Real estate just became its own separate asset class.  However, ironically, that may have occurred just at the moment it should have been morphing more deeply into other asset classes.
Don’t get me wrong, as a real estate professional I am very happy about real estate being named as its own investment class; however, it is worth taking stock of what is actually happening around us and its implications.
So far we have the disaggregation of real estate persisting in numerous directions, such as:

  • Co-working

  • Co-living

  • Crowdfunding and similar concepts to democratize real estate investing

  • Airbnb

  • The implications of self-driving automobiles

These are the obvious ones.  But roaming beneath the headlines is a slew of real estate players with different business models, with more being imagined and created every day.  Here is a quick list of some I know of:

  • LiquidSpace - Network for office space where startups and growing teams connect directly with real estate owners, operators and companies that have space to share.

  • Opendoor  and Nested – Offer simpler and easier ways to sell your home

  • Breather – On demand access to private spaces across the U.S. to be used as temporary working spaces.

  • Spacious - Uses restaurants during off-hours as co-working spaces for paying subscribers

  • Roam – Network for global co-living spaces and co-working spaces when you travel - providing everything you need to feel at home and be productive at your chosen destination

  • Remote Year – allows you to travel around the world while still being able to work remotely

  • Common – Manages shared living spaces

  • Storefront - Finds temporary retail or event space in the best neighborhoods

  • Fundrise - makes quality real estate investments available to everyone

And this list just scratches the surface as there are more and more things going on every day.  I certainly don’t know everything and even if I did, there are likely a bunch more things about to happen that I have no idea about, .i.e. to paraphrase Mr. Rumsfeld, “unknown unknowns.”
I have been wondering whether there is a way to make sense of all of this.  And the conclusion I have reached is that just as many people have been wondering whether they should really own a car when they can just rent or use one -- through services such as Zipcar and, eventually, self-driving vehicles – I wonder whether people will reach the same conclusion about real estate?  I mean why own a house and why rent space under a long-term lease if you don’t have to make that kind of economic commitment and get pretty close to the same benefits without such a commitment?
What this means is that real estate may transform from a thing you buy to a service…..
Consider these thoughts……
Living space that has co-living and robotic movable walls (already in development) whereby a single room can morph from a bedroom to a kitchen to a party room to a study. 
Restaurants that have a breakfast brand – a lunch brand – a dinner brand – and a swinging nightspot brand.  There are logistical issues; however, ultimately with the right cosmetic changes you could see that coming. 
Retail stores that are one store on one day and another on another day or at another time of day.  Of course, there are devils in these details but you could see it coming.
Offices that are shared.  I guess we already have that.  At first it was companies like WeWork.  Then it was competitors to WeWork.  And now it is landlords themselves putting these spaces into their buildings without leasing to a WeWork or a competitor of WeWork.
Houses and homes that are like hotels and used and rented out.  I guess we already have that too. 
Transient living uses that are being invented, largely under the concept of co-living.
Liquid space – Airbnb – and so much more
For some time, I have been idly thinking and wondering about this concept, but without really putting the intellectual pieces together.  Then I read a very insightful article by Mr. Dror Poleg entitled Don’t Think of a Building, Understanding Technology’s Threat to Real Estate Owners, Operators and Asset Valuations, where he synthesized my nascent thoughts better than I was able to do.  He makes the following points about how real estate is morphing:

  • “Space is broken down into smaller value units, allowing end-users to pay only for the specific components they wish to use — as desks, meeting rooms, bathrooms, beds, etc.”

  • Time is broken down, reducing the minimal commitment required from end-users to as little as 30 minutes — shifting profits to those who can secure large spaces “wholesale” and lease them out “retail” in smaller sizes for shorter periods of time.

  • Incremental use (smaller spaces, shorter periods) gives rise to dynamic pricing models.

  • Equity is broken down, enabling smaller owners to share their financial burden with other small and medium investors.

  • Visibility is no longer just about being seen offline. Accessibility is now partly about the ability to book space and other amenities within it on demand. Spaces with “good enough” locations become more valuable through optimized design and innovative marketing.

  • New attributes - community, curation (who else is there?), content (events), value added services, and availability on demand - are eclipsing location and accessibility as the key drivers of differentiation between assets.

So I wonder if real estate is morphing into a service more than an asset.  What does that mean and what should real estate players do about it?  Of course, no one can really predict the future and figure out what is going to happen.  However, I am getting more and more confident that real estate as we once knew it is going to be changing dramatically in years to come
The answer to appropriate strategy would be specific to the different asset classes and investment strategy of each real estate player; however, I will stick my neck out and advocate the following plan of action:
First read Dror’s article – this article – and whatever you can find about new business models in the real estate world.
Second - sit down with a pad of paper and a pen – and no iPhone – and think of what real estate related business you are in.
Then consider whether there is a deeper meaning to what you are “really” doing.  For example, the car companies are now wondering whether they are really in the transportation business?  Is there a deeper meaning about what you are doing that leads you to describe the heart of your business differently?  For example, instead of building houses, maybe you are in the business of giving people a comfortable place to live.
See where this leads you…….
Finally, I do think it behooves all of us (including us lawyers) to be as vigilant as possible regarding these changes because when an industry is disrupted, it is typically much too late to play catch-up once you fall behind.  And I will end with a Bill Gates (famous?) quote:
“People tend to overestimate what will happen in a year and underestimate what will happen in ten years”
I am comfortable in saying that whatever you are doing now, the odds are that you won’t be able to do that in ten years or, if you can, it will not be nearly as profitable.


Specialty Practice– Tax Exempt Organizations - David Samuels, chair of the D&S Tax Exempt Organizations Practice, was named the Best Lawyers® 2016 Non-Profit / Charities Law "Lawyer of the Year" in New York City. David Samuels, who is a Harvard Law School graduate and the former Deputy Chief of the New York Attorney General’s Charities Bureau, has a practice that focuses on matters requiring interaction with the attorney general’s office; internal disputes within charitable organizations; and matters involving synagogues, churches or other tax exempt organizations. 

David has over 30 years in the heart of the non-profit world and is one of the top non-profit lawyers in New York.  David’s background and experience as a top New York State regulator is invariably of great use and advantage to our clients. 

David was named the Best Lawyers® 2016 Non-Profit / Charities Law "Lawyer of the Year" in New York City. “Lawyer of the Year" recognitions are awarded to individual attorneys with the highest overall peer-feedback for a specific practice area and geographic location. Only one lawyer is recognized as the "Lawyer of the Year" for each specialty and location. Best Lawyers® compiles its rankings through peer-review surveys in which thousands of leading lawyers confidentially evaluate their professional peers. The lawyers being honored as “Lawyers of the Year” have received particularly high ratings for their abilities, professionalism, and integrity.

Our Tax Exempt Organizations Practice Group advises charities, foundations, corporate sponsors, and professional fundraisers on matters which affect the nonprofit community.  We are one of the few law firms with a practice group dedicated to addressing the unique regulatory, economic and legal issues of tax exempt organizations.

As mentioned previously, David Samuels was Deputy Chief of the New York AG’s Charities Bureau and regularly works with the Bureau on real estate transactions (including those involving religious organizations) and other matters requiring regulatory approval (such as cy pres applications to lift restrictions on charitable gifts).  David has been ranked by Best Lawyers and SuperLawyers as one of the best not-for-profit lawyers in New York City each year since 2007.

With possibly the most prestigious real estate practice in New York City – plus a top non-profit practice – we have melded these practices together into a Tax Exempt Real Estate Practice Group, in which our real estate lawyers and not-for-profit lawyers work together to service not-for-profit clients in real estate transactions.  Our not-for-profit clients often have real estate transactions (purchases, sales, sales of air rights, development transactions, etc.) that require New York State Attorney General approval or other interactions with the Attorney General.  We, therefore, not only advise on the real estate transactions but also on the critical not-for-profit issues

Most recently, David’s book, Nonprofit Compensation, Benefits, and Employment Law, was quoted in Crain’s New York, in their article, “Nonprofit Director’s Compensation Raise Questions”.  
If you have any question relating to non-profit organizations please contact me or you can reach David directly at (212) 692-5981 or


Real Estate Technology ExpertFifth Wall – Since this issue is about real estate technology, I mention Fifth Wall, which is a fund investing solely in real estate technology.  Brendan Wallace, who runs the fund, is continuously at the forefront of the intersection between real estate and technology.  Here is a link to a particularly insightful article on the impact of autonomous vehicles on real estate.  Also, if you have interest, you can subscribe to his newsletter here.  Full disclosure – I am an investor in the fund.