At-home health testing service LetsGetChecked began 2020 growing at a fast clip and with plans to find a location for its next customer call center office. Then came Covid-19.

The New York City- and Dublin-based startup moved fast--it raised $71 million in the spring to develop an at-home Covid test and won FDA approval for it in May. As of July 2020, LetsGetChecked is seeing more than 800 percent year-over-year revenuegrowth. While the company has begun to rapidly expand its customer care team, the virushas kept staffremote. ButLetsGetChecked is continuing its search for office space, trying totake advantage of shifts in the commercial real estate market that have createdopportunities for businesses not available even six months ago.

In the second quarter of 2020, office vacancies nationwide hit 13 percent.Available subleases made up 2.7 percent of all available space on the market, reaching a level not seen since 2010,according to an analysis by commercial real estate firmCBRE. BetweenCovid's severe curtailing of economic activity and the increasing number of employeesworking from home, manycompanies are downsizingtheir offices.Uber, Square, and Dropbox have all listed portions of their San Francisco offices for subleasing in recent months. REI is looking to sell its never-been-used new 400,000 square-foot headquarters in Seattle.

Asking rent prices have yet to fall, which is typical in a down cycle as landlords try to hold out as long as possible, says CBRE chief economist Richard Barkham. At the same time, Barkham says, landlords are eager to fill space, so they're willing to offer a bevy of concessions to the right tenants, including rent-free periods, build-out expenses, and flexible lease terms.

"The more the balance of power has slipped between landlord and tenant, the greater the opportunity for a bargain," Barkhamsays.

That's precisely what LetsGetChecked is banking on. "There's so much uncertainty. We're hiring a large number of staff in Tampa, but we're not sure how big we'll get or how soon," says Ronan Ryan, the COO. "So we need the flexibility of, say, starting with 15,000 square feet with an option to add another 15,000 square feet in the same building in the future. Before [Covid], landlords weren't as ready or willing to give that."

Where to look

Not surprisingly, in the past quarter the biggest shifts in the commercial real estate market have occurred in tech hubs and metropolitan areas heavily dependent on mass transit. Austin saw the biggest decline in demand, with a net absorption rate of -2.3 percent, according to CBRE's Q2 office report. Net absorption measures the total new square footage leased minus the total square footage tenants no longer occupy, overa given time period. California, Texas, and New York markets have all seen the biggest drops, with previously hot metropolitan areas like San Francisco, Los Angeles, New York City, Boston, and Houston all ranking in the top 20 for negative net absorption (see the graphic below for more detail).

"I'd look for opportunities in downtown areas. Austin, San Francisco, L.A.--it's been very difficult to get space in those cities in the past 10 years," Barkham says. "This is a once-in-a-decade opportunity to acquire prime space in San Francisco."

Another way to consider opportunities is to look for areas with large inventories of new construction space about to hit the market. Currently, 134 million square feet of office space is under construction in the U.S., which makes up 2.5 percent of total office inventory, says David Smith, head of occupier research in the Americas at real estate firm Cushman & Wakefield. But certain markets that were in high demand pre-pandemic, like Seattle, Charlotte, and Nashville, have reached 5 percent. That's a lot of vacant space that's going to need to be filled.

Similarly, since the pandemic started, millions of square feet in subleased space have flooded the market, says Cushman&Wakefield executive managing director Nathan Piehl. From last December through June, available subleased space across the country is up 21 percent.

"For growth businesses still in the startup phase or even mature companies starting in new markets, sublease opportunities are economically advantageous," says Piehl, who specializes in tenant representation. "They require minimal capital, often they're furnished, and you're dealing with what's already been negotiated."

Prior to Covid, LetsGetChecked had zeroed in on Tampa as an ideal location for its next customer call center because of its labor force skills--the area boasts a large number of nurses. Post-Covid, Ryan says the increase in available subleaseshas been substantial. "Companies took these large amounts of office space thinking they'd grow into them, and now they're quite urgently putting them out to market as subleases," he says.

The company has not yet signed a lease, but Ryan says it aims to do so in the next 60 days. Needing to staff up remotely in Tampa before selecting a space has had its advantages. Whereas the company previously thought a downtown office would be fun and convenient for its staff, Ryan says they've learned through feedback from new employees that a more suburban location nearer to the city's nursing colleges would make more sense.

How to sweeten the deal

As LetsGetChecked considers its options, it's also trying to time a deal to take the fullest advantage of the moment. In addition to more flexible lease terms, Ryan says, the company is already seeing a willingness from landlords to offer rent-free periods and to cover some build-out costs.

"Landlords are going to try to hold face rates for as long as they can," Piehl says. "So you're going to see more rent abatement, tenant improvement allowance packages, moving allowances, furniture and equipment allowances--these are all things you can ask for now that you couldn't ask for six months ago." Plus, you can consider non-monetary concessions, such as the ability to revisit market rents in a year or two, he adds.

LetsGetChecked is going to need at least five to six months to do a build-out for its new Tampa space, which pushes its soonest move-in date to early 2021. The space will likely be configured with more than six feet of space between employees, larger meeting spaces, and plexiglass partitions for safety.

When the office is ready, the company is at a greater advantage than most as it plans for employees' reentry: Since LetsGetChecked makes Covid tests, the startup can do all of its testing in-house, and its on-staff clinical team can advise on how best to set up the space.

Q2 2020 negative net absorption by region

Below are the 20 U.S. markets that saw the biggest drop in demand in the second quarter of 2020 for office space as measured by their net absorption rate, or the total new square footage leased minus the total square footage tenants no longer occupy in a given time period.

Source: CBRE Research, Q2 2020

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The Office Isn't Dead Yet. And Now's the Time to Get a Sweet Deal - Inc.

Free Rent, Tenant-Improvement Allowances On The Rise

The impact of these concessions is evident in the second quarter's 6.6 percent, year-over-year decline in net effective office rent in the 15 largest U.S. markets, according to CBRE. Net effective rent takes into account financial concessions (periods of time that a tenant does not have to pay rent, contributions toward the construction of a tenants space, etc.) that will be subtracted from a lease's contracted base rent. In comparison, base rent - before concessions - declined by only 1.1 percent in the second quarter from a year earlier.

Meanwhile, the average length of free-rent periods provided to induce a new lease signing or renewal in the second quarter amounted to 10 months. That's a 13.7 percent increase from the first-quarter average.

Another measure of concessions - tenant-improvement allowances - increased by 5.1 percent in the second quarter from the first to $75.57 per square foot. Landlords provide tenants these allowances to build out their new space to their individual needs. That percentage gain might have been greater if not for declines in construction pricing.

"Overall, U.S. office-leasing activity declined by roughly 43 percent in the second quarter from a year earlier, so it is to be expected that building owners would need to occasionally use some sweeteners to nail down a new lease in this tough environment," said Whitley Collins, CBRE Global President of Occupier Advisory & Transaction Services. "This means that office tenants can find some advantageous terms in many markets, at least until the U.S. economic recovery gains more momentum".

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COVID Forcing Office Landlords Nationwide to Grant More Concessions to Secure Tenants - World Property Journal

One of greater Portlands largest-scale apartment developments in recent memory will open the first of four buildings this fall.

PM Construction Co. of Saco is managing the large-scale construction of the Latitude at South Portland. The apartment complex will consist of four buildings each 68,500 square feet a total of 256 units, mainly one- or two-bedrooms. Each building includes a lounge, conference room and fitness center. There will also be two outdoor kitchen/grilling spaces on the property. Design is a collaboration with Archetype Architects of Portland. Northeast Firestopping Solutions was the firestop contractor at the Latitude.

Photo / Courtesy Firefly Aerial Solutions

An aerial view of the Latitude at South Portland apartment complex.

Elsewhere, PM Construction is managing construction of the Samuel L. Cohen Households at the Cedars, senior-housing housing in Portland, at 620-640 Ocean Ave. It also has some non-residential projects in the works:

Great Falls Construction of Gorham is finishing what it calls its 5 in 5 accomplishment, construction of five maintenance and public works facilities in five years. The most recent is Sacos Public Works Facility, which will be 30,000 square feet. It will be completed this fall.

The other four builds were in Windham, a vehicle maintenance facility of 27,000 square feet; MDOTs maintenance-and-operations facility at the International Marine Terminals Eimskip site; South Portlands municipal services facility, 82,000 square feet; and Westbrooks 33,500-square-foot facility for public services, school transportation and fleet maintenance.

Photo / Courtesy Great Falls Construction

Great Falls Construction built a maintenance-and-operations facility for MDOT in Portland.

Thats not all. Great Falls is also building fire stations for South Portland and Lewiston. In Casco, its doing a school addition and renovation. In Old Orchard Beach, its building an administrative facility for the wastewater treatment facility. Finally, its building the York Toll Plaza at mile 8.8 of the Maine Turnpike.

DeStefano & Associates Inc. and CWS Architects have completed the design and construction of the Main Beach Bathhouse, offering public facilities in Ogunquit. Its 2,500 square feet and includes 700 square feet dedicated for lifeguard use. DeStefano is based in Portsmouth, N.H. CWS is based in Scarborough.

Jewett Construction promoted Alain LeBlanc to director of field operations. He has 16 years of experience in construction. Hell oversee field ops and staff for all projects from Maine and New Hampshire offices. Jewett is based in Raymond, N.H., and has an office in Scarborough.

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Building Business: Clarks Pond apartment complex to open first units this fall - Mainebiz

A development partnership between San Francisco-based investment firm Sansome Partners and an affiliate of Hunter Properties nabbed $155 million in commercial mortgage-backed securities (CMBS) debt to refinance a section of a sizable new suburban office complex in San Jose, Calif. thats fully leased to media and streaming company Roku, according to Fitch Ratings.

The financing originated by Goldman Sachs and Deutsche Bank refinanced $140.5 million of existing debt, funded $7.7 million of reserves upfront, provided about $2.3 million of cash equity to the sponsor and paid $4.5 million worth of closing costs, per Fitchs analysis. The deal closed on Aug. 7.

The 10-year, interest only loan pays interest at a rate of 2.8 percent and is part of the $630.8 million DBJPM 2020-C9 CMBS transaction, in which a $30 million note is included the remaining $125 million will be securitized in future deals.

Designed by Gensler, the property is called Coleman Highline, a massive mixed-use Silicon Valley office development that will eventually comprise around 1.75 million square feet of office, residential and hospitality space. The collateral in this CMBS deal spans 381,000 square feet across two office buildings that make up a portion of the overall development as well as a third 22,889-square-foot amenity building that accompanies them; it includes a gym and a 1,182-space parking garage. Fitchs as-is appraised value of the assets in this deal was pegged at $301.1 million, while its stabilized value was set at $305.2 million. Roku has leased all of Coleman Highline Phase I, which has two other office buildings that are not included as collateral in this transaction; altogether, itll span more than 738,000 square feet of space, according to Fitch.

The property was completed in 2018, according to Ftch, and is fully leased to Roku, which will utilize it as its U.S. headquarters once social distancing and mitigation mandates eventually soften in the area. The development is located at 1155 Coleman Avenue in San Jose, directly next door to Avaya Stadium, the home of Major League Soccers San Jose Earthquakes. Roku is relocating from its former home in Los Gatos, which is an area about 10 miles south of downtown San Jose. The JV wrapped construction of the collateral in this deal at a cost of around $250 million, according to Fitch, which, with this CMBS loan, points to around $95 million in equity that still exists.

Nearly a month before this financing closed, it was reported that the JV had put the Roku-leased assets on the market for sale, according to a report in the San Jose Business Journal. Last summer, the joint venture also inked Verizon to 640,000 square feet at other office developments within the complex, with plans to partner with the telecommunications giant to build out its space, which will eventually house 3,400 employees.

Fitch highlighted Rokus scheduled investment in the property as one of the strengths of this deal as the media company has leased the property through September 2030 with annual rent increases set at 3 percent; Roku is planning to inject about $43 million, or $120 per square foot, of its own capital into its space as well as $29 million in tenant improvement allowances, per Fitch. The lease has one seven-year extension option and no termination or contraction options. The ratings agency also noted that the pandemic has benefited Roku given that demand for online streaming services has skyrocketed as a result of more people being confined at home.

Before COVID-19 set in in March, Roku had begun moving into one of the buildings in this deal, with a plan to have its employees in both by the end of this year. Now, the media company is aiming at moving its employees back into one non-collateral office building as well as finish its build out of the aforementioned asset to be occupied by this fall. Despite any challenges, Roku has not requested any lease modifications, according to Fitch.

The larger Coleman Highline development will eventually feature 1.75 million square feet spread across seven office buildings and multiple amenity buildings. The collateral in this deal is officially Phase II of the development. The developments third phase fully leased to Verizon is slated to wrap by 2021. There will also be a 175-key hotel that is scheduled for delivery next year as well as 1,600 residential units, which still happen to be in the early stages of planning.

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JV Gets $155M CMBS Refi on Silicon Valley Office Leased to Roku - Commercial Observer

The spread of the coronavirus has had a devastating impact on the U.S. and worldwide economies. But that spread also created health and wellness scenarios for the built environment that lend themselves to reconstruction and renovation, say AEC firms.

I anticipate an increase in renovation/reconstruction as buildings are adapted to COVID-required standards, says Guy Geier, FAIA, FIIDA, LEED AP, Managing Partner with FXCollaborative.

Darren Burns, a Vice President at Stantecs office in Vancouver, B.C., says many of his firms clients areredefining normal. And those that are financially strong are positioned to take advantage of a distressed market.

Long-term, we see a reset from traditional thinking around work-at-home opportunities and the reality of the traditional office, says Burns. All sectors will be looking to adapt and prioritize health and safety. We believe the reconstruction market will grow in strength as we look to creatively adapt and reuse leftover spaces into a new purpose.

Such adaptations, say AEC sources, are likely to include improvements in buildings technology infrastructure, as well as their HVAC systems with better air filtration and the functionality to let in more outdoor air.

DPR Construction is among the firms that are also seeing increases in requests for all things touchless, says Scott Sass, DPRs Special Services Group Leader, ranging from automatic door openers, occupancy sensor light controls, and touchless kitchen and breakroom equipment.

Just how quickly the demand for reconstruction recovers, though, is a matter of debate. Burns points out that, unlike previous recessions, the recent retraction in new development is primarily the result of uncertainty about future revenue streams and financing. This could set us up for a slingshot recovery, if the stimulus spending heavily overlaps with a return to normalized commercial markets, he speculates.

Sass says DPR saw a slowdown in office reconstruction projects, as developers were waiting for more certain guidelines from government and health agencies. His firm, though, expects reconstruction, in general, to see an increase in demand, as many customers are making due with what they have, and are putting off major capital expenditures.

One of McCarthy Building Companies recent reconstruction projects is the 120,000-sf, two-story St. Louis Aquarium at Union Station, thats built inside the footprint of a 19th-Century iron umbrella train shed. The aquarium, which was designed by PGAV Destinations and completed last November, includes a 250,000-gallon shark habitat and five overhead viewing areas. Photo:Sam Fentress Photos

AEC firms are concerned about their clients abilities to locate financing to initiate reconstruction projects. FXCollaboratives Geier thinks this could create an aggressively competitive bidding environment that leads to lower construction costs.

John Buescher, McCarthy Building Companies Central Region President in St. Louis, cautions that projects put on hold when the COVID-19 crisis began could stay delayed till early next year. Until political and economic climates stabilize, clients are more likely to make conventional, low-risk real estate decisions,he says. Even projects moving forward must contend with product and labor shortages, construction financing issues, and potential delivery delays.

Still, McCarthy is projecting strong demand for the reuse of existing buildings, be they office renovations or the repurposing of historic buildings. One of McCarthys recent reconstruction projects was the St. Louis Aquarium at Union Station, a 120,000-sf, two-story attraction built within the footprint of a 19th-century iron-umbrella train shed. The PGAV Destinations-designed aquarium is a signature element of the $187 million redevelopment of St. Louis Union Station, a National Landmark structure that Lodging Hospitality Management (its owner since 2012) has been transforming into a family entertainment and tourist destination.

While COVID-19 has consumed the AEC and development worlds, it isnt the only trend thats prevalent in reconstruction.

More firms, for example, are considering alternative building materials and delivery systems for these projects. Stantec and McCarthy are among those that have turned to prefabrication and modular construction to get projects completed faster, improve the quality control of that reconstruction, support jobsite health and safety requirements, and ensure efficiency at a time when labor availability remains dicey in some markets.

The Building Team for the BEAT office and industrialproject includes Stantec and ADD Inc. (architects), Norblom Company (developer), Copley Wolf Design (landscape architect), and AHA Consulting Engineers and McNamara Salvia (engineers). Courtesy Stantec

Stantecs Burns adds that, in many markets, mass timber continues to grow as a building product of choice because of its low-carbon, lighter-weight properties. New approaches to building systems will be critical as we navigate the importance of healthy building environments, post pandemic, he says.

To that point, one of the more prominent projects under construction is the $930 million reconstruction of Key Arena in Seattle, which when it reopens next summer will be home to the WNBAs Seattle Storm and an NHL franchise. In June, Amazon bought the naming rights and will call the building Climate Pledge Arena. It will be the first net-zero-carbon-certified arena in the world. (The building team includes design partner Populous, project manager ICON, construction partner Mortenson, and Rockwell Group, which designed the buildings seven amenity spaces.)

DPR is seeing a big move toward reconstruction that makes buildings smarter, says Sass, by increasing monitoring, automation, and the controllability of equipment and fixtures. He adds that the smart-building movement is driving an increase in low-voltage and network systems in buildings to handle the demand for wired and wireless networks.

In Dorchester, Mass., Stantec and developer Nordblom Co. are repositioning the 16.6-acre former Boston Globe headquarters into a 750,000-sf multi-tenant mixed-use innovation hub called The BEAT (for Boston Exchange for Accelerated Technology).

CallisonRTKL designed Canadas first 5G-ready store, Rogers 302, a technology retail hub and flexible event space that allows for immersive, digitally enabled experiences. Photo: Richard Caden Photography, courtesy CallisonRTKL Read the article

The BEAT will contain 360,000 sf of office space, 300,000 sf of flex/industrial space, retail, a 10,000-sf fitness center, 868 parking spaces, and 200-plus bike storage spaces. A multimode path is planned to connect the site to transit lines and adjacent neighborhoods. Burns notes that Stantec and Nordblom capitalized on maintaining the existing building to accelerate preconstruction and to retain the buildings character and history.

The $300 million reconstruction, which is slated for completion late this year, will include a ground-floor microbrewery and 100-seat restaurant, as well as several outdoor spaces for work and play surrounding the buildings, such as a rooftop coworking lounge by day and movie bar by night, and a backyard for tenants to picnic or recreate. The developer, says Burns, took over the maintenance of the adjacent state park to expand tenant and community use of the outdoor spaces.

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Reconstruction could be COVID-19's silver lining - Building Design + Construction

Skanska has signed a 10-year lease agreement with its own Gothenburg operations to move into just over 5,300 square meters in the Citygate office project in Grda, Gothenburg. The occupancy will begin take place during the summer of 2022.

The office building with its strong sustainability profile will be 36 storeys high, corresponding to 144 meters, and will have a total leasable area of approximately 42,000 square meters. To create additional positive imprint in connection with the project, Skanska, together with the City of Gothenburg, has developed sustainability initiatives where the project takes extensive social responsibility to promote employment among young adults in the neighbourhood. For example, the project has extensive collaborations with schools regarding programs for mentoring and homework assistance. This is a project that also creates healthy workplaces with the ambition to certify according to WELL and LEED.

Skanska is one of the leading development- and construction companies in the Nordics, with operations in building construction and civil engineering in Sweden, Norway and Finland, and developing residential- and commercial property projects in select home markets. The commercial development stream is also active in Denmark. Skanska had sales of about SEK 70 billion and more than 15,200 employees in its Nordic operations during 2019.

For further information please contact:

Jacob Birkeland, Head of Media Relations and Public Affairs, Skanska AB, tel +46 (0)76899 72 69

Direct line for media, tel +46 (0)10 448 88 99

This and previous releases can also be found at http://www.skanska.com.

Skanska is a world leader in construction and project development on select markets in the Nordic region, Europe and USA. Driven by the Group's values, Skanska wants to contribute to a better society. Skanska provides innovative, sustainable solutions for both simple and complex assignments. Skanska has about 35,000 employees, and 2019 revenue totalled SEK 177 billion.

https://news.cision.com/skanska/r/skanska-in-gothenburg--sweden--is-moving-to-the-self-developed-office-project-citygate,c3179084

https://mb.cision.com/Main/95/3179084/1296559.pdf

https://news.cision.com/skanska/i/image-20200825-se-citygate-gothenburg,c2815042

(c) 2020 Cision. All rights reserved., source Press Releases - English

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Skanska : in Gothenburg, Sweden, is moving to the self-developed office project Citygate - marketscreener.com

Mosaic Construction, LLC, a full-service design build firm specializing in commercial, multifamily and residential renovation, remodeling, and building services, announced the addition of Neil Power as Production Manager and Jared Maurer as Project Manager to their rapidly-growing team.

Power brings more than 20 years of experience successfully delivering a wide variety of public and private sector commercial and residential projects, including restoration, mid-rise multifamily developments, and new construction luxury single family homes.

In his role as Production Manager for Mosaic Construction and their sister brand Design Construction Concepts, Power will focus on office build outs, non-profit projects, window and roof replacements, as well as residential kitchens, bathrooms, exteriors, and whole home remodels. "Neil's positive attitude, coupled with a career-long focus on project management steeped in trust and integrity putting client satisfaction at the center of his role, makes him an ideal fit for our team," said Ira Singer, Principal at Mosaic Construction.

Mosaic Construction is also pleased to welcome Jared Maurer who has more than 15 years of industry experience as a builder, designer, and owner's representative. After earning his undergraduate degree in architecture, he worked for architecture firms in Pittsburgh, PA and Wilmington, NC, designing single-family homes and small commercial facilities. In 2011, he shifted his career to leading design-build construction projects in the high-end residential, secondary education and commercial sectors.

In his role as Project Manager, Maurer will be working on Mosaic Construction's Cannabis Facility Construction brand and be responsible for all cannabis specific retail dispensaries, processing centers and cultivation facilities, both locally and nationally.

"Jared's focus on realizing each client's design intent, foreseeing use and maintenance of the final project, and developing relationships with trade partners are qualities we value and know will make a great impact on our business," said Singer. "We're looking forward to having both Neil and Jared on our team as we continue to grow to meet the demands of a busy design-build renovation market."

Mosaic Construction offers commercial, multifamily and residential design-build services and is a brand affiliated with Design Construction Concepts and Cannabis Facility Construction. Led by Andy Poticha, Ira Singer and Mike Frazin, Mosaic's teams deliver uncompromising customer service as they realize client visions in locations across the United States. For more information, visit mosaicconstruction.net, dcc-inc.net and cannabisfacility.net.

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Mosaic Construction Adds Two Professionals to its Growing Team - Chicago Daily Herald

Tenant demand in the office market has been increasingly favoringshorter-term lease deals, a trend that complicates how much buildings are worth.

This shift hascreated more flexibility for tenants who don'twant to be locked into a long-term lease, and it has helped landlords fill spaces in their buildings that may otherwise sit vacant.

Despite the move toward shorter-term leases,officebuildings still achieve higher valuations when they have the stability of long-term leases, and landlords have had to work to make lendersand investors more comfortable with the flexible deals their tenants crave.

Wikimedia Commons/Hakilon

Lease terms can have a variety of effects on a building's valuation, but experts agreed that buildings with longer-term leases are consistently more valuable than ones with shorter deals. But as the market evolves, somesee a growing acceptance of lease flexibility that could increase the perceived value ofmore flexibleleases.

Short-term leases can make a building more valuable by allowing landlords to raise rents and fill space that may otherwise have sat empty. But when landlords try to finance or sell a building, they face institutional capital sources that want the assurance of long-term cash flow.

The trend toward shorter lease termsfor smaller deals has been occurring for years. According to Cushman & Wakefield, the average lease termfor all deals under 10K SF in the U.S. decreased from 81 months in 2015 to 75 months in 2019, and for the first half of this year, it has been 73 months. These small deals make up a majority of the market, with 74% of all office leases since 2015 measuring 10K SF and below.

The coronavirus pandemic has accelerated the trend toward shorter lease terms across all deal sizes as companies are more uncertain about the future of their business and their workplace arrangement. According to JLL, the average lease duration for all deals in the U.S. office market dropped from 6.4 years in the first half of 2019 to 5.4 years in the first half of this year, a 16% decrease.

"What we're seeing is tenants staking a very defensive leasing posture given the level of uncertainty," JLL Senior Director of U.S. Office Research Scott Homa said. "Deal sizes are shrinking, the duration of the commitments is compressing, and transaction volume is down considerably."

In many cases, these short-term deals are signed in pre-built spec suites or shared workspaceareas that landlords have created in response to the coworking movement. Tenants takingthese spaces will often ink three- to five-year leases, rather than the traditional 10- to 15-year deals.

Cushman & Wakefield Senior Managing Director Lynda Gallagher, who leads the firm's Valuation & Advisory Group in the D.C. region, said she started to see the trend toward spec suites with shorter lease terms about five years ago. At that time, she said it was difficult to getunderwriters and financial partners to feel comfortable with the deals because there wasn't much market evidence to prove the concept works. She said that is now starting to change.

"From the underwriting side, there is much more of a comfort level now," Gallagher said about spec suites with short-term leases. "As it has become more acceptable with the market, there are more and more buildings that have it. I'm now surprised when I see a building that has availability that hasn't gone that route."

The shift toward spec suites and shorter-term leases began largely in response to the explosion of coworking, which showed tenantsthe appeal of a flexible office deals, Newmark Knight Frank Executive Vice President Jane Diven said. She said this was especially true for Class-B tenants that don't look for trophy space with top-of-market rents.

"What I was starting to see was part of the tenant segment of Class-B were being attracted to coworking space because of the perceived flexibility that coworking could give them," said Diven, who is a leader inNKF's valuation and advisory team. "To become more competitive, many of these property owners were beginning to do spec suites with common areas clustered around a common tenant lounge area."

The push for shorter-term leases also happened because tenants saw how rapidly their office needs can change with the advent of new technologies, saidCohnReznick principal Patricia McGarr, who leads the firm's Valuation Advisory Services team.

"Shorter-term leases is a trend we're seeing, and part of it is because there has been this shifting in attitude about how things are changing and you don't want to be locked into a 15-year lease when five years out, they invent something new and you don't need all this space," she said.

Tenants have been asking for shorter lease terms for more than a decade, MRP RealtyprincipalZach Wade said, and he said landlords were hesitant because the capital markets preferredlonger lease terms. But now during the pandemic, he said the majority of tenants looking for space are seeking short-term deals, and landlords don't have a choice but to accommodate them.

"A lot of companies are in flux and trying to figure out what their future is," said Wade, who leads the developer's office arm. "The only longer-term deals currently in the market started pre-COVID ... If you want to be relevant, you have to meet the market."

The Upside

While shorter-term leases don't offerthe future stability of their longer counterparts, they do haveseveral benefits for landlords that can helpboost a building's valuation.

If average rentsin the office sectorare rising, short-term leases give landlords the ability to bring their properties up to the market rate every fewyears, rather than being stuck with a long lease that becomes more of a discount over time.

This is especially true when signing leases in an economic downturn, like the one the market faces today. Weak demand in the market creates downward pressure on rental rates that could leave landlords with much worse deals than they could get after the market recovers.Average office rents nationwide decreased by 0.2% during the second quarter, according to JLL, and are expected to drop further.

"There is a positive that when you have short-term leases and they're going to roll two to three years from now, depending on where rents are. This allows owners to realign rents to the market," Gallagher said. "The market right now is soft, and so a lot of deals are being made that will be below market in a couple years."

MRP Realty

The "Town Hall" amenity space at MRP Realty's Westwood Metro Tower in Tysons

Not only can short-term leases allow landlords to adjust to the market more often, but they are often leased at a rent premium, Wade said. Four years ago, MRP launched its Town Hall concept in response to tenant demand for more flexibility. The conceptoffers a series of office suites with common amenity spaces, and the leases typically have three- to five-year terms, Wade said.

"When you are accomodating a tenant's request for a shorter-term deal, whether two or three years, they should pay a little bit of a premium for that flexibility, and we've seen that," Wade said. "We've also seen rents go up in Town Hall on the turn of the space."

With elevated office vacancy in many markets, these short-term leases are often filling spaces that would have remained vacant. While longer leases may be better for a building's valuation, having a short-term lease is much better than having no lease at all.

CBRE Vice President Matthew Solomond, part of the firm's valuation and advisory group in Northern Virginia, said he thinks the trend of spec suites with shorter lease terms came in response to elevated vacancy in the market.

"Landlords are sitting on a lot of vacant space," Solomond said. "If they can build some of it out and get it rented and increase the occupancy of the building, that's better for valuation."

Tenant improvement allowances have become increasingly expensive for landlords, and building out spec suites with shorter lease termscan help them keep those costs down, Diven said.

"If a property owner builds out spec suites, they have more control over construction costs, and instead of doing $100/SF in TI, they may be able to do a suitable space with a $75/SF build-out," Diven said. "If it does roll and the tenant doesn't stay, they can refresh and at that point still control the cost."

The Downside

Despite the benefits of short-term leases for landlords, they still lead toa lower valuation than having a long-term lease in the same space, becauseinvestors and financiers prefer the latter. But some experts say they foresee short-term leases becoming more accepted as the market evolves.

Office buildings are valued based on the average weighted lease term of their full rent roll. Solomond estimated that an office building with an average lease term of 10 years would have a capitalization rate around50 basis points lower than one with a five-year average term.

"It's really difficult to finance deals with short-term leases due to the increased risk and re-tenanting cost," Solomond said. "More often you have to re-lease the space, and it costs you more in tenant improvements, commissions and downtime. That's why [investors] look for longer average lease rates."

Many of the investors that buy office buildings are large institutions that are seeking to park their money into a stable asset with little risk, Homa said, leading them to prefer longer leases.

"You have these offshore entities and sovereign wealth funds and pension companies and insurance companies that drive property markets and view real estate as a bond. Theyjust want stable cash flow," Homa said. "It's just a different place within the risk spectrum to be accepting of these shorter-term commitments and variable cash flows and higher volatility."

Lenders also prefer long-term leases, Diven said, makinglandlords want to keep their average term highif they are looking to refinance a building.

"I know from conversations I've had with institutional owners, they would really prefer not to do short-term renewals," Diven said. "Buildings are much more financeable when they have longer average lease terms, so it's a balancing act."

Cushman & Wakefield Executive Vice Chairman Bill Collins said institutional investors can be comfortable with a certain level of short-term, flexible leases in a building, but they typically do not want that level to exceed 10%.

"Would you want your entire building to be three-year leases? No. But some portion of it is good," Collins said. "I think 10% is a no-brainer. If you've got 10 stories, you have one floor you can build out and put leases in there and make it flexible, and they may morph into long-term leases."

Wade said MRP has had tenants in the town hall space sign longer-term deals after their initial short-term period expires. But he also said these flexible deals shouldn't fill an entire building.

"There is a limiting factor on how much of the shorter-term deals you can have in the building, and we do try to keep it within 20% or less of our assets," Wade said.

But Wade thinks that could increaseas capital sources become more comfortable with short-term leases. If a landlord can prove their ability to consistently re-lease space with little turnaround time, he said financiers can have the same typeof confidence in short-term office leases as they do in apartment buildings with 12-month leases.

"In the future, I think there will be a component of the office assets that will be valued similar to apartments and hotels in that they will look backwards on revenue instead of just looking forward on cash flows," Wade said. "They'll look at your performance on the flexible side and make projections based upon that ... as the office building evolves, I believe it will become a component of how buildings are valued."

Continued here:
How The Shift To Short-Term Leases Is Changing The Way Office Buildings Are Valued - Bisnow

And were back! Today was part two of Y Combinators absolutely massive Demo Day(s) event for its Summer 2020 class.

As we outlined yesterday, this is the first YC accelerator class to take place entirely online, from the day zero interviews all the way on through to their eventual demo day debut. We talked with YC President Geoff Ralston about what it was like to take the program fully remote (and whether or not itll be staying remote for the long run) in an ExtraCrunch interview here.

Nearly 100 companies presented yesterday, and almost 100 more took the stage today. Each company got 60 seconds to pitch an audience of investors, media, and fellow founders and tell the world in many cases, for the very first time what they were building.

Here are our notes on each of the companies that presented today:

CapWay: A mobile bank for the financially underserved. CapWay brings modern banking services to those in regions where only local (and potentially out-of-date) credit unions exist. The company makes money on the processing fee during debit card transactions. Set to launch in 3 weeks.

Supabase: An open source alternative to Googles Firebase. Supabase helps developers by providing a Postgres database with a self-documenting API based around the data inside. 12 weeks post launch, the team says its already hosting over 1500 databases.

BaseDash: The people who know how to edit a database arent always the same people who need to do it. BaseDash lets non-engineers safely manage data as simply as theyd edit a spreadsheet, replacing custom internal tools.

Afriex: If you remember the early days of bitcoin and other cryptocurrencies, the idea that they would be huge for remittances was a regular talking point. Somehow that never took off quite as expected. At least not yet, if Afriex has its way. The startup uses USD-pegged stablecoins to help users to send money to other countries, and its model is catching on: Afriex is currently processing $500,000 per month, which is up 5x in the last three months. If Afriex can take on TransferWise and other services that have scale today, it would do well by itself and make cryptos look good at the same time.

Image Credits: Backlot

Backlot: Meet the collaborative design tool for film and video industries thats billing itself as the Figma for filmmakers. The company boasts that filmmakers can render their entire film in 3D, enabling productions to mitigate a lot of the risk and expenses associated with film production. Blockbusters typically hire teams of humans to do by hand what Backlot offers with its software. The company estimates that its an $11 billion market. Backlot charges $130 per user per month.

LSK Technologies: LSK is looking to tap computer vision to build disease testing hardware (a lab in a box, as they put it) small/fast enough to keep in a doctors office or workplace. The company says its currently running Zika Virus field trials in Latin America, and is looking at how they can bring their computer vision approach in to help tackle the COVID-19 pandemic. They also say theyve seen over $100,000 in pre-orders to date.

Image Credits: inFeedo

inFeedo: inFeedos Amber is an AI bot that chats with employees and aims to predict who is unhappy or about to leave. The team says its already working with 46 enterprise companies, and is cash flow positive with an ARR of $1.6M.

Opvia: Nobody is less satisfied with the data tools available to scientists than the scientists themselves, but theyre not often able to do anything about it. These two, however, decided to make Airtable for scientists, replacing the menagerie of tools old and new, from spreadsheets to MatLab, that researchers use to hold and corral data.

Porter: Remote development environments for microservices. Lets developers set up templates of the dev environments they use, and roll out new remote instances with a click. Currently used by companies like PostHog and Motion.

Plum Mail: Its not an email and chat competitor, its an email and chat replacement. The startup sells a platform that focuses on communication features and scheduling tools. On its website, it says it has 36 other era-defining features that blow e-mail and chat out of the water. The startup launched 6 days ago and has 550 people on its waitlist.

Cradle: SMBs in India often resort to cash or checks because the overhead from online payment systems cuts into their profits. Fortunately new regulations make certain types of B2B payments free there, and Cradle is building a platform on top of these. With no interchange fees and all the usual benefits of instant online payment, this could help supercharge SMBs in this growing market.

Clover: Creatives are still largely stuck living in Google Docs and Word, two pieces of technology that are designed around the history of physical paper and printers and general Office Space sadness. Clover wants to shake the text doc world for creatives on an infinite canvas. The companys product isnt launched yet, so there are no growth numbers to share, but the startup does claim 5,400 folks on its waitlist. Our question is how you get creatives to pay for stuff, as most creatives that we know are out of work. Regardless, down with todays terrible text apps! Lets see if Clover can shake its market up.

Datafold: automates quality assurance of analytical data. Anytime a developer makes a change, Datafold analyzes and verifies the output across your databases. Developers spend hours checking data manually, but incidents happen because theres not a good way to handle all of the changes that go into modern software programming.

Depict.ai: Joining the host of products aiming to help SMBs compete with Amazon in the ecommerce sphere, Depict.ai is building a product recommendation engine to help bring Amazon-quality product recommendation for any e-commerce store. Customers include office bigbox chain Staples.

DigitalBrain: Pitched as Superhuman for customer support agents, DigitalBrain says it can help CS reps get through tickets twice as fast. Currently in 10 paid pilots after launching 6 weeks ago.

Image Credits: Daybreak

Daybreak Health: Online counseling for teenagers. The startup uses a mobile app to connect teens to teen-specialized therapists. It also communicates with parents to figure out a plan for online counseling. Founded by Stanford alums, Daybreak Health is bringing in $6,000 in monthly revenue and claims it is more affordable than private practice. Read more in our story here.

Phonic: Surveys are useful for a million reasons, but the text-based online surveys were all familiar with havent changed much in 20 years, leaving them open to manipulation and fraud. Phonic avoids this by using audio and video responses rather than text or buttons, and the company says this triples response quality and helps eliminate fraud and joke responses. The media are automatically ingested and summarized using machine learning, so no, you dont have to watch/listen to them all.

Dapi: Dapi is a fintech API play that is aimed at facilitating payments between consumer bank accounts and companies. That Dapi has managed to make its service work in seven countries with deep bank support is impressive. And Dapi has found demand for its service, with $400,000 in ARR and growth of more than 50% per month as of its presentation. Of course, that growth rate will sharply decline in time, but everyone knows that fintech APIs can have big exits. Expect to hear more from Dapi.

Reploy: By rolling out staging environments with each code deploy, Reploy lets developers share features with their teams and get immediate feedback. Reploy has $1500 in monthly revenue after launching roughly 3 weeks ago.

Index: Index wants companies to use its no-code dashboard builder to help visualize their KPIs and track performance. The tool boasts integration with a variety of data providers so that users arent forced to manually enter data into another tool. The startup hopes that building embeddable dashboards will help their solution catch fire and that startups will turn to their tool when they want to track progress on goals.

Ramani: Helps distributors in Africa manage their inventory, allowing sales people to catalog and track sales. Currently running 5 pilots, theyve seen $80k worth of sales logged to date.

Spenmo: Framing itself as Bill.com for SMBs in Southeast Asia, Spenmo helps companies manage their payments. The founding team hails from Grab, Xendit, and Uangteman. After launching 5 months ago, it has 150 companies as customers and processed $500,000 in transactions in July.

Piepacker: We can play games together, and we can video chat, but its not actually that easy to play games together and video chat. Piepacker combines video with a collection of licensed popular retro-style games that friends can play together easily. Its simpler than putting together a Discord group but more interactive than just streaming. So far the platform has seen long sessions and engagement.

Farel: Another Shopify for X startup, Farel stood out from the pack by having an idea that wed never thought of: Shopify for regional airlines. The Farel team says that regional airlines those with fewer than 30 airplanes make up 30% of the $600 billion air travel market; Farel wants to offer better software for those airlines, charging $1 per traveller per segment. That sounds super cheap? So far the startup is lining up early customers and partners, so its a bit too early to say if Farel will, ahem, take flight.

PhotoRoom: This promising startup already has over $1 million in annual recurring revenue, thanks to its service that removes backgrounds from product photos. Its grown 50 percent since its launch in February and the simple service belies some pretty interesting technical wizardry with machine learning tools to effortlessly retouch marketing images.

Liyfe: Liyfe is building a telemedicine platform for breast cancer patients to communicate with oncologists and cancer professionals from home. The founders hope that more communication between experts and cancer patients can lead to more thoughtful approaches and outcomes.

Openbase: Reviews and insights to help developers choose the right open-source packages. Founder Lior Grossman previously founded Wikiwand and the open-source project Darkness. According to Grossman, Openbase is already seeing 250,000 developers per month.

Image Credits: Quell

Quell: Quell is eyeing what they see as a $18 billion market opportunity in the immersive fitness gaming market. The startup uses resistance bands to help players get fit while fighting their way through a virtual fitness world. It coins itself as a Peloton meets gaming, and charges a monthly fee to keep content fresh.

Hypotenuse: E-commerce sites need a lot of copy: product descriptions, ads, blog posts and more. This is generally done by copywriters, but the quality (especially if hired from by-the-word content farms) can be hit and miss. Hypotenuse generates high quality copy automatically for a variety of purposes and they claim switching to their system boosts engagement by double digits. The founder has a strong AI background so you can at least count on the science.

Reflect: Testing your website or web service is time-consuming and hard to get right. And if Reflect is correct, the existing tooling in the market to help make web testing better is too complicated for most folks to use. Reflect is a bet that a no-code (buzzword!) tool to automate web testing (desktop and mobile, per its website) will be a hit. The company claims $9,600 in MRR, growing at 30% month-over-month.

Byte: Byte is building on-demand food delivery from virtual kitchens in Pakistan. Using virtual kitchens, Byte can slash the cost of food prep, the company says. Byte is already growing 40 percent week over week. The company makes $1 per order, and says it has a total addressable market in Pakistan of $20 billion to make food delivery cheaper.

Parrot Software: Parrot is building Toast for Latin America, creating a suite of back office tools for restaurants. The software handles all of the expected tasks, including customer payments, ordering, seating and data visualization.

Image Credits: BlaBla

BlaBla EdTech: An app that aims to help the user learn English using short, TikTok-style videos. Founder Angelo Huang says the company has 8,000 weekly active users six weeks after launch.

StratumAI: Artificial intelligence software and technology that helps mining companies figure out where to mine. Stratum charges $2 million per year, per mine and it helps those customers unlock an average of $10 million in profit during the same time period.

Intelline: Diesel generators may sound like 20th century tech, but theyre used everywhere, both by industry and individuals. Intelline has designed a diesel generator that they claim has 40 percent better fuel efficiency, which translates to enormous savings at scale; Mining operations, they note, could save millions per year with better diesel generators.

Ilk: Using a thesis of the childcare pod, Ilk is coming to the rescue of worried parents who need to find better/safer childcare solutions during the COVID-19 pandemic, according to the companys founder. With a childcare pod, two to five families team up to pool resources and pay for a caregiver to care for their kids. The companys service matches parents with caregivers. The very very early stage company has already set up two successful pods in San Francisco and officially launches next week.

Isibit: A platform for managing/overseeing business travel, focusing on companies in Latin America. Allows travel managers to configure travel policies/limits, and offers employees rewards for making affordable travel choices. The team says theyve seen over $10,000 in bookings a month after launch.

QuestDB: Born years earlier as a side hustle being built on nights and weekends, QuestDB is building an open source time series database focused on speed. If the startup pulls it off, it can help companies detect fraud plus plan and predict customer activity at a faster speed than other competitors. The company is currently being tested at a fintech unicorn, and several companies are using it as part of their production processes. Read more on our coverage here.

WareIQ: Companies in India are trying to wean themselves off Amazons infrastructure, but cant match the companys fast shipping. WareIQ is a software platform that links Indias huge network of fulfilment centers and last mile couriers to enable next-day delivery for budding e-commerce sites that would normally only be able to offer 5-15 day shipping.

Kernal Bio: MRNA therapies to cure COVID and Cancer are a pretty compelling business proposition. Kernal Bio says it has developed therapies which rely on using messenger RNA to instruct cells in the body on how to make their own defenses to diseases. The team has an incredible background with co-founders that include a former researcher from Merck whos developed therapies already. A former founder of Santigen and a phD scientist from MIT. The company has already won three awards from Amgen and NASA.

Kosmos: Kosmos is building a control center for a companys microservices, helping developers monitor and debug a web of services inside a unified interface. The company is integrating all of these tools so developers can see updates and track changes without being forced to search in multiple locations.

Matter: Pitched as Superhuman for reading, Matter says it is building an opinionated reading app to help users find better content online. Currently in private beta on iOS.

Ladder: Building a labor marketplace to help construction companies hire skilled workers for permanent positions. Essentially, Ladder works as an HR team that construction companies can turn to for hiring and retention needs. It has 1,340 workers on the platform and booked $12,200 in revenue in the first month of launch.

Letter: Letter is a bank specifically for rich people, made by a newly rich person who didnt like existing banks. Aimed at high net worth individuals with $1-10M in assets, Letter includes features specifically for the wealthy, replacing the pedestrian tools and designs of ordinary banks and credit unions. The team says they earn up to 2% per transaction.

Maytana: Pitching itself as the financial payment center for multinational startups, Maytana makes it easier for multinational businesses to move money using open banking APIs. The company has three customers and is charging a 0.01% fee for money transfers. Theres $10 trillion being transferred around the world and Maytana thinks it can capture a big chunk of that spending.

Safepay: Safepay wants to build a Stripe for Pakistan, crafting a digital payments API in the country where the founders say there are no other major players in this space.

Jumpstart: Helps international founders setup businesses in the US, aiding with things like incorporation and establishing bank accounts. Charging $129-$329 per year, the team says they have 1,280 companies on the service today.

Mozper: A debit card and app for kids and parents in Latin America. The startup is seeking to tailor to the smartphone-carrying youth, sticking with them until adulthood and becoming their de-facto bank option along the way. Mozpers core product is a debit card, which it charges a fee for, and an app. The startup has already raised $1.5 million from investors and friends. Read more with our previous coverage here.

Parade: Parade lets online brands generate tailored marketing content automatically. You fill out a survey about preferred styles and other info, and it generates assets, including social media posts and a style guide for other content all with no human in the loop. Its a big industry dominated by expensive human designers, and Parade feels theres plenty of room for an automated solution like theirs for businesses that cant afford or dont want to deal with the human element.

Nestybox: creating software to enable containers to replace linux virtual machines. Instead of deploying a few heavy VMs on a server, Nestybox lets you deploy a number of containers for the same functionality. There are 30 million deployments which represents a $6 billion opportunity for Nestybox. Containers have already revolutionized programming, now Nestybox is looking to extend that revolution to compute infrastructure.

Here: Here is building personal, shareable, flexible in-browser video chat rooms. Unlike most other video chat startups, the companys founder says theyve built their own video stack. Seeing their website, it definitely has its own unique look, bringing in some 90s website design paradigms with modern video chat.

Image Credits: Roboflow

Roboflow: Helps developers build computer vision models without having to know much about machine learning. Co-founders previously built AR-heavy Sudoku solver Magic Sudoku, spinning the tools and learnings they put together there into Roboflow. The team says there are currently over 1,000 developers using Roboflow each week.

Vena Vitals: Sells a wearable sticker that allows consumers to monitor their blood pressure continuously. Its a replacement for needles, at a fraction of the cost and clinical accuracy. The company is starting out the clinical route, but wants to become the standard for blood monitoring and managing for consumers and hospitals over time.

SafeBase: B2B SaaS companies, of which there are approximately five million in this batch alone, need to be able to show that they meet security standards in a clear, verified way or they risk losing customers. SafeBase aims to be a one-stop status page that provides instant credibility by showing compliance with security standards.

Image Credits: Rume

Rume: Rume wants to make the social video experience better by allowing groups to have multiple conversations in one space. The company says it enables attendees to fluidly move between groups just like they would at a party. So far, the average Rume session is 50 minutes long and the company has integrated games into the Rume. What sets Rume apart, the company says, is that it owns the entire video stack, thanks to the expertise of the co-founders as former developers at Google and Dropbox.

Oico: Oico is a B2B marketplace for construction materials in Brazil. The company is aiming to build the missing infrastructure to help large contractors acquire materials, pointing them to materials providers and facilitating deals. The company takes a 10% slice of transactions, and theyve reached $87k GMV after four months on the market.

Osmind: Millions of Americans suffer with mental disorders that traditional psychiatric and psychological treatments dont address. While experimental treatments have been developed, theyre not being delivered or tracked effectively, thanks to the barriers that exist in practice management, reimbursement, data collection and distribution to pharmaceutical and insurance companies. Osmind wants to use its practice management and monitoring software to help mental health professionals deliver care to this population thats most in need and provides anonymized insights for pharma/insurance companies to ensure that these treatments are effective. Find our previous coverage of Osmind here.

Todos Comemos: A ready-to-cook meal kit delivery service for Latin America. The company sources food from production facilities that serve restaurants and hotels and is able to turn over meal kits at a cheaper price, with a 30% margin after delivery costs are accounted for.

Orchata: Grocery stores and other food suppliers in Latin America rely on outdated methods like paper/pen for things like ordering and delivery, if they offer it at all. Orchata wants to be the Shopify for online grocery ordering in the region, enabling these small businesses to list items and receive orders online, accept payments, optimize delivery routes, and so on. The company says 1.7M people can be served at their current pricing, which suggests its a bit expensive for most, but really, thats true of Instacart and others as well.

Speedscale: Another programming dev tool to make life easier, Speedscale simulates APIs using actual traffic. Founded by former leaders of engineering and developer solutions at companies like NewRelic, Speedscale solves the problems of code oversight that even companies built with state of the art cloud services have to face. Development updates are often impossible to test due to too many dependencies, but Speedscale says it validates each component with real traffic. The company already has Digibee as a customer and hopes to roll up each of the 11 million developers programming with APIS, which would represent a $6.5 billion market opportunity.

Stacker: Stacker is another startup aiming to upscale the spreadsheet with no-code functionality, allowing the companys users to turn spreadsheets into internal apps and customer portals. The software pushes customers to let data drive designs and turn manual processes into automated ones. The company has more than 250 customers including Google and Amazon.

Epihub: Another Shopify for X! This time its Shopify for anyone teaching online. Epihub is a platform meant to help online instructors schedule/run classes and charge students. 3 weeks after launch they have 50 paid instructors on the platform, with an MRR of $1k.

Notabene: Helps businesses perform crypto transactions in a regulatory compliant way. The startup wants to be the trusted layer on top of blockchain for sharing information. The market is looking to cash in on the new global regulations on crypto that is driving adoption but, at the same time, confusion. In 3 weeks, it landed 10 signed customers.

Bits: Bits helps people build their credit score by providing them with a digital credit card that they pay off every month. Sure, you could do it yourself, but why not have a service that helps you out? In nine months the company has attracted 10,000 paying customers and collected $1.9M in revenue, and some customers have seen their credit scores jump by hundreds, so clearly theres something to it. The founder hopes that this straightforward beginning will be the basis for a new, more full-service billion-dollar fintech company.

Oco Meals: Delivering prepared meals made by local catering companies has already nabbed Oco Meals 25,000 in monthly recurring revenue. Unlike most delivery businesses, Oco Meals delivers pre-ordered food in bulk once a week. The company boasts that its able to give customers better pricing at half the cost and still make $25 per order.

Response: Response is another YC startup thats focused on the response to COVID-19. The startup is building a network for PPE in the United States allowing suppliers to bid on customer requests. The startup hopes that they can further scale this infrastructure beyond PPE in the future and eventually become Alibaba for the United States.

RingMD: Helps governments quickly roll out telemedicine in their countries. Currently working with customers in Chile, the Philippines, and India while charging $3 per user per year, founder Justin Fulcher pins their ARR at $632,000.

CarbonChain: A way for companies to automate the arduous process of tracking their carbon emissions. The company, which is profitable, has landed 5 paying customers with $280,000 in annual recurring revenue. CarbonChains success hinges on more than just the benevolence of business leaders. Its betting on government regulation as a catalyst for companies to care (and transform) their carbon emissions. Read our coverage here.

Panadata: Background checks are an ordinary part of doing business everywhere in the world, but the data is fragmented across multiple government databases and other document hoards. Companies have emerged to sift through the mess in the U.S. and E.U., but Latin America provides a unique challenge and Panadata hopes to tackle it. Its automated check system is already in action and in use by banks, law firms even the local governments in charge of the data it uses.

Image Credits: Venostent

Venostent: Venostent, the company thats developing a novel material for stents and vascular reconstruction and stenting surgeries, has already won prestigious prizes from HHS and the NIH and will be beginning a clinical trial this year. The company has a $5 billion market opportunity ahead of it in just its initial market alone and it has 92% gross margins. Read more about our coverage on this company here.

NeXtera Workforce: NeXtera is building a software platform to help factories integrate robotics into their processes in days instead of months. The AI platform is focused on deployment, monitoring and tech support to help optimize rollouts. Early customers of theirs include Dunkin Donuts and Tesla. The founders are MIT alumni with backgrounds in AI and cybersecurity.

Finch: An API to help developers tap into payroll systems (like ADP, Gusto, Rippling, etc) with three lines of code, enabling them to do things like verify income, set things up for direct deposits, pull paystubs, and confirm employment.

Scrimba: An online, personalized coding school coming out of Oslo, Norway. Scrimba teaches students coding through interactive videos that are pre-recorded. Students are able to actively code throughout the videos, and so far Scrimba has worked with students from over 100 companies.

Tangobuilder: Taking an architects designs from concept to construction-ready blueprints is an expensive, complex job done by structural engineers and other experts. Tangobuilder automates the process, saving time and money for example, they claim one hospital project was 2 months faster and $1.5M cheaper because it used their platform. You can read our coverage of Tangobuilder here.

Frontline: How about a startup that gives developers no matter their security experience NPCI compliance? Thats Frontline. The company already has $22,000 in monthly recurring revenue and is growing 42% monthly. Already 20 Fortune 500 companies are using the companys service. Typically the process to deploy a secure virtual machine takes 100 hours to complete. Frontlines service is an obvious and affordable choice to get that chore off of developers plates. The company estimates that its service represents a $4 billion market.

Synth: Synth is building a platform for creating compliant, realistic fake data for application development, cloning existing databases while synthesizing the specifics. The startup believes its approach will help promote better data privacy and compliance with regulations while still maintaining accuracy.

Sutra: Looking to help the countless fitness instructors put out of work by COVID gym closures, Sutra charges $25 per month with a 3% transaction fee to help instructors host live fitness classes and sell videos/monthly memberships. Their platform can be integrated into your existing website, or they can provide a landing page.

Trident Bioscience: Sells software that helps biotech companies design proteins with recent breakthroughs in mind. The company has predictive models that help customers decide which kinds of proteins should be made. The founder, Tyler Shimko, has a PhD in genetics from Stanford. Trident is currently working with 2 biotech companies.

TyltGo: Brick and mortar stores and small online retailers want to provide same-day delivery, but would prefer not to own a bunch of trucks. TyltGo provides same day delivery service on demand, batching orders from multiple retailers to optimize routes, lower costs, and reduce the need for warehouse space.

Tappity: The company bills itself as the interactive Netflix for kids. It already has 5,000 subscribers and $55,000 in monthly revenue. Its picking up 20,000 free downloads per month and has no marketing spend something thats a valid selling point given the high costs of consumer customer acquisition. Customers pay $8 for the service and with 25 million kids in its target market thats a $2.5 billion market opportunity. Its already the number one science app for kids on the app store and the company plans to add classes for programming, history math and art. The goal, the company says, is to build a veritable Library of Alexandria of interactive lessons that kids are curious about.

Ukama: Ukama is building technologies to allow any enterprise to create their own LTE-based cellular network. The founder says that this approach can reduce network bills, increase security and provide more accessibility to on-campus users. The CEO previously founded another cellular network startup that was acquired by Facebook.

Biocogniv: Builds AI-powered software to help hospitals diagnosis patients, analyzing their EHR (electronic health records) in real time. Currently focusing on predicting COVID outcome, they will soon expand to screening for signs of sepsis and pulmonary embolisms.

Image Credits: Drip

Drip: Rather than a restaurant running on a collection of disconnected pieces, Drip provides what it claims is the only piece of software a restaurant needs to run its entire business. That means POS, employee scheduling, payroll and more. With lots of restaurants modernizing their methods during the pandemic, Drip has grown from doing $10k/month in business in June $600K in August.

Henry: Bringing the income sharing model to Latin America to help potential students pay for their education, Henry is a company that thinks its in the right region at the right time. It already has more than 500 students and its serving an incredible need given the flood of demand coming from tech companies in the region. The college and university system is broken, Henry argues, and its got the education opportunity for new developers. Thats why we created Henry. To unlock potential and bring high quality education with an income share model.

Batch: Batch is building a Time Machine for corporate data. The startups tools allow customers to observe and replay data inside messaging systems to help them quickly diagnose outages and data disasters and revert changes.

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Here are the 94 companies from Y Combinators Summer 2020 Demo Day 2 - TechCrunch

Real estate brokerages in Los Angeles and elsewhere have made shifts in their business over the last five months that could be for the long-term.

In early April a dejected-looking Kurt Wisner posted a video in front of an empty van.

Ive got a van parked down here by the L.A. River and its Tuesday, said Wisner, a Compass agent who runs the Courtney & Kurt team. Tuesday is typically a day where we do our broker caravan.

We tell stories, we tell jokes, and its just a great time to be human, Wisner said to the camera. But today, as you can see, the van is empty.

L.A. residential real estate agents lost a fundamental part of their routine when statewide orders issued in March shut down the weekly home caravan tours as well as Sunday open houses.

The stay-at-home orders Gov. Gavin Newsom issued are now five months old.

Throughout this unprecedented disruption to the norms of residential real estate, brokers have tried to stay positive. Theyve discussed pent-up demand and how the Covid-induced recession has let them learn new skills, and freed up time for phone and Zoom calls with clients.

When sales fell in April and May, such optimsm seemed like public relations damage control. But now sales really are up 22 percent in L.A. County year-over-year for July, with sales records being set nationally, according to National Association of Realtors figures. Brokers made adjustments big and small that were unthinkable in February.

Theres layers weve been able to peel off, said Tami Halton Pardee, CEO of Halton Pardee & Partners.

What has stayed and what has changed may come as a surprise. Heres whats in and whats out for residential brokerages in L.A. and elsewhere:

In: Managing the virtual office

When offices shut down in March, many agents, ironically, turned to their office manager.

My manager has been really good at navigating the different reality that we have had, said Alicia Dry Cohen, an agent at Nourmand & Associates. Cohen says her manager, Carolyn Rae Cole, has kept us up to date on issues like applying for unemployment and contract verbiage.

Office managers including Howard Lorey of Nourmand & Associates swear theyve done more work during the pandemic. My job has been more intensely busy since March, Lorey said. I am helping agents redefine their roles.

Spencer Krull, manager broker of Sides Southern California offices, said hes spent an inordinate amount of time providing legal guidance to his agents.

The big difference now is that managers are supposed to be experts in government orders from the state, counties, and cities, Krull said. Agents are asking questions like, How long do I have to wait to do the showing if the seller was exposed to someone with Covid?

To an outsider, the facilitative role of office manager with no sales track record, or leadership decisions is hard to measure.

When Compass laid off 15 percent of all its employees in March, a notice filed with the California employment department revealed that managers of various titles agent experience, construction, strategic growth, associate marketing got a pink slip.

But office managers interviewed say those positions are not like managers at other brokerages (numerous messages left with Compass went unreturned). Traditionally, there is one manager per office, and they are jack-of-all-trades, doing sales training, contract, deal doctoring, legal, and administrative, said Colin Keenan, the managing broker of Westside Estate Agency.

The majority of brokerages maintain the practice of one do-it-all manager per office. But some bigger brokerages created an alternative of specialists, a strategy Keller Williams is credited with pioneering. The Austin-based brokerage began shifting 15 years ago from all-purpose managers to specialists with specific tasks like legal compliance or accounting.

Keller Williams moved to specialists, and Compass has adopted some of that model as well, Keenan said.

Both brokerages have managers focusing on one area, like an accountant who handles the books at multiple offices.

But big brokerages experiments with the office manager role seems to have hardened boutique shops resolve in sticking with the do-it-all manager.

As a deal doctor, legal liability navigator, and sales trainer, office managers are imperative to working in todays market, said DJ Grubb, broker of Oakland boutique Grubb & Co.

Out: The physical office

Brokerages are slowly reassessing their physical presence.

Coldwell Banker, the top L.A. County residential brokerage by sales volume in 2019, made office cutbacks amid the pandemic, though Duran said the firm has no plans for closures for the foreseeable future at the 61 offices it leases in Southern California.

Meanwhile, Coldwell Bankers national rival, Keller Williams, is openly rethinking office space.

The market center of the future will almost certainly consist of smaller physical footprints, said Matt Green, director of growth for Keller Williams. Covid and other market shifts we have experienced continue to show us that office space isnt core to our value proposition.

When agents need to cut costs, Green added, Office space is one of the first things to go.

Sill, Keller Williams has not announced office closings amid the pandemic.

You are not a very good real estate broker if you are in the office anyway, said Suzanne Hollander, professor at the Jerome Bain Research Institute at Florida International University. Many agents just collect their commission check, and fill out some paperwork there.

Despite that, Hollander noted, brokerages from Fisher Island to Beverly Hills have spent millions of dollars on glamour offices.

Realogy, the parent company of Coldwell Banker, Corcoran and Sothebys, listed $491 million in operating lease assets in its latest SEC quarterly report (down from $515 million at the end of 2019).

Coldwells portfolio of over five-dozen California offices include leasing a whole floor at 166 N. Canon Drive in Beverly Hills, an office building in the heart of the tony 90210 ZIP code.

Within walking distance are offices rented by Compass, The Agency, Hilton & Hyland, and Douglas Elliman among other brokerages.

According to the L.A. County assessors office, the building Elliman rents at 150 El Camino Drive has a market value of $40 million. Elliman glammed up the space, and used it on reality TV to market the brokerage, a practice employed by other shops like Oppenheim & Associates and its West Hollywood office.

But when the cameras shut off, offices play a small role. Over the past five to 10 years, Id say the majority of agents spend their time working from home or Starbucks, so a lot of the day-to-day has been over the phone for a while, said Krull of Side.

Agents interviewed basically said the same. The atmosphere and camaraderie there can be great, said one agent. So great that the agent comes into the office, Only when I have to.

Side is distinctive for making agent teams bear the cost of office space. But other brokerages may also find alternatives to the traditional office lease.

Pardee noted her brokerage owns offices in Venice and Culver City on L.A.s West Side. Thats what brokerages should do, buying our own buildings, she said.

Halton Pardee & Partners does one lease one office building in Palm Springs, but the broker says that office might not be worth the trouble. We are looking to go down from three offices to two, Pardee said.

In: Matterport tours Out: The caravan

A key layer Pardee has peeled off is physical sales departments. The broker furloughed two staff members who work on physical sales, and sold one of the two trucks used to transport brokers and got rid of most physical advertising.

Other expenses associated with caravan tours and open houses were also jettisoned.

These were events where everyone got dressed up and it was a time for agents to interact with each other, Krull said.

Sometimes the price of a home could be discerned by the open house spread. Some would have cookies, some would have champagne and cookies, and some would have champagne and sushi, noted Hollander, the real estate professor.

Virtual tours have replaced open houses as the entry point to a new house on the market for brokers and clients alike.

The Sunnyvale, California, company Matterport, which makes immersive 3-D technology, has become an adjective and verb in the brokerage world just as Zoom has for many other businesses.

One thing we added was Matterport tours, Pardee said. We can actually walk people through the house.

Like other brokers interviewed, Pardee has seen such adjustments teaching agents a whole new technology, and the structure by which a home comes onto market as just another cost of doing business.

Residential brokerages could be given a credit as a flexible and resourceful business or one that used a global catastrophe to learn what was really essential to selling homes.

Its a people business, Hollander said. But communicating virtually you can establish some of those same relationships.

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Survival of the slimmest: TRD looks at the future of the residential brokerage - The Real Deal