recchia said that Keyway is “able to include buy-back provisions” in its sale-leaseback contracts.

“We see business owners as long term partners and look to build creative solutions that fit their short term and long term goals and can adapt to changing environments,” he said.

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The return of neighborhood retail and other surprising real estate trends

The pandemic made remote work and on-demand delivery normal far faster than anyone expected. Today, as the world beings to emerge from the pandemic, location doesn’t matter like it did a year ago.

As shocking as it sounds, we could be entering a much better era for small, local businesses.

Modern society produced superstar cities filled with skyscraper office and residential buildings. Now, the populations that once thrived in these urban centers are deciding how to repurpose them for a post-pandemic world.

I caught up with ten top investors who focus on real estate property technology to get a sense of how they’re betting on the future.

They are optimistic overall, because the typically glacial real estate industry now sees proptech as essential to its future. However, they are the most unsure about the office sector, at least as we knew the concept before the pandemic.

They expect remote work to be part of the future in a significant way and foresee ongoing high housing demand in the suburbs and smaller cities. They are especially positive about fintech and SaaS products focused on areas like single-family home sales and rentals. Many are continuing to invest in big cities, but around alternative housing (co-living, accessory dwelling units) and climate-related concepts.

Most surprisingly, some investors are actually excited about physical retail. I examined the latest evidence and found myself agreeing. As shocking as it sounds, we could be entering a much better era for small, local businesses. Details farther down.

(And before we dig in below, please note that Extra Crunch subscribers can separately read the people cited below responding fully in their own words, with lots of great information I wasn’t able to explore. One other thing, we did suggest they mention their own investments to illustrate what they believe about the sector. )

When the office is more of a luxury

The pandemic combined with existing trends has made office renters “more akin to a consumer of a luxury product,” explains Clelia Warburg Peters, a venture partner at Bain Capital Ventures and long-time proptech investor and real estate operator.

Landlords who have “largely been in a position of power since the 1950s” now have to put the customer first, she says. The “best landlords will recognize that they are going to be under pressure to shift from simply providing a physical space, to helping provide tenants with a multichannel work experience.”

This includes tangible additional services like software and hardware for managing employees as they travel between various office locations. But the market today also dictates a new attitude. “These assets will need to be provided in the context of a much more human relationship, focusing on serving the needs of tenants,” she says. “As lease terms inevitably shorten, tenants will need to be courted and supported in a much more active way than they have been in the past.”

The changes in office space may be more favorable to the supply side in suburban areas.

“Companies are going to have to offer employees space in an urban headquarters,” Zach Aarons of Metaprop tells me (his firm just published a very positive report on the sector). But many will also want to offer ”some sort of office alternative in the suburbs so the worker can leave home sometimes but not have to take a one-hour train ride to get to the office when needed.”

“If we were still purchasing hard real estate assets like many of us on the MetaProp team used to do in previous careers,” he added, “we would be looking aggressively to purchase suburban office inventory.”

Most people thought that remote work was here for good and would impact the nature of office space in the future.

Adam Demuyakor, co-founder and managing director of Wilshire Lane Partners, is generally bullish on big cities, but he notes that startups themselves are already untethering from specific places. This is a key leading indicator, in TechCrunch’s opinion.

“Something that has been interesting to watch over the past year is how startups themselves have begun to evolve due to newfound geographic flexibility from the pandemic,” he observes. “Previously, startups (especially real-estate-related startups) felt pressure to be ‘headquartered’ near where their customers, prospective capital sources and pools of talent were located. However, we’ve seen this change over the past few months.”

In fact, a recent report by my former colleague Kim-Mai Cutler, now a partner at Initialized Capital, highlights these trends in a regular survey of its portfolio companies. When the pandemic began, the Bay Area was still the number one place that founders said they’d start a company. Today, remote-first is in first place. Meanwhile, the portfolio companies are either going toward remote-first or a hub-and-spoke model of a smaller headquarters and more far-flung offices. Those who maintain some sort of office say they will require significantly less than five days a week. Nearly two-thirds of respondents said they would also not adjust salaries based on location!

That’s a small sample but as Demuyakor says, “Startups (a) are frequently the most adept at utilizing the types of technology necessary for effective remote work and (b) simultaneously have to compete ferociously for talent. As such, I think we may be able to infer what the ‘future of work’ may look like as we observe what startups choose to do as the pandemic passes.”

Some landlords (with big loans) and large cities (with big budgets) are making a push to repopulate their offices quickly, and some large companies are loading up on office space or reaffirming their commitments to current locations.

Maybe efforts like these, plus the natural desire to network live, will bring back the industry clusters and pull everyone back to the old geographies? Maybe something close to 100% of what we saw before? What does that look like?

In such a scenario, some pandemic-era changes will persist, says Christopher Yip, a partner and managing director at RET Ventures. “A populace that has become sensitized to public health considerations may well gravitate toward solo forms of transportation (cars and bicycles) instead of mass transit, and parking-related and bike-sharing tech tools may likely thrive. From a real estate management perspective, technology that makes high-density living more comfortable and healthier will also increase, as consumers will become increasingly attracted to touchless technology and tools that facilitate self-leasing.”

Here’s the other scenario that he lays out “if a large number of jobs remain fully remote.”

“In theory, retail and office properties could structurally continue to suffer, and there has been some talk from government officials in certain regions about converting office properties into affordable housing,” he details. “If market-rate vacancies in cities remain high, there will be increasing demand for short-term rental platforms like Airbnb and Kasa, which enable landlords to gain revenue from hotel-type stays even in a market where residential demand is not strong.”

Vik Chawla, a partner at Fifth Wall, sketches out a middle-of-the-road scenario. “We believe that major cities will continue to attract knowledge workers and top talent post-pandemic,” he says, “though we expect remote work to become an increasingly critical component to the work economy, meaning that there will be increased flexibility in terms of time spent in the office versus elsewhere.”

This would still mean some sort of long-term price decline. “At a city level, this means that rents should taper relative to pre-pandemic levels due to lesser demand,” he believes. “That said, the real estate ecosystems in cities that have experienced growth throughout the pandemic will enter a period of innovation, and with it, see an increase in housing density, ADUs and modular building techniques.”

Andrew Ackerman, managing director of UrbanTech for DreamIt Ventures, also sees a gentle deflation of commercial office prices over time, followed by some complex space-management questions.

“[T]he return to work will likely result in more flexible work arrangements rather than the demise of the office which, as leases renew over the next 5-10 years, will lead to a gradual meaningful-but-not-catastrophic reduction in the demand for office space. The question is, what then happens to the excess office space?”

“Office to residential conversion is tricky,” he elaborates. “Layout is a major constraint. Many modern offices have deep, windowless interior space that is hard to repurpose. But even with narrow layouts, the structural elements are often in the wrong place. Drilling thousands of holes in structural concrete so you can move plumbing and gas to the right places is a heavy lift.”

This might just lead to new types of still-valuable uses? “One of the areas that I’m still investigating is whether co-living or microunits might be a more attractive conversion option. Turning an office break room and interior bullpens into a shared kitchen, dining area, and recreation or work flexspace may be a better way to repurpose deep interior space without a very costly retrofit. And if you don’t have to reroute too much plumbing, it may even be possible to convert (and convert back!) individual floors as market demand for office and residential space fluctuates over time.”

All respondents saw proptech being a core part of the next era of big cities (of course), however bullish or bearish they may be about the office itself.

A new equilibrium for residential

Housing availability has become even more limited in most places during the pandemic, with many more people looking to buy and fewer people wanting to sell. This is even though the previously hottest cities have seen major rental price drops.

Demuyakor of Wilshire Lane is staying focused on the housing problem, and solutions to it like co-living. “Despite the pandemic, it is still difficult for millennials and Gen Z to afford to live in the most expensive cities (New York, San Francisco, Los Angeles, etc.) at current wage levels,” he says. “As such, we believe that we will continue to see demand for products and solutions that can continue to help alleviate costs and burdens of living in major cities. For example, we think that at its core, co-living is an economic decision. Solutions that continue to help people live where they want to live more easily (ADUs are another example of this) will continue to thrive.”

Casey Berman, managing director and general partner of Camber Creek, thinks that “cities will continue to attract people to live, work and play because they offer density and opportunities for experiences that people crave even more now. To the extent all of this is true, there will be renewed demand for urban spaces and properties to take advantage of that demand.”

He says that the firm has been investing in products to make dense living safer and more convenient and “we expect those solutions will become increasingly popular. Flex allows tenants to pay rent online in easier-to-manage installments and in the process makes it more likely that landlords will receive payment on time. Latch’s access control devices are in one out of 10 new multifamily buildings. A lot of people purchased a pet over the past year. PetScreening makes it easy to manage pet records and confirm when a pet is a service or support animal.”

Robin Godenrath and Julian Roeoes, partners at Picus Capital, generally share this viewpoint and describe how new living arrangements in cities could allow for more radical changes to how people live.

“Flexible living solutions will allow remote workers to spend time across different cities with a fully managed, affordable and safe rental option for short-to-long-term urban living,” he says, “while commercial conversion to residential will play a key role in driving down per square foot prices enabling long-term returning residents to afford less densified space. Although co-living densifies multifamily buildings, we believe it will remain an interesting sector as the continued shift to remote work will make living communities increasingly important considering the reduced social interaction on the job.”

But modern proptech is also making the suburbs and beyond more appealing in the long run, according to many. Great new technologies for living can exist anywhere you are.

Proptech has also helped fuel the new suburban boom. “There is an ongoing trend of reverse urban migration causing an uptick in the demand for suburban-style living,” he says. “Proptech companies have played a significant role in enabling this shift, specifically via digitizing the home buying, selling and renting transaction processes (e.g., iBuyers, alternative financing models and tech-enabled brokerages). Additionally, proptech companies have played a key role in reducing physical interactions through remote appraisals, 3D/VR viewings and digital communications thus enabling homebuyers and sellers to efficiently and safely transact throughout the pandemic.”

Ultimately, the same technologies that could make cities more affordable will also help out in the suburbs. “We strongly believe that the acceleration of the digitalization of the home transaction process coupled with the significant increase in demand for suburban-style housing and evolving buyer profiles (e.g., tech-savvy millennials) opens up a multitude of opportunities for proptech to significantly impact suburban living across construction, access and lifestyle. This includes companies focusing on built-to-rent developments, modular homebuilding, affordable housing, community building and digital amenities.

Many investors who we talked to highlighted the single-family rental market trend. Here’s Christopher Yip again from RET.

“One of the unheralded trends of the past decade has been the rise of the single-family rental (SFR) market,” he says “with a significant number of major investors moving into this asset class. The SFR space is poised to benefit from the migration from cities, and the tech that supports SFR will likely have positive ripple effects across the industry.”

“SFR portfolios are particularly challenging to operate efficiently and at scale; compared with a multifamily property, they have more distinct unit layouts and are more spread out geographically,” he explains. “Technology has the ability to streamline operations and maintenance for SFR operators, with smart home tools like SmartRent facilitating self-touring and management of these distributed portfolios. We’re bullish on this space and are keeping a close eye on proptech tools that serve this market.”

Andrew Ackerman of DreamIt agrees. “Single-family has been neglected, slowly growing more interesting both from an asset and proptech perspective for some time. For example, we invested in startups like NestEgg and Abode who service this ecosystem … prior to the pandemic. COVID has been good to these startups and brought more attention to the opportunities in single-family in general.”

Stonly Baptiste and Shaun Abrahamson, co-founders of, already see a world of options unfolding across geographies, with choices like co-living and short-term rentals letting people find new lifestyles. “Portfolio companies like Starcity are really thriving as co-living doesn’t just solve for cost, but also for a key overlooked issue — access to community. We also see room for more nomadic lifestyles. A lot of the discussion about Miami is about people moving there, but it seems like a more interesting question for a lot of places is maybe whether or not people will spend a few months of the year there. So for remote workers this might mean places near specific activities like mountain biking, surfing, snowboarding etc. Starcity makes it easy to move between city locations and Kibbo takes this far beyond the city by building communities around van life.”

Here’s how all these changes are adding up for the suburban market, as mapped out by Clelia Warburg Peters of BCV.

“The residential transaction disruption is now settling in three core categories: iBuyers (who buy homes directly from sellers and ultimately hope to own the sell-side marketplace), neobrokers (who generally employ their agents and use secondary services such as title mortgage and insurance to increase their revenue) and elite agent tools (platforms or tools focused on the top agents).”

This combination of innovations are changing residential real estate as we know it. “[C]onsumers are increasingly open to alternative financing tools, including home-equity-based financing models (where you sell a stake in your home, or you buy into full ownership in a home over time). The growth and proliferation of these new models are consolidating the whole residential market so that brokerage sales commissions and commission from the sale of mortgage, title and home insurance are now functionally one large and intertwined disruptable market.”

The surprising revival of neighborhood retail

Humans seem to love the concept of a traditional Main Street full of bustling, walkable local businesses. But the hits have kept coming to the people trying to successfully operate independent retail storefronts.

E-commerce began cutting into traditionally thin margins with the rise of Amazon and the 90s wave of “e-tailers.” More recently, art galleries, high-end restaurants and boutiques became a harbinger of gentrification in many cities. Many commercial retail landlords in these locations aggressively priced rents as more residents moved in who could afford higher prices, ultimately contributing to gluts of empty storefronts in prime locations.

The pandemic seemed to be the final blow, with even the most loyal shoppers turning to order online while local businesses stayed closed.

And yet, a range of investors are strangely optimistic. Even though the pandemic upended social and economic activity for more than a year, most agreed that IRL retail experiences are an essential aspect of modern life.

“Humans are fundamentally social animals and I think we will all be hungry for in-person experiences once it is safe to return to them. Additionally, I think the shift away from working five days a week in the office is going to create a greater desire for ‘third spaces’ — not home, not a formal office environment,” said Peters.

“I do think we will continue to see more ‘Apple store’-type retail experiences, where the focus is less on selling inventory and more on creating an environment for customers to physically interact with goods and experience the brand ethos beyond a website. Because I anticipate that retail rents are going to be meaningfully lower at the end of the pandemic, I actually think we will see even more experimentation than we did pre-COVID. It will be a very interesting period for retail.”

Many others held views in this direction, whether they are investing specifically in retail-related tech or more generally in third-space ideas.

“It’s true that retail has been in flux for more than a decade; the list of common e-commerce purchases has expanded from books and clothing to prepared meals and groceries. It’s also true that the pandemic has accelerated e-commerce’s growth, to the detriment of brick-and-mortar retail,” says RET’s Yip. “But people are still human and crave in-person experiences. Even if cities never bounce back fully, major metropolises will still have enough foot traffic to support a fair amount of retail, and innovative models like pop-up shops can be brought in to help address vacancies. It should also be noted that the public markets still have some confidence in the retail space. While the major REITs struggled in early to mid-2020, many have recovered substantially, and several have actually surpassed their pre-pandemic figures. It has been a bad decade for retail — and a very bad year — but it is just too soon to close the book on the sector.”

Godenrath and Roeoes of Picus say movie theaters are just one example of a retail sector poised for success when public life resumes at scale post-pandemic.

“Cinemas, many of which are key shopping center anchor tenants, were already reinventing the traditional theater experience by offering a more holistic experiential solution (e.g., reserved seating, 4DX visuals, in-theater restaurants, cafes and bars) and the pandemic has led to an expansion of these offerings (i.e., private theater rentals and events). We have the opinion that this trend will continue to expand across the entire retail real estate industry from restaurants (immersive culinary experiences) to traditional retail (integrated online and offline shopping experiences) and believe that proptech will play a defining role in helping retail real estate owners identify potential tenants and market properties as well as in helping retailers drive in-store customer engagement and gain key insights into the customer journey.”

The internet is also a friend these days, surprisingly! “We also see a lot of potential for hybrid models combining online and offline experiences without friction,” they say. “Taking the fitness sectors as an example we can imagine a new normal where in-studio courses are broadcasted to allow a broader participant group and apps tracking fitness and health progress throughout in-studio visits and at-home workouts.”

I have a few additional reasons to believe in the future of retail that I didn’t hear from any of the investors I interviewed.

You can also see how retail intersects with many other solutions investors are betting on, particularly to improve the appeal of cities and solve for macro problems like climate change.

“Cities have some massively underutilized assets, perhaps the biggest being public spaces that are allocated to cars,” Baptiste and Abrahamson say. “So one change we think will become permanent is reallocating parking spaces away from private vehicles to micromobility (bike/scooter/board lanes, parking, etc.). We’re seeing a lot of demand for portfolio companies like Coord (manages curb space starting with commercial vehicles and smart zones), Qucit (manages bike and scooter share operations in many large cities) and Oonee (secure bike/scooter/board parking).”

That’s just the start of the virtuous cycle they foresee.

“As [car removal] happens, the use cases like logistics can shift to electric micro-EVs. Similarly, parklets or seating areas increase social spaces. The EU is setting the pace for banning cars, but overall reduced access to streets for cars is going to be a big change. And likely will make cities attractive — yes, you give up private living space, but you’re going to get a lot more common/social space. This is also likely to drive more co-living so you can decrease the cost basis for being in a city, but get a lot more from shared spaces, which have no real comparison in lower density communities.”

Demuyakor of Wilshire Lane is betting in the same direction.

“One of the key tenets of our overall strategy has always been a focus on space utilization and identifying the best ways technology can monetize underutilized spaces. This can be seen clearly with many of our newest investments: Stuf and Neighbor (monetization of basements, parking garages and other vacant spaces), MealCo (monetization of vacant kitchens), WorkChew (monetization of restaurant seating areas, hotel lobbies and conference rooms), and Saltbox (monetization of empty warehouses). We believe that landlords can certainly use these types of strategies to help mitigate increased levels of vacancies that we’re seeing across the real estate industry today in the medium term.”

If this thesis pans out, retail may become more about shared spaces. “With WorkChew in particular, which just announced funding this week, we’re seeing a ton of demand for their product both on the demand side and the supply side. Hotels and restaurants are excited to partner with them to monetize their less-utilized spaces and infrastructure,” said Demuyakor. “And of course, employers and companies love [it] as an easy amenity that can be offered to their hybrid workforces that increasingly want to spend more time out of the HQ office.”

I have a few additional reasons to believe in the future of retail that I didn’t hear explicitly from the investors I interviewed.

  • First, millions of new businesses have been created during the pandemic, to the surprise of even economists and policymakers. A large portion appear to have a very local angle, whether food delivery (cupcakes) or services (on-site haircuts) or internet-first products with strong local followings (much of Etsy). These entrepreneurs went internet-first and now, as commercial rents plummet, they have sufficient revenue to support a physical presence.
  • Second, most local business that have sustained themselves during the COVID-19 era figured out how to succeed on the internet. To see which ones in your vicinity are weathering the storm, just open one of your preferred on-demand delivery and services apps and place an order.
  • Third, as noted by respondents and available data, landlords are already starting to drop prices, creating a renter’s market for the first time in decades.
  • Fourth, there are whole new types of financing opening up to more traditional businesses that could enable any company with a successful online side hustle, hobby (or perhaps larger project) to get funding for expansion. (This reason is perhaps the most speculative, but we are trying to figure out the future here at TechCrunch.) For example, Shopify has just invested in, a new “platform for trading recurring revenue.” Although the companies are not saying much now about the relationship, it’s possible to imagine a bunch of successful small(ish) businesses on Shopify suddenly getting a new kind of capital infusion right as the math is suddenly much better for a storefront location.

If you roll all of this up with other broader shifts in how we think about cities, like making them more climate-friendly through allowing density and bike lanes, you can start to see a world emerging that sounds a lot more like the fantasies of a New Urbanist than the world before the pandemic.

At the same time, these concepts are being deployed across smaller cities, suburbs and towns: All will compete to offer the highest quality of living — unless the old network effects of industry clusters return miraculously.

And let’s say the industry clusters don’t cluster like they used to. It’s possible that many landlords, lenders and city budgets will have to retrench soon, creating a drag on the economies of otherwise-attractive cities.

Even in this case, you can imagine a rebirth for places like New York and San Francisco focused around housing, retail and amenities. Maybe one day, we’ll look back at recent decades as the bad old days before we collectively bottomed out during the pandemic and had to decide on the right answers for the long-term.

And with that, I invite readers to go check out the full sets of responses from the investors I interviewed. Each person offered a lot more than I was able to fit into this already-too-long article and is worth reading in detail. Extra Crunch subscription required, so you can support our ongoing coverage of these changes.

I’ll be covering the future of proptech and cities more soon. Have other thoughts about all of this? Email me at

Legaltech startup Orbital Witness scores £3.3M to create a ‘universal risk rating’ for real estate

Orbital Witness, a U.K.-based legaltech startup developing “AI-powered” software to transform the £4 billion U.K. property due diligence market, has raised £3.3 million in seed funding.

The round is led by LocalGlobe and Outward VC, with participation from previous investors, including Seedcamp and JLL Spark. It brings Orbital Witness’s total funding to £4.5 million.

Launched with its first customer in September 2018 and now used by numerous large law firms, including four of the five so-called “Magic Circle” firms, Orbital Witness’ long-term vision is to build a “universal risk rating” for real estate. “Think of a credit risk check for land and property,” Orbital Witness co-founder and COO Will Pearce tells me.

To do this, the startup is employing machine learning technology that it hopes can mirror the process a lawyer goes through when gathering and checking property information. The idea is to use AI to “predetermine” issues that constitute a potential risk.

“Our technology is adept at trawling through and extracting key issues from the wide range of sources that a property lawyer considers, including HM Land Registry and local authorities,” explains Pearce. “For example, a user is alerted to third party rights, charges and restrictions that might block a sale. In our current state of product development, this allows Orbital Witness to act as an ‘early warning system’ for property lawyers”.

Zooming out further, Pearce says real estate is the world’s largest asset class, but that the process of recording and reporting on property rights has not materially changed in 150 years. This sees real estate lawyers having to manually collect and review information from an array of disparate sources, which can often take weeks to arrive before they can even start. Meanwhile, the various real estate stakeholders — from banks making lending decisions, large commercial real estate PE funds, to residential homebuyers — can’t sign off transactions until the lawyers have completed their due diligence.

“Anyone who has ever bought a home will appreciate the frustrations of dealing with this legal due diligence process, and in commercial real estate, where Orbital Witness is initially focussed, many of these problems are amplified,” says Pearce.

The longer term plan is to ingest a broader range of data, so that Orbital Witness can eventually become trusted to provide a universal risk rating for real estate. This will see its risk modelling solutions wired to also include geographic information (e.g. flood risk), privately held information that can be uploaded to the platform (e.g. rights of lights reports), and also non-legal information (e.g. financial data from public records and ratings agencies).

Adds the Orbital Witness co-founder: “Very importantly, risk in real estate is dependent on the context of a transaction. For a real estate investor purchasing a block of flats, they are interested in understanding the security of rental income derived from the leaseholds. However, a property developer transacting on the same building, may be more interested in any hidden covenants that could prevent the ability to build or redevelop the site”.

View, the dynamic glass company that raised $1.1 billion from SoftBank in 2018, is laying people off

View, a 13-year-old, Milpitas, Calif.-based company that makes dynamic glass designed to reduce heat and glare as well as lessen eyestrain, has cut an unknown number of employees, including at a plant in Olive Branch, Mississippi. One employee of several years, an IT manager, wrote on LinkedIn that he was laid off owing to the pandemic. Another employee of the company for the better part of decade — an engineer and project manager — wrote on LinkedIn that he has also been laid off and that the company “really cleaned house.”

This individual added that several other “long timers” had also lost their jobs.

Efforts to reach these former View employees was unsuccessful this afternoon. A request for help from the company’s head of communications also went unreturned today.

The company — which touts its glass as a way for real estate owners to attract commercial tenants as well to improve energy consumption by up to 20 percent —  is among a large stable of companies that raised enormous amounts of capital from SoftBank’s Vision Fund.

The funding it was provided by outfit — $1.1 billion in early November 2018 — was notable at the time given that it included no other investors.

The round was also announced at a trying time for the Vision Fund —  roughly on month after the journalist and Saudi dissident Jamal Khashoggi was murdered at the Saudi consulate in Instabul, Turkey, drawing unwanted scrutiny to both Saudi Arabia and to the Vision Fund. As many industry watchers will know, the Japanese conglomerate had raised nearly half the capital for its massive Vision Fund from the Public Investment Fund of Saudi Arabia. Though no one in Silicon Valley was willing to speak up at the time about the episode, SoftBank’s checks were presumably seen as radioactive in that moment to at least some founders.

View has been selling its glass to building owners and commercial real estate developers. On its site, it features a testimonial from a 14-person development firm in Utah named Cottonwood Partners, for example.

Real estate, as with transportation and fintech, has been an apparent area of interest for SoftBank, whose other portfolio companies include Katerra, a tech-driven construction company that had run into troubles well before this year, according to several reports by The Information, and Opendoor, the home-buying company that earlier today announced that it was laying off 35 percent of its employees.

Though the construction industry has been hard hit since the coronavirus hit the U.S. market and largely shut the nation down, it is still operating in some pockets, saved by the belief in some states and cities that certain projects constitute essential business.

Earlier this month, for example, crews were at work on apartment buildings just south of West Hollywood. Asked by the New York Times to explain, officials agreed the work was essential, while a spokesman for the Los Angeles Police Department called what was happening “uncharted territory for all of us.”

Before SoftBank came onto the scene, View had raised about $800 million over the years, including from Corning, Madrone Capital Partners, TIAA Investments and a New Zealand sovereign wealth fund.

At the time it was announced, CEO Rao Mulpuri told Bloomberg that the deal predated Khashoggi’s murder, telling the outlet, “Obviously, what happened in the region there is quite concerning. But, at the same time, we’ve now built a relationship of getting to know SoftBank over a long period of time, and we are quite comfortable moving forward with this investment.”

Heading into its current layoff, which was announced to employees yesterday, View had roughly 600 employees, according to LinkedIn.

Should your company move into a co-working space, sublease space or traditional office?

It’s a cautionary tale we hear far too often: Company A, hiring staff and growing rapidly, finalized a 10-year lease for office space. One week after move-in they had filled their space to the brim, with engineers sitting on top of sales staff, interns working in the hallways and the CEO operating out of a small conference room.

Company A had backed themselves into a corner, in desperate need for more room with no easy solution to the problem, and looking to swiftly dispose of their inadequate space.

In the startup environment, everything moves at a breakneck pace. Raising venture capital, hiring staff, assembling a board, etc. – all while working day-in and day-out to refine a product or service meant to disrupt the world. With senior staff pulled in different directions, there is little time for a strategic analysis of office space needs.

My team at Colliers specializes in working with technology companies at all stages, from pre-seed to IPO and beyond. We have advised dozens of companies literally from their first day of operations, to others whose market caps are well into the multi-billion dollar range.

We have developed some metrics and strategies that help our clients to grow without having to worry about scheduling an hourly team huddle at the downstairs Starbucks .

We have extensive experience working with companies with offices around the U.S. and world, but a majority of our work is in the New York City area. The analytics and strategy formation for each company is different dependent on a multitude of factors: budget, concrete or tentative headcount projections, timing, etc. – but there are a few baseline rules that can help jumpstart the education process and conversation.

From working with hundreds of technology companies in various states of flux (capital infusion, rapid growth, headcount reduction), we’ve become experts on which office may be the best fit for a company, from a month-to-month WeWork licensing agreement to a long-term lease.

Rarely in the commercial real estate world are issues black-and-white; and strategies are unique to each company. But there are several basic questions that need to be answered when evaluating office space:

On-demand workspace platform Breather taps new CEO

Breather’s new CEO Bryan Murphy / Breather Press Kit

Breather, the platform that provides on-demand private workspace, announced today that it has appointed Bryan Murphy as its new CEO.

Before joining Breather, Murphy was the founder and President of direct-to-consumer mattress startup, Tomorrow Sleep. Prior to Tomorrow Sleep, Murphy held posts as an advisor to investment firms and as an executive at eBay after the company acquired his previous company, WHI Solutions – an e-commerce platform for aftermarket auto parts – where Murphy was the co-founder and CEO.

Breather believes Murphy’s extensive background scaling e-commerce and SaaS platforms, as well as his experience working with incumbents across a number of traditional industries, can help it execute through its next stage of global growth.

Murphy is filling the vacancy left by co-founder and former CEO Julien Smith, who stepped down as chief executive this past September, just three months after the company completed its $45 million Series C round, which was led by Menlo Ventures and saw participation from RRE Ventures, Temasek Holdings, Ascendas-Singbridge, and Caisse de Depot et Placement du Quebec.

In a past statement on his transition, Smith said: “As I reflect on my strengths and consider what it will take for the company to reach its full potential, I realize bringing on an executive with experience scaling a company through the next level of growth is the best thing for the business.”

Smith, who remains with the company as Chairman of the Board, believes Murphy more than fits the bill. “Bryan’s record of scaling brands in competitive markets makes him an ideal leader to support this momentum, and I’m excited to see where he takes us next,” Smith said.

In a conversation with TechCrunch, Murphy explained that Breather’s next growth phase will ultimately come down to its ability to continue the global expansion of its network of locations and partner landlords while striking the optimal balance between rental economics and employee utility, productivity and performance. With new spaces and ramped marketing efforts, Murphy and the company expect 2019 to be a big year for Breather – “I think this year, you’re going to start hearing a lot about Breather and it really being in a leadership role for the industry.”

Breather’s workspace at 900 Broadway in New York City is one of 500+ network locations accessible to users.

On Breather’s platform, users are currently able to access a network of over 500 private workspaces across ten major cities around the world, which can be booked as meeting space or short-term private office space.

Meeting spaces can be reserved for as little as 2 hours, while office space can be booked on a month-to-month basis, providing businesses with financial flexibility, private and more spacious alternatives to coworking options, and the ability to easily change offices as they grow. For landlords, Breather allows property owners to generate value from underutilized space by providing a turnkey digital booking system, as well as expertise in the short-term rental space.

Murphy explained to TechCrunch that part of what excited him most about his new role was his belief in Breather’s significant product-market fit and the immense addressable market that he sees for flexible workspaces longer-term. With limited penetration to date, Murphy feels the commercial office space industry is in just the third inning of significant transformation. 

Murphy believes that long-term growth for Breather and other flexible space providers will be driven by a heightened focus on employee flexibility and wellness, a growing number of currently underserved companies whose needs fall between coworking and traditional direct leasing, and the need for landlords to support a wider variety of office space options as workforce demographics and behaviors shift. 

Murphy believes that the ease, flexibility and unlocked value Breather provides puts the platform in a great position to win share.

“Breather has built a remarkable commercial real estate e-commerce and services platform that offers one-click access to over 500 workspaces around the world,” said Murphy in a press release. “To our customers, having access to workspace that is turnkey, affordable, beautiful, productive and that can flex up and down based on needs is a total game changer.”

To date, Breather has served over 500,000 customers and has raised over $120 million in investment.