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3 Ways Metaverse ‘Land’ Acts as Quasi-Commercial Real Estate

Cyberspace Conferences, VR Stores and Immersive Tours
Architectual visualizations in metaverse platforms could gain traction among real estate professionals. (Getty)
Architectual visualizations in metaverse platforms could gain traction among real estate professionals. (Getty)

If you’re here, on a marketplace for commercial real estate, you may be looking to lease a storefront or make a play on a foreclosed marina. But just by being online, you’re likely seeing references to those same types of deals taking place — with real money — in entirely artificial worlds: an emerging digital ecosystem loosely known as the metaverse. If you’re confused by any of this, don’t worry — you’re still in the right place.

LoopNet has already added to chatter about the metaverse by relaying experts’ answers to such hard-hitting investigative questions as, “what is the metaverse?” That was in part one of this 3-part series, which hopes to help commercial real estate professionals like you start to understand why the lexicon of your livelihood is being used in the context of something you might confuse with a game your 13-year-old plays on her iPad.

Having identified parallels between the types of leasing agreements, deed transfers and land grabs your business conducts and ones that could just as easily transpire on that iPad, we’re back to find out a bit more about how “virtual real estate” compares to real real estate, and how it differs.

Projects already taking place in the metaverse involve everyone ranging from the average Joe ordering delivery in a three-dimensional digital Chipotle to medical students practicing surgery in virtual operating rooms. Futurists will tell you that the metaverse will be all those things and more, eventually amounting to a better, more autonomous and more fully immersive version of the internet — one that will be more “cyberspace” than computer screen.

If you’re still skeptical, you’re in good hands. LoopNet has narrowed down several broad uses for the metaverse that may be relevant to the commercial real estate industry, at least for now. These are the three main ways the metaverse currently supplements — and in some cases, ever-so-slightly hints at one day competing with — traditional commercial real estate:

  • Commerce — Retail, Marketing and Entertainment;
  • Productivity — Workplaces and Conferences; and
  • Architectural Visualization — Digital Twins and Virtual Tours.

Retail in the Metaverse: Introducing V-Commerce

One of the simplest ways an expert explained the online 3D worlds being called the metaverse is that they represent the “next iteration of the internet.”

Having presence in a virtual reality metaverse will one day be as essential as having a website, explained Dan Reitzek, CEO of TerraZero Technologies and purveyor of Miller Lite’s Meta Lite Bar. “In the ’80s, there was one way for Nike to sell us a pair of shoes, and it was a store in a mall. Then with the internet, there became a second way for Nike to sell us a pair of shoes,” Reitzek told LoopNet. “The metaverse presents a third way, [which combines elements of both], and we call it ‘v-commerce.’”

With a finite amount of “land” mandated into the user-based constitution of most of the 3D blockchain worlds like Decentraland and The Sandbox — and big spenders like Molson Coors wanting to build virtual bars in them as part of a Super Bowl spend, for instance — “virtual real estate developers” like TerraZero have been buying deeds to “land” on the blockchain and jockeying to become their cyberspace landlords.

But why is big business happening in virtual platforms that look and feel like the types of games played by Generation Z (born 1997 and on) and even the younger Generation Alpha?

Because those generations are the future of the economy, Reitzik said. And those generations are spending their money — or at least their parents’ money — in virtual reality.

Part of the appeal of free-to-play, massive online games like Epic Games’ Fortnite, for example, has been the digital upgrades players can purchase for their avatars (paid for in real money – to the tune of $5.1 billion on Fortnite alone last year) and the immersive, imaginative worlds in which players make purchases. Players run, fly or teleport around virtual cities, occasionally popping into digital stores where they peruse and shop for digital swag.

Blockchain-based metaverse worlds like Decentraland are natural transmutations of those environments, and it’s no wonder why they light up marketers’ eyes with digital dollar signs, another source said. Given the popularity of proto-metaverses like Fortnite and Minecraft, brands know they’ll have a captive audience in the younger generations that are drawn to them, and they’re starting to realize they can target parents as well with schemes like the aforementioned Miller Lite “bar” or even JPMorgan Chase’s bank “lounge.”

JPMorgan's virtual bank lounge, Onyx, is in a "mall" in Decentraland. (CoStar)

Music is also going to be a “big deal” in the metaverse, according to Reitzek. A majority of U.S. adults said they weren’t interested in any activities in the metaverse, but, of the respondents to a recent Morning Consult survey, 45% said they’d attend a live music event in the metaverse. “While I could only put 20,000 people in a stadium to see Rihanna perform, for instance, I could put 20 million people in a virtual stadium,” Reitzek said. Here again, the infrastructure would be considered “real estate” and the rights to use it stand to make someone a lot of money.

“There’s this misconception with virtual real estate right now, because we’re so early on, that it’s like getting a virtual condo and playing The Sims,” explained Eric Klein, CEO of MetaSpace Real Estate Investment Trust (MREIT), a firm that promises to be exactly what it sounds like.

Instead, he continued, “we’re already seeing people selling clothing, merch, virtual concert tickets and experiences in the metaverse. It’s an opportunity to get in somewhere that has so many eyes on it for a fraction of the cost of brick and mortar.”

The metaverse is important for advertisers and retailers because it’s a natural evolution of media, explained Kristi Waterworth, who reports on virtual real estate investing for The Motley Fool. “Television and newspapers worked for advertising for a long time, until they didn’t anymore. Then the internet and social media pulled a lot of that weight, until the younger generations start rejecting that in favor of something else that speaks to them more — which they are already doing.”

Advertisers are trying to get set up in the metaverse by the time the technology and the next generation’s spending power catch up and converge.

Walmart recently filed patents that herald a big push into the metaverse, which may include massive 3D stores. The world’s largest brick and mortar retailer has been hinting at VR shopping experiences since at least 2017.

But a lot of unlikely companies are following suit. Panera has trademarked “Paneraverse,” for example, to offer “virtual restaurants and cafes … wherein users can earn reward points and virtual currency which may be used to purchase food and beverages.” Conagra Brands’ Slim Jim brand has staked claim to “The Meataverse.” Then there’s Gucci and Ikea and Nike and Louis Vuitton, to name just a few of the heavyweights already splashing around in the metaverse. Most are clearly targeting Gen Z.

But is that all there is to the metaverse? Kids running around as expensively dressed avatars in cyberspace, as retail vultures vie for their attention?

Far from it, says Stephanie Gilezan, a commercial real estate broker and director of growth at eXp Commercial. Her firm is an otherwise traditional real estate brokerage that is entirely headquartered in a virtual platform called eXp World, which is hosted by its sister company Virbela, a virtual reality proto-metaverse platform geared toward productivity.

The Game Plan: Business in the Metaverse

The thousands of employees at eXp aren’t jumping on a bandwagon or reacting to the recent remote-work paradigm shift, Gilezan explained. The growing firm has been meeting as avatars in a virtual reality campus for the past decade.

Similar to the 3D, avatar-based interfaces of games like Fortnite or metaverse worlds like Decentraland, Virbela mimics the real world, but is structured to facilitate learning, working and gathering for events and conferences.

To no one’s surprise, Meta (formerly Facebook) also has big plans for working in the metaverse, given its teasers for its Horizon Worlds platform. Some objective observers also say emerging virtual reality platforms will completely change the way people go to work. The next evolution of WeWork, Klein said, will be “virtual workrooms,” and all of them will be “built, in some way, on virtual real estate.”

In most cases, the platforms geared to host these virtual workrooms and offices will act as landlords, but some companies are taking the initiative themselves and purchasing “land” in the types of decentralized metaverse worlds where anyone can bring to fruition what they wish.

Pricewaterhousecoopers (PwC), for example, reportedly purchased a $10,000 plot of undeveloped land in the metaverse world The Sandbox. Prager Metis did something similar in December, opening what it says is the “first Certified Public Accountant firm headquartered in the metaverse,” with its three-story digital structure in Decentraland.

“From Fortune 500 companies to startups to churches … eXp can help pretty much any entity you can think of build a customized campus or office space,” Gilezan told LoopNet. “With brick and mortar, there are obviously square footage requirements and design choices. With relatively the same digital footprint, instead of working with contractors that put up drywall, you’re working with developers that build this virtual gaming asset that can mimic whatever it is they're trying to do.”

Apart from meeting in a virtual world themselves, eXp facilitates brokerage of virtual real estate, and Gilezan said she’s seeing tons of real estate sales and leasing opportunities. In the case of Virbela, “We do not sell deeds or provide title, but it’s a lease agreement.” Even commercial real estate heavyweights like CBRE have explored working in the metaverse.

eXp Realty brokers meet in Virbela, a metaverse geared to productivity. (Virbela)

Metaverse working incorporates remote work tools like Zoom and Teams, Gilezan said, but also extends beyond them to make people really feel like they’re together. That’s why some webinar and conference stakeholders are also migrating to virtual reality platforms like Virbela and MootUp, she said, with the latter having already hosted events for a range of entities including Autodesk and Yale.

That doesn’t mean there aren’t technological limitations to overcome, Klein said. Contrary to the goals of such an endeavor, cramming a lot of graphical avatars into one virtual environment often slows it down. “I think office will lag behind retail in the metaverse,” Klein said. “We’re in a prototype phase right now. That’s why everything looks [graphically primitive]. Once we enter a realm of realistic metaphors, that’s when things will really take off,” he continued.

Architectural Visualization in the Metaverse: Is This Real Life?

The graphical and technical shortcomings Klein is referring to are what make most VR and metaverse platforms look and feel a bit dorky and disorienting and leave casual observers skeptical about what they have to offer.

But the technology is evolving faster than almost anyone can imagine, according to David Weir-McCall, the architecture industry marketing manager for Epic Games.

As graphical representations become more realistic and dynamic, he said, the metaverse will have massive implications for architecture, engineering and construction — and for real estate.

Design, planning and brokerage firms across the world are using Epic Games’ Unreal Engine software framework to create hyper-realistic, 3D digital twins of actual or planned buildings, with a wide range of applications including brokers hosting immersive, first-person-view tours showing the view from different units in a multifamily building and developers seeing entire cities being represented as a hyper-realistic metaverse.

Unreal Engine’s ever-improving capacity for rendering hyper-realistic graphical representations is proven, Weir-McCall said. And while it’s currently only being implemented for use in siloed tools by all sorts of industries — including to assist real-life real estate brokerage — it could potentially be scaled to entire metaverse worlds where virtual real estate is being bought, sold and leased to host stores, concerts and offices.

Asked about hardware limitations when it comes to such technologically demanding cyberspaces, Weir-McCall said Epic is working on hosting more of its backend on powerful servers that can be streamed through the cloud to a local device such as a VR headset or even an iPad.

He also mentioned that while Epic’s most popular video game, Fortnite, is just that — a video game — it’s also a proto-metaverse that leads the way in proving the possibility of meeting the technical demands necessary for a truly viable “metaverse.”

Epic has hosted online gaming events in Fortnite that have held 24 million simultaneous participants on average per day, he said. “There are no other tools on the planet that have battle-tested their own technology to the point that we have to make sure it can be the thing that it needs to be in the future.”

But just what does the metaverse need to be? That’s up to its potential users to demand. Or is it up to the equivalent of real estate professionals to supply it? Stay tuned for part three of this series, in which we’ll consider some open-ended questions about the metaverse such as, “if you build it, will they come?” and try to uncover what virtual real estate is worth.