SAN FRANCISCO—In preparation for our upcoming RealShare National Investment and Finance conference, held June 24thin Los Angeles, we exclusively chatted with crowdfunding panelist Adam Hooper on trends in retail and on building a real estate tech company in Silicon Valley. According to the CEO and founder of the Palo Alto-based RealCrowd crowdfunding platform, technology is going to continue to shape how retailers do business and interact with customers. “Everything from Amazon’s ever expanding web of products and services, including the talk of one day shipping product by way of unmanned drones, to their recent increase in price for their Prime memberships, they are a clear juggernaut in the world of how technology will impact retail.”
According to Hooper, “They have a singular ability by way of their sheer mass to move the market and create, or kill, major trends. Keep an eye on their developments and don’t be surprised if we see some interesting models in the near future.”
Beyond Amazon, Hooper tells GlobeSt.com, there are a host of other companies that are starting to fundamentally disrupt the established norms. “One of which, that we use with incredible frequency, is Instacart—a grocery on demand service that is experiencing explosive growth. No longer do we need to go to the store, wade through isles of choices and fight with the crowds. Log in, select your items and they magically appear at your door within an hour.”
What happens to retail spaces when customers no longer have to visit the brick and mortar, Hooper asks… “There is already a trend to smaller footprints, services like Instacart and others will continue to push that trend for certain.”
Do keep in mind, he says, that just because a reliance on technology enabled services can dramatically increase the efficiency and ease of which we shop, Whole Foods still needs to exist for Instacart to pick up the groceries. “Local restaurants still need to exist for DoorDash to pick up the food for delivery.”
This is very different from the Webvan model of the late 1990s, he explains. “The base infrastructure and physical locations still need to exist, but it will all function in a massively more efficient manner.”
Another largely yet untapped sector is the “Internet of Things,” he notes, essentially the ability for inanimate objects—the “things”—to be interconnected and capable of communication. “An interesting player to watch will be Estimote and how they are enabling down-to-the-foot location aware shopping experiences within brick and mortar stores—they call it proximity marketing.” If a retailer wants to run a promotion on a particular item, he continues, customers can get a notification when they are within an immediate vicinity with a special offer right on their smartphone.
Beyond proactive interactions, the sheer amount of data that can be collected about customer behaviors is fascinating, Hooper says. “Turning that into actionable intelligence will have a big impact on the way we interact with the physical spaces of the future.”
More relevant to his business specifically is an incredible investor appetite for retail investments. “Retail has been one of the easier food groups for investors to understand, especially in the single tenant net leased space,” he says. “Most everybody has had coffee at a Starbucks, most people have been to a Walgreens and everybody needs to bank somewhere.”
As an example, one of the most recent opportunities that his company launched on its platform was a single tenant net leased retail fund, where in three days, the company has funded over $750,000 of investment into the fund. “There is incredible investor demand for quality retail space which will keep it in focus over the next two to three years.”
According to Hooper, overall capital markets trends, be it continued downward pressure on cap rates or the inevitable increase in still historically low financing, are going to be important factors to watch, but the overall demand for retail space from non-institutional investors, he says, will keep it a hot ticket for some time.
“We are in the very early stages of a great transformation in the retail age, predominantly driven by the incredible technology innovations that are coming down the line,” he explains. “Everything from supply chain management, to the Internet of Things, to crowdfunding and the emergence of enhancing the overall shopping experience through these technologies will have a transformative impact on the future of retail real estate.”