Raphael ThysEveryrealm's Metajuku shopping district in Decentraland Everyrealm Inc.
Is digital real estate still real estate? Is a digital store still a store? These questions lie in the gray matter between the world of humans the world of our avatars. Or perhaps this is all hype and, like Google Plus or Vine, will dissipate into the black hole of tech. But, on the other hand, what if it’s the next form of internet, proving vital to the future of long-term commercial success?
The term, metaverse, was coined in the 1990s by sci-fi writer Neal Stephensen but became widely used after Mark Zuckerberg’s presentation last fall on socializing in the metaverse. Since then, brands like Nike have created virtual sneakers for avatars, Gap has launched an NFT collection, Forever 21 opened a store, and retailers like Walmart have plans to join.
One aspect of the metaverse that has not been widely discussed is how the real estate industry can get involved. CNBC recently reported that according to MetaMetric Solutions real estate sales in the metaverse were over $500 million in 2021 and could reach $1 billion in 2022. Despite being intangible real estate, its value is skyrocketing and hints at a significant opportunity cost for those not involved.
Digital stores existed before the metaverse but now hold more considerable value
Alo Yoga's wellness sanctuary in Roblox
The idea of virtual retail stores is not new. Back in 2018, Storefront partnered with Obsess to build the first-ever fully-interactive virtual pop-up store as a way for customers to interact with a store environment digitally. Since then, it’s become clear a similar concept in the metaverse makes sense. Shopping, even for an avatar, can be an activity.
It seems the initial interest for retail stores in the metaverse is taking form in pop-ups. They allow people to browse a brand’s latest digital collection. For example, Selfridges announced last month that it was partnering with fashion house Paco Rabanne to create an IRL pop-up mixed with an art exhibition featuring NFTs. In addition, Gucci and Ralph Lauren have pop-ups in the metaverse platform Roblox and Zepeto. And today, Alo Yoga launched the Alo Sanctuary, an immersive wellness space for yoga and meditation, on an island in Roblox. It includes a store with Alo digital fashion.
The digital commercial real estate industry is forming, and the physical one is missing out
The idea of a virtual world becoming a popular place for people to interact poses a threat to physical experiences. E-commerce has already hit the retail real estate industry. The surviving landlords are the ones that made upgrades and changes to their tenant mix to maintain popularity and relevance. So, if the metaverse is the next shift in consumer behavior, there’s a need to get on board.
So far, tech companies are taking the lead. Decentraland, an Ethereum based virtual reality blockchain platform, is a 3D world where participants use tokens to purchase land, goods, and services. It’s set to be the host of the first metaverse fashion week, and it features stores like Samsung, and Sotheby’s, which built a duplicate of its London Galleries on the platform. In addition, last year, Boson Protocol, a decentralized commerce platform, purchased a plot of land in Decentraland for $704,000 to build a virtual mall.
A leader in digital real estate development is Everyrealm, previously known as Republic Realm. It owns land across numerous virtual worlds, including a shopping district in Decentraland called Metajuku. In purchasing real estate through NFTs, it utilizes physical real estate techniques in the virtual world. It also recently launched a retail concept located in Decentraland called GFTshoppe, which sells NFTs designed for gifting. Each GFT is wrapped in a digital box that unwraps on a certain date depending on the collection.
Tech giants like Meta and Microsoft are also well equipped to become digital real estate companies. It will only be a matter of time before there are many. But perhaps, it’s still possible for the commercial retail real estate industry as it is known today to survive and thrive in the metaverse.