RISMedia's Real Estate Magazine

JAN 2019

Real Estate magazine is the industry's leading source for real estate news and information since 1980. Published monthly by RISMedia, Real Estate magazine offers timely and relevant real estate news to the industry's top brokers and agents.

Issue link: http://remag.rismedia.com/i/1066259

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Page 51 of 118

markets, Hitt understands that new ventures may sometimes be the key to survival. "…There's nothing stopping a new scrappy competitor from taking its place tomorrow. I applaud Airbnb for thinking about its next chapter," says Hitt. Project leader Fedor Novikov says that the undertaking fills a space, stating, "Simply put, nothing ad - dressed long-term adaptability from a systemic perspective. The only way to close the gap was to work from first principles and imagine entirely new approaches for building homes." Others agree with the sentiment, believing this service could help restructure a construction market that's deeply fragmented. "We welcome anyone who is se - rious about bringing innovation to home-building. People deserve more than what's currently available to them: poorly-designed and -built homes except for those who are privileged enough to afford the best architects, designers and builders," says Alexis Rivas, co-founder and CEO of Cover Technologies, Inc., a Los Angeles-based tech company that custom-builds backyard guest - houses, studios and homes. While details are scarce, Gebbia said the light bulb ignited with one question: "What does a home that's designed and built for sharing actu - ally look and feel like?" Using a de- cade's worth of data surrounding the way individuals travel, live and share their spaces, Airbnb hopes to pro - vide an answer through eco-friendly building materials and fully prefabri - cated homes. "People are on a continued quest to find ways to improve and enhance their lifestyle, and space is an impor - tant part of the equation, especially as it relates to homes," says Hitt. "Design, location and amenities that simply make people's lives easier and happier will be a draw. Airbnb has a lot of data as to what their cus - tomers are attracted to, so I'd imag- ine this initiative will certainly strike a chord with a niche buyer." With prototype units set to be tested as early as fall 2019, what lies in the future for Airbnb? Many agree that this is merely the start to greater initiatives. "Airbnb building homes will just be the beginning. Experiences will soon be part of the consumer shopping checklist, on top of Walk Score, school system and distance to work," said Pat Kinsel, CEO and founder of Notarize, in a statement. "That's why Lennar, the largest home builder in the United States, is work - ing with Amazon, and why Redfin believes that more than 20 percent of their closings will soon be online. The real estate industry is undergo - ing the largest shift in technology it has ever experienced, and those who connect all stakeholders in the home-buying process will set the tone for the future." Innovations aside, there are prac - tical questions that have not yet been answered, points out Rivas, including: • What part of the building process will Airbnb handle? • Will homes be fully customizable, or will customers have a few mod - els to choose from? • Will Airbnb manage the permitting process? • Are they building new technologies (both software and hardware) to make their homes, or are they us - ing traditional building systems? • In which regions will Airbnb start building? Additionally, their success hinges on several factors, which have yet to be addressed. Most importantly? The bottom line. "Airbnb has about 5 million homes on their platform. To build the num - ber of homes required to impact their top and bottom line, they would need to create a division that is to - tally focused on building a profitable business, and not just a prototyping project as they've described in order for this venture to not negatively im - pact their EBITDA (earnings before interest, tax, depreciation and amor - tization) in either the short- or the long-term," says Rivas. All trends go out of style eventu - ally, says Hitt, stating that, "in real estate, we've all seen listings that make us wonder, 'What were they thinking?' But it's the natural pro - gression of time. Airbnb's move is a bold one, but exciting to see based on the way we as a culture are re - thinking space and simply living dif- ferently than previous generations." RE Liz Dominguez is RISMedia's as- sociate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. RISMedia's REAL ESTATE January 2019 47 "Airbnb has a lot of data as to what their customers are attracted to, so I'd imagine this initiative will certainly strike a chord with a niche buyer." – ANTHONY HITT President and CEO, Engel & Völkers America

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