For years, Airbnb has been a household name for house-sharing and short-term rentals, particularly in the travel industry. Now, moving into the architecture and construction industry with its new Backyard initiative—led by the company’s subsidiary Samara, a design studio launched in 2016—Airbnb is looking to leave its imprint in a more concrete way: designing, building and sharing homes based on contemporary lifestyles.
Anthony Hitt, president and CEO of Engel & Völkers America, who was recently recognized as a 2019 RISMedia Real Estate Newsmaker, believes this is positive news that could help inspire other segments of the industry.
“I think this an intriguing concept that will appeal to a niche market and perhaps inspire new building trends among traditional builders over time,” says Hitt. “Why wouldn’t a real estate professional want a piece of this action? I think the challenge will come in simply understanding the ‘why’ behind a new way of design and construction, and then preparing the right messaging and marketing strategy targeted to the right consumer.”
Airbnb Co-Founder Joe Gebbia announced the news on November 29, stating that Backyard is looking into how it could implement sophisticated manufacturing techniques and smart home technology into buildings.
“Airbnb challenged conventional thinking and pioneered an entirely new industry,” explained Gebbia in the project statement. “We helped people activate underutilized space—from a spare bedroom or treehouse to your apartment while you’re away—and built a community that connected people around the world. With Backyard, we’re using the same lens through which Airbnb was envisioned—the potential of space—and applying it more broadly to architecture and construction.”
Hitt acknowledges the company’s impressive history, stating that Airbnb disrupted the vacation and rental home markets by introducing a digital platform that works to connect renters and their guests. But is that enough? With fierce competition in the short- and long-term rental markets, Hitt understands that new ventures may sometimes be the key to survival.
“…There’s nothing stopping a new scrappy competitor from taking its place tomorrow,” Hitt says. “I applaud Airbnb for thinking about its next chapter.”
Project leader Fedor Novikov said the undertaking fills a space, stating, “Simply put, nothing addressed long-term adaptability from a systemic perspective. The only way to close the gap was to work from first principles and imagine entirely new approaches for building homes.”
Others agree with the sentiment, believing this service could help restructure a construction market that is deeply fragmented.
“We welcome anyone who is serious about bringing innovation to home-building,” says Alexis Rivas, co-founder and CEO of Cover Technologies, Inc., a Los Angeles-based tech company that custom-builds backyard guesthouses, studios and homes. “People deserve more than what is currently available to them: poorly designed and built homes except for those who are privileged enough to afford the best architects, designers and builders.”
While details are scarce, Gebbia said the light bulb ignited with one question: “What does a home that is designed and built for sharing actually look and feel like?”
Using a decade’s worth of data surrounding the way individuals travel, live and share their spaces, Airbnb hopes to provide an answer through eco-friendly building materials and fully prefabricated homes.
“People are on a continued quest to find ways to improve and enhance their lifestyle, and space is an important part of the equation, especially as it relates to homes,” says Hitt. “Design, location and amenities that simply make people’s lives easier and happier will be a draw. Airbnb has a lot of data as to what their customers are attracted to, so I’d imagine this initiative will certainly strike a chord with a niche buyer.”
With prototype units set to be tested as early as fall 2019, what lies in the future for Airbnb? Many agree this is merely the start to greater initiatives.
“Airbnb building homes will just be the beginning,” said Pat Kinsel, CEO and founder of Notarize, in a statement. “Experiences will soon be part of the consumer shopping checklist, on top of Walk Score, school system and distance to work. That’s why Lennar, the largest home builder in the United States, is working with Amazon, and why Redfin believes more than 20 percent of their closings will soon be online. The real estate industry is undergoing the largest shift in technology it’s ever experienced, and those who connect all stakeholders in the home-buying process will set the tone for the future.”
Innovations aside, there are practical questions that have not yet been answered, points out Rivas, including:
- What part of the building process will Airbnb handle?
- Will homes be fully customizable, or will customers have a few models to choose from?
- Will Airbnb manage the permitting process?
- Are they building new technologies (both software and hardware) to make their homes, or are they using traditional building systems?
- In which regions will Airbnb start building?
Additionally, its success hinges on several factors, which have yet to be addressed.
Most importantly? The bottom line.
“Airbnb has about 5 million homes on their platform,” says Rivas. “To build the number of homes required to impact their top and bottom line, they would need to create a division that is totally focused on building a profitable business, and not just a prototyping project as they’ve described in order for this venture to not negatively impact their EBITDA in either the short- or the long-term.”
All trends go out of style eventually, says Hitt, noting that “in real estate we’ve all seen listings that make us wonder, ‘What were they thinking?’ But it’s the natural progression of time. Airbnb’s move is a bold one, but exciting to see based on the way we as a culture are rethinking space and simply living differently than previous generations.”
Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.
