Space by the Hour: This Platform Facilitates ‘Hyper-Short-Term’ Access to Commercial Real Estate
The formula for Peerspace is simple. People have all sorts of commercial properties sitting idle, whether they’re waiting for the next 10-year lease or just for that evening’s dinner service. Meanwhile, other people could use that space, on demand, for endless reasons: a weeklong remote team retreat or an afternoon photoshoot.
Commercial space-sharing platforms, akin to Airbnb, connect owners and occupiers for short-term leases. It isn’t new, but it’s tailor-made to our times.
In this interview, edited for clarity and brevity, LoopNet caught up with Matt Bendett, Peerspace’s senior vice president of global operations, to chat about this pandemic-era solution he cofounded nearly a decade ago.
What’s the philosophy behind Peerspace and how’d it get started?
Commercial real estate is traditionally disaggregated and it’s often difficult to find an inspiring space from a central resource. When you do, it’s difficult to source an arrangement to use or gain access to the space [on demand].
That was really the idea behind Peerspace: to provide “hyper-short-term” access to commercial real estate. We started Peerspace in 2014 to deliver the concept of access over ownership.
On the supply side, even pre-pandemic when lease occupancy rates were pretty high, there is always underutilized space. We thought, we can create the tools to make it relatively easy for the property manager or the small business owner to get an additional revenue stream [by renting out that space on a short-term basis].
We think that’s something to strive for: full utilization of your space. It’s a sunk cost otherwise. So that’s been our ammo; that’s what we want to provide.
This includes office space, which is probably the hardest to do something like this for traditionally. But it’s also storefronts, art galleries, workshops, ateliers, and things like that, where small business owners are really looking for some [extra] income or a connection to other creatives in the community that might drive their business forward in some other way.
We want to help small businesses stay afloat when times are tough while enabling people to connect and get things done without having to rely on prohibitive long-term leases.
How is space-sharing performing in the pandemic era?
I think it's probably getting a lot easier now. The rhetoric is changing in this post-pandemic world. Before, even in a hot leasing market, a lot of landlords looking to lease their vacant space wouldn’t even want to take that extra step to list their property on [the Peerspace platform] because, especially with brokers involved, all they cared about was their next five-year lease or whatever the next windfall transaction could be.
But I think the paradigm is really shifting. There are far fewer tenants that are looking to occupy space in a non-flexible manner right now. And that could continue to be the new norm well after the effects of the pandemic are beyond us.
And so from our standpoint, it’s really about helping property managers, small business owners or even large enterprise-level portfolio companies with tools to manage bookings on Peerspace. We’re thankful to be adding spaces in over 35 markets internationally.
Peerspace is called the ‘Airbnb for Commercial Properties.’ Is that accurate?
We’re similar … but we really think what we're doing is fundamentally different. With Airbnb, you're vacating physical property in order to let somebody occupy it in a transient manner. What you’re effectively buying on Peerspace, on the other hand, is a license to use the space.
[Similar to Airbnb], a Peerspace host lists their space, but they might be working there at the same time or supervising it at the minimum. But they are granting access for a duration of time to an area of the space. And everything from the cleanliness of the space to how recordings are handled inside the space to what amenities are included … along with a supplemental space insurance policy … is part of the services agreement that both parties sign to complete the booking.
Let's say you have excess meeting room space in your office. A receptionist at the firm might run the Peerspace account as the host. That might be the perfect use case for our Instant Booking feature, wherein everything about the booking is included in the listing description. When you execute the transaction — so when you click “Submit Booking Request” and the host confirms, or when you do an Instant Booking — you are agreeing to all the terms that encapsulates and getting access to that license.
Those who are really looking for this additional revenue stream, that's the role they have to play. But we help businesses with space figure out how to create or leverage resources to manage bookings … and there are definitely property managers or scouting agents that work on Peerspace in partnership with the real estate owners.
What do owners of commercial properties need to do to successfully share their space?
If you're commercially zoned in some capacity, the types of activities that you could potentially have in your space tends to open up quite a bit.
As for what types of spaces work well, we have all sorts across our 35,000-plus locations. Small theaters do pretty well in terms of being able to host a variety of different activities. There might be a fully equipped medical office or dentist office that we have on the platform that is great for video and photo shoots.
Multipurpose spaces do really well. You'll see there are examples of spaces that [are] the same structure, but our listings show how the space can be set up as a production location, how it's set up as a meeting location, and what it looks like as a banquet for an event.
We do require our host to have an understanding of what is and is not permitted with regards to not just zoning laws, but whether it's a homeowner's association or any kind of local stipulations that would possibly regulate their ability to use the space for a certain activity. Because we're in so many jurisdictions across the world, it's hard for us to manage that. So, you need to understand what your space can and can't be used for.
If [your occupier] is going to have an event with amplified noise, for instance, you’d need to know about the zoning law or the city municipal code that talks about special event permits that are required for that.
We have hosts that have fully transitioned to this model from having the more traditional leasing model because it's been more lucrative for them over time.
And there are other hosts that have sort of become venture-backed off of using Peerspace initially as a booking process until they suddenly realize they need to expand their inventory to meet demand that enables the business to be able to grow.
It makes me personally feel very proud of the kinds of potential we have and the opportunity we create for investors to launch and scale their own businesses off the back of our platform. An example of a power host that comes to mind is Hasan Kansu, the Founder of Studio Nula in Brooklyn, New York, who went from one location for his photography business to five [commercial properties that Kansu leases and then subsequently offers on the platform].
There are hosts that are making very material amounts of money on the platform because they've figured out the system. They know what they need to do to be able to earn the booking, to deliver the five-star review and [draw in repeat customers].
What trends are you seeing on the demand side for short-term solutions, especially for office work?
We have definitely seen an increase in employers who want to be able to cater to the trend of remote or hybrid workers who still need opportunities to get together.
What this means is that a lot more space is being booked as a one-off solution to bring teams together for a week or a day at a time, which we call “offsites.” They're looking for creative or inspiring locations where they can be together and work productively, and they are much less interested in longer-term uses.
These range from smaller startups meeting investors to raise money before they have their own office, to large, publicly traded companies looking to Peerspace to find a more flexible solution for their team to meet regionally on a semi-regular basis without being anchored to real estate that they don't use the rest of the time.
We’re all about thinking differently about how your space can be used. We have restaurants that are only open for dinner, but during the day while they're prepping, they offer private dining options where [colleagues] can get together in a totally different, unique environment from their desks.
Some companies book the same location every other week and work from home the other days. Others are looking for a continuous variety of unique spaces to keep it fresh while they engage and collaborate; and that’s the case for us at Peerspace — we’ve been remote since the pandemic, but we get together regularly, always in a different Peerspace location. We're able to recreate that spontaneous nature of [in-person work], but really only need to do so once a month or so. That would cost you $500-$700, I would say, to have a full day where 10 to 15 people can come together in a creative space.
