#WorkBold Podcast Episode 10

How to finance the future of commercial real estate with Dror Poleg

The new capital stack of CRE
Dror Poleg

Dror Poleg, world renowned author of Rethinking Real Estate, chats with Bold Founder, Caleb Parker in London during his UK book tour. Dror explains why the old way of leasing space is becoming obsolete and how to finance the next phase of growth for Space-as-a-Service.

Questions answered in this episode

  1. In your LinkedIn article you refer to the hotel industry offering a few hints into the future of Wework, with lessons we can all take away for how to finance the next phase of growth for Space-as-a-Service. Can you elaborate?
  2. You state that WeWork should not use venture capital to finance long leases or building acquisitions. Would you give this advice to the other operators in this sector?
  3. You say demand for space-as-a-service is growing and owners are coming to terms with the fact that the old way of leasing space is obsolete. Is that why are you keen on management and franchise deals with traditional landlords?
  4. The way buildings are valued (particularly here in the UK) is a barrier for the proliferation of management agreements. Do you expect this to change anytime soon?
  5. What is the future of finance, or “capital stack” as you like to call it, for CRE?
  6. Will a PropCo/OpCo brand emerge?

Value Bombs and tweetables

  • There’s a growing gap between what customers want and what landlords and their investors are willing to deliver. There’s a missing service layer.
  • There is insatiable demand for flexibility and service that is not going away.
  • Wework got the investor profile wrong.
  • Commercial real estate investor profiles need to evolve to align with the different layers of risk to deliver space-as-a-service.
  • Landlords have been sheltered from the new risk created by the demand for space-as-as-service.
  • Building valuations will have to change to account for this new risk of not having space-as-a-service.
  • Brand will become an important factor in building valuations.
  • New sources of funding will make up the future capital stack of CRE finance.
  • CRE Investors will bypass managers and partner directly with space-as-as-service brands.


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Dror's LinkedIn article referenced
Book: Rethinking Real Estate

About Dror

Dror Poleg is the author of Rethinking Real Estate and the Co-Chair of the Urban Land Institute’s Technology and Innovation Council in New York. His insights on the future of cities and buildings have been featured in publications including the Wall Street Journal, Forbes, The Globe and Mail, and Business Insider.

Dror briefs and advises senior executives from multibillion dollar companies such as AvalonBay Communities, British Land, Liberty Mutual, Dubai Holding, and Cushman & Wakefield.

Dror’s work draws on his experiences as a real estate and technology executive in the US, China, UK, and Australia, as well as on his formal training at the London School of Economics, INSEAD, and Swinburne University of Technology.

Previously, Dror served as Vice President of Kardan Land, where he oversaw the expansion of a $3b property portfolio in partnership with investors such as Blackrock MGPA and Frasers Properties; as CEO of Otherz.com, an app development company; and as Head of Digital at Standards Group, a creative agency that served clients such as IKEA, Scandinavian Airlines, and Shangri La Hotels.