Ari Rastegar is CEO of Rastegar Property Company, a vertically integrated real estate company with a focus on value-oriented real estate.
In the years leading up to the pandemic, all manner of pop-ups and permanent experience-focused locations were being constructed to meet the demands of a social media generation. Everyone from museums to luxury brands to renowned artists are building spaces dedicated to experiences rather than just products. Places like the Museum of Ice Cream in New York City put visitors in the spotlight with interactive displays rather than the traditional museum setup that makes its exhibits the focus.
Lists of “instagrammable” spots from all across the globe have flooded the travel news space and most everyone’s social media feeds. Anything can become a social media mecca, from perfectly placed shots of the iconic skyline in Brooklyn’s DUMBO neighborhood to the overnight sensation a simple staircase became following the release of the movie Joker. It’s becoming embedded in the younger generations, and even some of the young-at-heart, to seek out these experiences and spaces to share with their social networks.
Catering to themes and aesthetics popular among millennials, these spaces are full of bright pink walls and picture-perfect photoshoot 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.
For those more familiar with traditional asset classes, this may be surprising news, but realistically, it’s simply the latest evolution of the real estate market. The pandemic may seem like a significant roadblock to the momentum of building experiential places, but the reality is very different. 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.
The case for immersive experiential spaces doesn’t stop with just increased demand. Experiential spaces can be extremely attractive from an investor perspective. 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.
Additionally, malls, many of which have been facing a slow decline over the past decade, make ideal locations for experiential properties. One recent estimate is predicting that nearly half of all mall-based department stores will close by the end of 2021. With many malls sitting vacant or largely vacant, their plethora of open floor space and multiple levels make them excellent blank canvases for these experiential spaces. 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.
Another great selling point for real estate investors is the longevity of these immersive spaces. While there will be some familiarity for returning visitors, the uniqueness of the experience creates new memories for these participants each time they visit. Even with minimal changes to spaces, there’s the ability to create new memories for participants. Updates to spaces can also be events in and of themselves. Collaborations with local artists and businesses or charitable causes can help bring in other demographics of visitors that may not have previously been interested. These ever-evolving spaces are essentially a gift that keeps on giving as they are updated throughout the years. Additionally, some can even be broken down and tour the country or globe, generating even more value for real estate investors. Some savvy developers may even make dedicated spaces for these types of traveling attractions, furthering their investment with a revolving door of new and exciting spaces for visitors to flock 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. Real estate investors should be on the lookout for these projects that are closely aligned with the interests and demands of youth culture to capitalize on the opportunity ahead of its seemingly inevitable boom.