Cities and offices still have a future – TechCrunch

Despite the COVID-19 pandemic, many U.S. workers will eventually return to their offices.

But when they do, their big-city workplace will not only have a smaller footprint and operational strategy, it might be in a different town altogether, according to a recent TechCrunch survey of top real estate and proptech investors.

TechCrunch surveyed nine investors who are writing checks today for startups in the sector. Optimism still runs high for startup hubs as well as supercities like New York and San Francisco. However, the move toward e-commerce and remote work — a trend that started before COVID-19 upended the way people live, work and play — has accelerated. 

The responses below get into these and other looming matters, such as the role that government support is playing to support the market … for now. Next week, we will publish the second installment of responses focused on the opportunities and risks for startups that these investors are betting on (or not).

For additional context on where top investors believe the market is headed, be sure to check out our real estate and proptech investor survey from late March and the previous ones from late last year (when everyone thought 2020 would be something different).

Clelia Warburg Peters, venture partner at Bain Capital Ventures

Early evidence suggests that there is a reversal of the New Urbanism movement that defined the past several decades in the U.S., with the pandemic combining with existing trends in this direction. How will this migration affect your investment decisions, especially given foundational changes to residential, office and retail? How does this compare with what you may be seeing in other countries?

There is no doubt that in the United States the pandemic is serving as an accelerant in the “diffusion” of the model where economic activity is concentrated in a few primary urban centers. This diffusion was already underway — so-called “secondary” or “tertiary” cities have been growing in population and economic relevance for more than a decade. But I do think this is a period which will likely cement the permanent significance of many of those cities, where people feel like they can live more comfortably and affordably while enjoying many of the benefits of urban living (jobs, culture, restaurants and walkability). I actually think this in line with the new urbanism movement — which emphasized the need to make cities more walkable, green and friendly for living and not just working.

I also don’t see the pandemic altering people’s feeling or perception about the appeal of the “1950’s suburban ideal” in which someone (usually a father in a grey suit) commutes daily into a nearby urban center of activity — in fact, I think what the current interest in the suburbs confirms is that people don’t want to commute and that they feel more interested in suburban environments as they imagine them transitioning into “miniurban” environments where commuting is limited, ideally, there is walkability and where they have access to restaurants, culture and shopping through a mix of local and digital experiences.

I think technology is going to be a significant part of the transitions in how we live and work in the next few years, and I am bullish about proptech during this period. There was always the anticipation that, across the industry, tech adoption would be accelerated during a downturn because tech can often drive efficiency and bring down costs. I think the pandemic will serve as an accelerant to this as well and will also allow more disruptive models in both the residential and office sectors to gain greater market share. (In an environment where business as usual doesn’t exist, I think tenants and consumers are going to be more willing to experiment). On the office side, so far we are seeing an investment bump primarily focused around technologies that support the back-to-work experience on the office side, but I think we will start to see much more dynamic models evolve.

The U.S. is unique in that we have so many layers of urban models — some of this disruption will not be as great in other countries where the country itself really has only one or two primary cities, or conversely, where the contrast between the economic development of cities and the countryside is really stark. (I don’t think you will see as much discussion of the idea that everyone is going to leave London in the U.K. — there just isn’t another area that has the same multifaceted infrastructure. Nor is this “flee the cities” discussion relevant in China or other areas where it would be logistically difficult to work in the same way outside of many urban environments). This may mean that office and retail are less impacted in these places, and this combined with the fact that these countries are emerging from the pandemic more smoothly, may make international expansion a priority for a lot of proptech startups.

More specifically, startup hubs have been synonymous with superstar cities like San Francisco and New York — do you see the centers of innovation spreading out more widely, to smaller cities, college towns, versus the last decade?

I do believe that startup hubs will continue to spread out more widely, but I do also think that venture is a business that is heavily reliant on networks and relationships, so I think these “hives” will not disperse as quickly as roles in many other industries.

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