When talk of the metaverse first went mainstream, it sounded to many like a game -- albeit a fancy one -- or an extension of social media. It certainly didn't sound like anything that could have a significant impact on real estate. But major companies are now plunking down some very real cash for metaverse real estate ranging from office space and entertainment venues to retail stores, and investors in physical real estate are paying attention.
But should these investors actually be rolling out the welcome mat for the metaverse? Let's look at a few real estate sectors where that might be the way to go.
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1. Retail
With retailers spanning the spectrum from Gucci to Walmart making a leap into the metaverse, it's understandable that some investors in physical retail are getting concerned. But just like e-commerce has yet to usher in the retail apocalypse, it's unlikely the metaverse will be diverting traffic from physical retail anytime soon. In fact, a growing emphasis on outdoor shopping centers over enclosed malls reflects the fact that people still want to get out there and shop in person, so property owners are staying on top of their shifting desires.
That said, the metaverse does offer a variety of unique new marketing opportunities that physical retail investors stand to benefit from. These include everything from special metaverse events and letting consumers outfit their avatars in branded clothing and accessories to more direct advertising outlets like metaverse billboards. And it's quite possible that we've only seen the beginning of what metaverse marketing can do.
2. Suburban residential
Remote work became huge during the pandemic as social distancing was key to stopping the spread of the virus. Several major companies have even announced that all their employees who can do their jobs remotely will be allowed to continue to do so indefinitely. Investors in physical office space are keeping a close eye on this situation. And now, virtual offices in the metaverse could lead even more companies in the direction of an all-remote workforce.
Another pandemic side effect was an increasing number of people deciding they didn't want to be packed into a city anymore. And it's reasonable to think that as more people plan to work remotely and forgo the commute for the long term, quite possibly in favor of a virtual office, more will head to the suburbs. As a result, residential suburban real estate is hotter than ever. So, it may be a good idea to consider investing in either suburban rental property or in a real estate investment trust (REIT) that owns plenty of them.
3. Suburban co-working offices
So the metaverse could lead to more people working from home, and for many, that's always been the dream. Unfortunately, as many people learned during the pandemic, it's just not always that practical. If both spouses work from home, there may not be enough office space to accommodate them. And if one parent stays home with the kids while another works, it can be hard to get enough peace and quiet to get work done. It's also true that some people just need that routine of getting ready for work and heading to an entirely separate environment to keep them free from distractions and focused on the task at hand.
Enter co-working offices. These shared office spaces for remote workers can be a great way to get some work done and may even help workers achieve a healthier work/life balance than the always-on feeling they may get from working in their homes allows.
And they can be great places to connect to their metaverse offices. Co-working spaces are certainly nothing new, but as more formerly office-bound employees head to the suburbs, they're becoming increasingly popular in suburbia.
4. Vacation rental properties
One of the many fun uses of the metaverse is getting to tour other locations. Want to visit the Grand Canyon, Niagara Falls, or the Florida Keys? Or maybe you want to check out some international destinations, like the Costa Rican rain forest, the French Alps, or the vineyards of Tuscany? Part of the beauty of the metaverse if that it can be a gateway to explore anyplace you want.
But as immersive as the technology is, it's not the same as actually visiting the real-world destination. In this sense, vacation rental property owners can think of the metaverse as an incredible marketing tool for travel, the likes of which we've never seen before. If watching travel writer Rick Steves visit a gorgeous location motivates people to book a trip, what kind of wanderlust could visiting that location virtually conjure up?
The metaverse could be a win for real-world real estate
It's easy to understand why physical real estate investors might see the exploding popularity of metaverse real estate as a threat. But just as 20-year-old fears that e-commerce would soon sink retail have yet to be realized, it's not looking at all likely that the metaverse will replace most of our real-world real estate. Office space may be the most at risk, but even that is unlikely to totally disappear. And in many areas, it could even help.
If you've been following the latest metaverse developments and want to invest in physical real estate that may benefit from its rapid expansion, these four areas are worth checking into.
