What's the Future of Real Estate? Bigger Offices and Smaller Chains

Ben Bergman

Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.

Office space generic
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Offices will be bigger and oriented around creating a sense of community, omnichannel retail will be more important, brands will have dozens of stores instead of thousands, and cities will provide incentives to lure employees rather than companies. Those are some of the predictions about what will happen in the next few years as the world recovers from the coronavirus, according to Brendan Wallace, co-founder and managing partner at Fifth Wall, Justin Bedecarre, co-founder and CEO of HelloOffice and Jen Nguyen, founding partner of TEAMWERC.

Fifth Wall is the largest venture capital firm focused on real estate tech, known as proptech. It announced the close of its second real estate technology fund last year, with $503 million in dry powder, making it the largest VC fund in Los Angeles. HelloOffice is a technology-powered commercial real estate brokerage that started in the Bay Area and expanded to L.A. last year. TEAMWERC is a San Francisco-based commercial real estate consultancy.


Wallace, Bedecarre and Nguyen spoke to dot.LA in advance of an executive strategy session Tuesday at 11 am PST about the future of real estate after the novel coronavirus. Here are some excerpts from the conversation:

Retail shops have been opening in Los Angeles and elsewhere. How quickly do you think people will want to go shopping?

Wallace: I think there's probably two considerations. One is that you actually have some pent-up demand. So, I think you will see a surge, and I think you actually have seen that in cities like Phoenix. What I'm not clear on is if that's a false positive, and what we're likely to see going forward because we haven't seen the second peaks occurring in cities and how the public will react to that. We're in the very early innings of probably a surge in retail bankruptcies. As stores go dark that just drives down foot traffic, and I think alongside that you have this forced adoption of e-commerce that just occurred over the last 75 days. That experience is going to have a long-term effect and I think about it like we pulled the future forward. Whatever was going to happen in 2022 or 2023 is happening now in 2020, and the confounding variable on top of that is the uncertainty around COVID and the public response to it so the one thing I feel confident in saying is it is not going to go back to business as usual.

That sounds like a lot of uncertainty, which is understandable because no one really knows what's going to happen in terms of the health considerations. But as someone who has this big retail fund, what, how are you deploying that?

Wallace: Our retail fund is focused on brands that are omnichannel, so those are brands that are selling both online and offline. This crisis has underscored is that to really have resiliency in circumstances like this, a brand needs to be ubiquitous. You need to be able to reach consumers where they are and that can be on their computer, their phone or in a store. I think the more omnichannel a brand is, the more durable they are in a situation like this so we are still actively looking to invest in those brands. I think the other distinction about how we invest in retail versus how retail is traditionally conceptualized is that some of the brands that are out there today — like Old Navy and Gap — you're talking about hundreds in some cases thousands of stores. I don't think even the largest, most prolific omnichannel brand is ever going to have 1,000 stores. I think that era is over. What you're seeing is just smaller real estate footprints and a concentration of those footprints in higher-quality real estate assets. In many ways this crisis is hurting the weakest assets. The malls in the shopping centers that were already struggling are going to struggle more in this crisis and this could be a body blow. But I think the stronger assets, the assets that were always desirable, and the high streets in retail real estate that were always desirable to many brands are going to come back for no other reason then there's still going to be a street life in cities. I don't think that's going away.

Left to right: Justin Bedecarre, co-founder and CEO of HelloOffice, Jen Nguyen, founding partner of TEAMWERC, and Brendan Wallace, co-founder & managing partner at Fifth Wall.

Just looking at cities in general, there's this whole potential ripple effect from people not working as much in big cities. Do you see that actually happening, lots of tech workers moving out of San Francisco?

Wallace: I think you can generalize more broadly than tech workers and make it knowledge workers, who are less required to work in cities than they were in January of this year. The experience of many companies is that working remotely has been surprisingly productive. But the reason cities formed in the first place was to accommodate businesses and people and create a social dynamic which drove people together where you had to go to the market square to buy things. What's happened with technology – e-commerce being a prime example – is we virtualized much of that meaning. So, we've stripped away many of the commercial benefits of concentrating businesses and people together. And so what I think cities are left considering is because there's no longer the commercial magnetism of pulling everyone together it really has to come down to the social magnetism, that we like being around other people. I'm curious to see how much people want to go back to cities.

Justin, how much work do you see returning to the office once the threat from the pandemic subsides?

Bedecarre: Offices are really going to be built around what they're meant to be built around, which is collaboration. In the short term, square footage per person is going to go way up. The way that we're thinking about our spaces at HelloOffice is that we're going to be doing a phased-in approach to bring in key members and desks are going to be spread out significantly. Fewer people are going to be coming into the office at any given time. Whether it equals out for how many people are in the office versus how many square feet per person is is hard to predict with certainty. But square footage per person will trend upwards, not downward as it has been for over a decade.

Jen, are you seeing a similar trend?

Nyugen; Oh definitely. It's really typical for a lot of tech startups that we work with, their standard square foot per person is 100 square feet per person. But what we've seen in doing the six foot social distance studies is a lot of the companies we work with need extra space, so instead of 100-square-feet per person they're needing at least 300 square feet, at a minimum.

Are you hearing from clients that they want to go back to the office?

Nyugen: We're hearing more of we're going back to the office in some shape or form but in a phased approach.

Is there a specific timeline you're getting from most companies about when they want to come back?

Nyugen: The timelines are consistent with specific regions. For example, in San Francisco a lot are looking towards the end of Q3. A lot of them are also identifying within their own or organization which functions they deem critical.

Justin, it seems like there has been something specific about startups that they need to physically work together. Do you think that will change now?

Bedecarre: I do think overall, especially in the early stages, having everyone together working in one place has significant advantages. But it's not for everyone. Gitlab and WordPress have built some phenomenal companies being 100% remote, but that certainly isn't where most companies will end up.

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🏰 Disney's Epic Investment Stands Out Amidst Gaming Industry Layoffs

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

🔦 Spotlight

In the midst of widespread gaming industry layoffs, a glimmer of positive news emerges as Disney announces a significant move: a $1.5 billion investment in Epic Games. 🏰💰🐭

Image Source: Disney

Disney's $1.5 billion investment in Epic Games, disclosed late Wednesday, signals a strategic alignment aimed at expanding the success of "Fortnite." The deal enhances Epic's growth prospects after financial setbacks, including layoffs, and strengthens the partnership between the two companies. With Disney gaining a larger equity stake in Epic, the collaboration will broaden the integration of beloved Disney franchises like Marvel, Star Wars, Pixar, and Avatar into the game, potentially boosting its appeal and longevity. This significant investment underscores Disney's commitment to interactive entertainment and signifies a shift towards games as a primary revenue stream, aligning with the growing trend of digital engagement among younger demographics. Moreover, the potential for crossover sales of physical Disney products within "Fortnite" and the exploration of new content distribution channels are just some of the opportunities arising from this partnership.

For LA tech, the Disney-Epic Games partnership represents a validation of the region's burgeoning tech and gaming ecosystem. The substantial investment in Epic, who maintains a large Los Angeles office with 1,000+ employees (according to LinkedIn), reflects confidence in the LA’s talent pool and innovation potential. Additionally, this partnership between two industry giants fosters an environment for further collaboration, investment, and growth within LA's tech sector. As Disney and Epic Games deepen their ties and explore new avenues for content integration and distribution, it not only elevates the prominence of LA as a tech hub but also stimulates economic growth and job creation in the region. This partnership highlights LA's unique position as a hub where technology and entertainment converge. With its ability to integrate diverse industries, LA is driving innovation and expansion in digital entertainment. 🚀💸🎮

🤝 Venture Deals

LA Companies

  • ProducePay, a financing and marketplace platform for the fresh produce market, raised a $38M Series D led by Syngenta Group Ventures joined by Commonfund, Highgate Private Equity, G2 Venture Partners, Anterra Capital, Astanor Ventures, Endeavor8, Avenue Venture Opportunities, Avenue Sustainable Solutions, and Red Bear Angels. - learn more
  • Blush, an invite-only dating app that drives users to local businesses on dates, raised a $7M Seed Round from individuals like Naval Ravikant. - learn more
  • Mogul, a startup founded last year that provides an overview of an artist's royalty earnings and identifies areas where money is owed but has not yet been collected, raised a $1.9 million seed round from Wonder Ventures, United Talent Agency, AmplifyLA, and Creator Partners. - learn more
  • Avnos, a hybrid direct air capture startup, raised a $36M Series A led by NextEra Energy and joined by Safran Corporate Ventures, Shell Ventures, Envisioning Partners, and Rusheen Capital Management. - learn more
  • AI.fashion, startup whose mission is to help retailers enhance the online shopping experience by providing consumers with virtual try-ons and personalized fashion recommendations, raised a $3.6M Seed Round led by Neo. - learn more
  • Suma Wealth, startup that aims to demystify financial topics and provide culturally relevant content, virtual experiences, and resources to help Latino users navigate financial challenges and opportunities, raised a $2.2M Seed Round . Radicle Impact led, and was joined by Vamos Ventures, OVO fund and the American Heart Association Impact Fund. - learn more
  • 222, a startup that helps users discover their city and meet new people through unique social experiences, raised a $2.5M Seed Round. Investors included 1517 Fund, General Catalyst, Best Nights VC, Scrum Ventures, and Upfront Ventures. - learn more
  • LimaCharlie, a security operations cloud platform, raised a $10.2M Series A led by Sands Capital. - learn more
  • Polycam, an app that uses a smartphone’s sensors to capture 3D scans of objects, raised an $18M Series A co-led by Left Lane Capital and Adjacent, and joined by Adobe Ventures and individuals like Chad Hurley and Shaun Maguire. -learn more.

LA Venture Funds

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a startup building software to decarbonize logistics for logistics businesses and goods business through a vetted marketplace and optimization software. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $1.5M Pre Seed Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

Venture Waves, Climate Tech Wins, and Silicon Beach's Ongoing Evolution

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Anduril Seeks $1.5B in VC Funds

Defense company Anduril Industries Inc., based in Costa Mesa and founded by Palmer Luckey, is seeking to raise $1.5 billion in fresh funds to boost its valuation to $12.5 billion or more, according to sources quoted by The Information. This fundraising effort, if successful, would mark one of the largest venture capital rounds of the year.

Image Source: Anduril

Anduril recently secured a contract to develop and test small unmanned fighter jet prototypes under the Air Force’s Collaborative Combat Aircraft (CCA) program, beating out major defense companies like Boeing, Lockheed Martin, and Northrop Grumman. Alongside General Atomics, Anduril will design, manufacture, and test these aircraft, with a final multibillion-dollar production decision expected in fiscal year 2026. This program aims to deliver at least 1,000 combat aircraft to fly in concert with manned platforms and is part of the Air Force’s Next Generation Air Dominance initiative. Central to Anduril’s success in this contract is the Fury autonomous air vehicle, acquired through the purchase of Blue Force Technologies. This victory underscores Anduril's rapid advancement in the defense sector, aligning with Luckey's vision of building faster and more cost-effective defense assets. - learn more

Los Angeles Ranks Number 1 in Emerging Climate Tech Hub

The 2024 Emerging Climate Tech Hubs Report by Revolution highlights Los Angeles as a burgeoning center for climate tech innovation. LA's growth in this sector is driven by its diverse talent pool, strong research institutions, and a culture of environmental consciousness. The city's unique mix of legacy industries, such as entertainment and aerospace, alongside emerging tech companies, positions it as a pivotal player in the climate tech landscape. This shift reflects a broader trend of decentralized climate tech funding across the U.S., reducing the historical dominance of California's traditional hubs. - learn more

Silicon Beach: Looking Back, Moving Forward

Assessing the overall health of the startup market is challenging, especially as venture capital funding has decreased by an average of 61% from 2021 to 2023 across the top VC markets in the US. Markets with robust ecosystems in AI, SaaS, Biotech, Healthtech, and Fintech appear to be weathering the downturn better than those focused on Consumer and Gaming industries, areas where Los Angeles traditionally excels.

Percent Change In VC Funding By Region

CB Insights

LA Times paints a rather bleak outlook on the Los Angeles tech scene noting venture capital funding in Greater Los Angeles plummeted 73% from 2021 to 2022. Silicon Beach, once a vibrant tech corridor, currently faces high vacancy rates and lacks late-stage financiers, especially in the AI sector. However, there are positive signs, including growth in aerospace startups and increased venture capital investment in early 2024, suggesting a potential rebound for LA's tech ecosystem.

While LA may not be exceeding expectations during this period, its tech ecosystem warrants a nuanced evaluation, given the broader market dynamics and its strong performance in specific sectors. Reach out to us with your thoughts.

🚀 SpaceX gears up for another stellar year, active raises, and more

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Happy Friday Los Angeles! You made it through the first week of 2024!

🔦 Spotlight

Elon Musk may be a divisive (albeit entertaining) figure, but the continued success of SpaceX is pivotal for the aerospace industry in Los Angeles and more broadly around the world.

Image Source: SpaceX webcast

What happened with SpaceX in 2023?

  • Elon Musk challenged Facebook founder, Mark Zuckerberg to a cage fight.
  • SpaceX launched 96 successful missions with its Falcon series of rockets, a 57% increase over its previous annual record.
  • SpaceX conducted two test flights of the largest and most powerful rocket ever built, Starship.
  • Roughly two-thirds of SpaceX's launches in 2023 were devoted to building out Starlink, the company's satellite-internet megaconstellation.
  • Isaacson’s Elon Musk biography was published in September including everything from Musk’s tumultuous relationship with his father to his work ethic and “demon mode”.

Moving forward what can we expect from SpaceX and its controversial founder? Continued innovation pushing the aerospace industry to new limits? Yes. More drama? Without a doubt.

Here is some of what is to come in 2024:

🤝 Venture Deals

Just Announced

Check back next week!

LA Exits

  • CG Oncology, an Irvine, CA-based developer of immunotherapies for bladder cancer, filed for a $100M IPO. It plans to list on the Nasdaq (CGON) with Morgan Stanley as left lead underwriter, and has raised around $317m in VC funding. - learn more
  • McNally Capital agreed to sell Advanced Micro Instruments, a Costa Mesa, CA-based maker of gas analyzers and sensing technologies, to Enpro (NYSE: NPO). - learn more

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a hard-tech startup that is developing a technology for decarbonizing natural gas, is raising a $1.5M Seed Round. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $250K Angel Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

📅 LA Tech Calendar

Sunday, January 7th

Wednesday, January 10th

  • Startup Cafe: Networking with a Kick - Entrepreneurs, Startups, and Tech Enthusiasts join together to meet and connect with like-minded people, industry professionals and investors, while enjoying a nice cup of coffee in Venice at The KINN. This week’s interactive discussion about AI’s evolution in entertainment will feature Dr. Sam Khoze and Rachel Joy Victor.
  • Venice Tech Happy Hour- Join Startup Coil and FoundrHaus Wednesday evening and enjoy the sunset from the rooftop, grab a bite overlooking Abbot Kinney, and mingle with other tech enthusiasts and entrepreneurs by the bar on the patio.

Have an awesome event coming up? Reach out to be featured on next week’s Newsletter!

📙 What We’re Reading

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