Due Diligence: Spacewise - Short-term Space Leasing

Today, leasing real estate space isn't a deal for eternity anymore: Short-term leasing is in demand, with these arrangements called “pop-up shops”, “promotional space”, “flexible space” or IRL (”In Real Life”) touchpoints. Now that people are back to shopping malls, pharmacies and do-it-yourself centers, offline channels will likely drive? a good 90% of total retail sales again, just a little below pre-pandemic levels.?

Note: German version available on inside-it.ch

So using short-term spaces for getting products exposed to select customer segments with a notch of exclusivity may well pay out - and it is surprisingly effective and cheap compared to ever increasing costs of online advertising which we all hardly pay attention to.?

Finding Rental Space with Ease

Well, only if finding the right space was easy: Going back and forth just to close a deal worth a few days lease is not efficient for landlords or tenants.?

This is why Swiss startup “Spacewise” started offering a specialised online platform that facilitates closing such deals: Via their platform, tenants find the right location for their shop, promotion or brand activation in a fraction of the time used before by filtering through locations, types of spaces (e.g. storefront, prominent shelves or stands), availability, and rent price. And once there, the deal gets directly sealed via the Spacewise platform. Tenants also benefit from optional insurance coverage on the go, and if the roadmap gets delivered: planning tools, floor plans and additional comprehensive demographic metrics.?

Leasing Out More Profitably

On the other end, landlords benefit from lower vacancies, offering a better customer experience, new revenue streams and efficiency gains which Spacewise claims to be around 90%. They can also promote their spaces dedicated branded portals such as it is done for Migros Aare, and via online marketplace popupshops.com. And other neat features are planned of which dynamic pricing based on all the location and demography parameters appears to be the most ground breaking.

Potential for Market Leadership

While there are many online real estate platforms in Switzerland, none of them today is focussing on the specifics of short-term leased spaces that’s really easy and convenient to use. So with a good (secretly held) deal volume brokered via Spacewise-powered platforms in 2022, well-sounding customer names such as Wincasa, Swiss Post or Migros, and a promising sales pipeline, Spacewise is pretty uniquely positioned in this niche.

And there also aren’t too many players in this field internationally: VTS from the US has a slightly more long-term leasing focus for which they offer an attractive feature set, and they raised close to USD 500M in funds up until today. Originating from France, startup Storefront looks limited in features and not very self-servicing. Well established Yardi shows little innovation in that space but an impressive M&A track record that has me fantasizing about Spacewise listed there one day…?

Overall, competition looks manageable but I fear other real estate platforms will be entering the market, somethin Spacewise intends to de-incentivize by integrating them.?

Additional Funding Rounds

To date, Spacewise already raised 1.5M through multiple smaller rounds which probably could have been better anticipated. The team is now raising a pre-A series round with about 4M later this year. The cash shall primarily be spent on additional key hires, engineers and account managers, and help? enter the US market more aggressively. Through these activities, their current lower range six figures ARR shall increase to somewhere around 10M in a few years from now - earned via subscription and transaction fees.

To me, the Spacewise product looks solid and the idea is interesting. That said, too much currently still depends on its CEO, Chalid El Ashker. Firmly executing as per his plan to hire key people and then fully focusing efforts on rapid market expansion will be critical for seizing the market potential.

#popupshop #rentalsolutions #rentalspace #productpromotion #swissmade #software

Spacewise SICTIC Chalid El Ashker

Hero photo by Pop & Zebra on Unsplash

This article is a repost of a?piece published in German on Swiss ICT news platform?Inside-IT?on 03-Mar-2023. The content of this article reflects Ramon’s personal opinion and shall not be construed as investment advice.