Before the pandemic, experience-focused locations and businesses were appearing all around the world to appease the generation raised by social media.
Ari Rastegar is the CEO of Rastegar Property Company, a real estate company focused on value-oriented properties. Rastegar recently wrote about how these types of “instagrammable” locations will likely be a major player in rebuilding the industry as the pandemic comes to an end within the next year or so.
Places like the Museum of Ice Cream in New York City allow visitors to become a part of the exhibit and encourages patrons to take as many pictures as possible. This way the client is not only getting amazing content for their online presence, but the business itself receives free advertising through the hundreds of people who saw just one given post.
Younger generations who grew up with social media are the main target for these types of businesses, but also older generations who spent their adolescence with more traditional cultural experiences. Rastegar explained that these businesses are so successful because they “cater to themes and aesthetics popular among millennials. These spaces are full of bright pink walls and picture-perfect photo-shoot opportunities just begging to be posted. For example, Meow Wolf, a popular experiential attraction in New Mexico, drove more than 1 million visitors to its Santa Fe location.”
“No longer are consumers interested in just products or brands, but rather in memories and experiences, an incredibly important trend for real estate investors to follow.”
Rastegar also explained how these types of businesses and institutions are relatively new for the real estate industry, and many leaders are finding that with the pandemic, finding properties in major metropolitan areas for these immersive experiences is actually easier than initially expected. In the beginning of the pandemic many residents and businesses shut down their city locations due to a lack of traffic, leading to a multitude of available properties.
Commercial real estate properties are expected to sell at exponential rates this year, and most industry leaders believe that commercial transactions will be the main source of revenue for 2021. “Similar to retail, dining and nightlife, experiential spaces are poised to explode as the demand for new and engaging experiences rises post-pandemic, particularly now that there is a vaccine and given the pent-up demand from frustrated young people who’ve been socially isolated.”
Rastegar also explained how from an investor’s viewpoint, coming out of this pandemic there’s never been a better time to invest in these types of spaces and businesses because there’s such an excess in supply right now, so prices are low, but not expected to stay that way. “There is a supply of properties available under market value across the country, and especially in some of the largest cities, where demand will likely be greatest.”
“These spaces can be converted with ease, as most experiential places require simple layouts and focus heavily on set-dressing and decor rather than a complex build-out.”
There’s also a multitude of mall locations with vacant spaces within them that these experimental businesses would fill perfectly. A recent estimate predicted that nearly half of all mall-based department stores will close by the end of 2021 due to the lack of foot traffic. With this excess in vacant commercial property, there’s never been a better time for these businesses to take over.
“Part of the beauty of these experiential spaces is that they are whatever the mind can imagine, from intricate and complex to minimalist and stark. Depending on the demographics of the location where it’s being built and who the target customer is, the design focus of the experience will vary dramatically,” Rastegar explained.
The longevity of these properties is also thought to be a major selling point for industry leaders. The ability for returning and new customers to experience something memorable is one of the biggest reasons why these experiences and businesses were thriving before the pandemic. Developers take their time designing a space that younger individuals would be drawn to, and want to return to.
“As the younger generation looks for new and engaging attractions to capture their attention, immersive experiential spaces will become increasingly popular. Not only do these spaces offer a form of entertainment and escapism, but they also provide a vehicle for visitors to immerse themselves in the experience and create and share that experience with others through social media.” It’s expected that commercial real estate transactions in general will be on the rise within the next few months, and only time will tell what new experiences are to be had once this pandemic is finally over.
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