In Scooter Startups, Landlords See a Competitive Edge—and a Path to the City of the Future
In the two years since electric scooters first arrived on the streets of Southern California, the e-scooter industry has exploded beyond virtually everyone’s expectations.
Startups like Bird and Lime have built an international presence and now have private valuations that exceed $2 billion. Ride-sharing heavyweights Lyft and Uber (the latter through its own micro-mobility vertical, Jump) have also entered the game, as has automotive giant Ford Motor Company, which paid $100 million to acquire bike- and scooter-sharing startup Spin last year.
This flurry of investment is happening even as doubts loom over whether these startups can build a long-term, sustainable business model (last week, it emerged that San Francisco-based Bird had laid off up to two dozen employees). There’s also been ample criticism from local officials over the congestion created by e-scooters; in some markets, “rogue launches” left city planners ill-equipped to deal with a new, unregulated industry.
Yet the entrepreneurs and investors who have spurred the micromobility sector’s rapid growth believe they’re working at the forefront of urban transportation in the 21st century. With public transit infrastructure across the U.S. feeling the strain of age and underfunding, they think they’re well-positioned to provide more connectivity in a rapidly urbanizing world.
“It’s really about urban design, and how we should be thinking about what the future of our cities looks like,” says Ryan Foutty, global head of business development at Lime.
To achieve that vision, some of these startups are now making new friends whose business strategies align with their own—in particular, the real estate landlords who own and operate properties in urban centers.
Whether it’s providing an amenity to apartment dwellers or affording office workers another way of commuting, commercial real estate owners have begun to team up with e-scooter companies to deploy the vehicles at their properties.
The result is a symbiotic business relationship that’s becoming more common. On one side, landlords and their tenants gain access to an affordable, easy-to-use and—for many—fun way of getting around town; on the other, micromobility startups have a new means to gain exposure and grow their ridership.
“For real estate owners, it helps create better connections to transit and destinations in their communities. For us, it’s an investment to make [Spin] the most useful mobility service in the cities we operate in,” says Ted Bronstein, Spin’s vice president of partnerships.
Spin began partnering with landlords nationally earlier this year, striking agreements with the likes of Brookfield Properties and Howard Hughes Corp. in markets like Chicago, Tampa, and Washington, D.C. The e-scooter firm has placed more than 40 charging stations, known as Spin Hubs, at these firms’ properties, and Bronstein says it hopes to expand to roughly 1,000 Spin Hubs by the end of next year in new markets including Los Angeles, San Francisco and Portland.
Like competitors such as Lime, Lyft, and Jump, Spin has also collaborated with universities and major corporations to deploy e-scooters at both college and corporate campuses, with similar goals in mind. But in commercial real estate owners, the micromobility industry has found a substantially larger, more wide-reaching constituency.
Magnolia Capital, a Chicago-based real estate investment firm, is among those to have teamed up with Spin. The multifamily landlord has inked an agreement with Spin to install Spin Hubs at apartment buildings in Chicago, Los Angeles and Portland, according to Magnolia managing director Jay Friedeck.
“We mutually agree on a location on the property, and they put in, at their cost, the charging stations and scooters,” Friedeck says. The goal, he notes, is to provide Magnolia’s tenants with a “very convenient, environmentally friendly way of getting around town”—as well as an amenity that gives its properties an edge over competing buildings.
Clutter and connectivity
While Spin describes itself as a “dockless” e-scooter operator, the Spin Hubs are also meant to address one of the biggest criticisms facing its industry from municipalities across the U.S.: the clutter created by e-scooter riders who park their vehicles on sidewalks and in other public spaces. With that in mind, Spin encourages its riders to park their scooters at the mobility hubs by offering those who do a credit that discounts the ride—a strategy that Friedeck says has “solved one of the downsides of the scooter [industry], which is the mess they leave behind.”
That tweak to the dockless model is among the factors that drew the Crystal City Business Improvement District—whose membership is mostly comprised of private commercial real estate landlords—to partner with Spin in installing 10 mobility hubs across the Crystal City area of Arlington County, Va., located just across the Potomac River from Washington, D.C. The partnership comes on the back of an e-scooter pilot program that Arlington County launched in late 2018, and which was well-received; in November, the Arlington County Board passed regulations permitting private e-scooter companies to operate in its jurisdiction.
Crystal City’s embrace of e-scooters is driven by the significant commercial transformation the area is undergoing—most symbolized by Amazon’s decision to establish its “HQ2” project in Arlington County. With HQ2 expected to create up to 25,000 new jobs, local stakeholders have recognized the need to flesh out the area’s transit connections, and e-scooters have become a major part of that strategy.
“For the same reason that individual companies are partnering with mobility operators to enhance the value of their buildings, we see these types of services as a major economic development tool,” says Rob Mandle, the Crystal City BID’s chief operating officer. “It’s a big part of talent attraction… Young workers are demanding these kinds of amenities.”
Mandle describes e-scooters as a useful “last-mile” solution for connecting Crystal City’s growing number of office workers to major transit services like the Washington Metro, which is not easily accessible from everywhere in the area. “It helps extend Metro’s influence; not everybody wants to drive to work, or walk 30 minutes from the Metro station,” he notes. “This is an elegant solution to closing that last-mile challenge.”
While Amazon “weren’t involved in any of the conversations” regarding Arlington County’s e-scooter pilot program or the Crystal City BID’s partnership with Spin, according to Mandle, there are several Spin Hubs located in close proximity to the HQ2 campus that will undoubtedly be used by Amazon employees. Representatives for Amazon did not return requests for comment.
The car parking conundrum
Beyond providing residential and office tenants alike with a valuable amenity, those in the realm of commercial real estate also see much broader ramifications when it comes to embracing micromobility—namely, the potential to alleviate the burden of automobile parking. Whether mandated by local zoning regulations or by logistical necessity, real estate developers often find themselves pouring significant financial resources into building parking lots and garages, to the tune of tens of thousands of dollars per individual parking space.
“Owners don’t want to build parking; they’re often required to do so. If building owners had their way, they would build less parking lots and garages,” says Brendan Wallace, co-founder and managing partner at Fifth Wall, a real estate-focused venture capital firm that has invested in Lime.
In e-scooters and micromobility schemes like bikeshares, real estate developers and investors see a solution to the car parking conundrum. At Fortune’s Brainstorm Tech conference in July, Lime chief business officer David Richter said he’s “been surprised at the degree to which real estate entities want [micromobility] to happen.”
“They will get greater value from the real estate they already own because they will not have to allow ‘X’ number of parking spaces for people who are either residing or leasing space [at their properties],” Richter said.
Magnolia Capital’s Friedeck echoes that sentiment. “If you’re developing [real estate] projects, partnerships with micromobility companies give you better flexibility to reduce the number of parking spaces that you have to put in at a building,” Friedeck says. And with more urban-dwelling millennials eschewing car culture altogether in favor of more a walkable lifestyle, it gives residents who don’t have a car more options, he adds.
In addition to addressing the “bane” of parking, Fifth Wall’s Wallace notes that e-scooters also have the potential to increase traffic on retail “streetscapes,” which have been harmed by the rise of e-commerce and a corresponding downturn for many brick-and-mortar retailers. Along those lines, Lime has partnered with the likes of shopping mall landlord Macerich and French grocery store chain Franprix to deploy e-scooters with the goal of driving retail traffic and allowing customers to get around more easily, Lime’s Ryan Foutty says.
Ultimately, it’s become apparent to many working in commercial real estate that micromobility is not only here to stay, but a huge part of what the future of their industry will look like.
Charles Lancaster, of Washington, D.C.-based developer Gould Property Company, says his firm’s decision to install Spin Hubs at its Crystal City properties was motivated by a desire “to be part of the change” that promises to disrupt the real estate business.
“The way to be part of the future is to embrace future technologies—so that we can disrupt ourselves,” Lancaster says.
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