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Zoning In On Commercial Real Estate In The Metaverse

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Chairman and Chief Executive Officer of Zoned Properties, Inc., a strategic real estate development firm.

Since Facebook announced its plans to bring the metaverse to life, the term quickly became absorbed into tech and business vernacular. It’s a term that inspires contemplation across many sectors, including commercial real estate. Many are asking questions like, “Will there be zoning in the metaverse?” In truth, this is already a reality, and as leaders and developers, we must be active in advising, learning and shaping how the metaverse intersects with the real estate industry.

Just as highly regulated markets made their way into traditional real estate, the metaverse will also need to adapt and adhere in some ways to standards and precedents as it sets forth to create a new world.

Virtual Zoning

Zoning dictates the rules of our evolving communities. Through permits and development codes, operators receive approval from zoning administrators and local governments to proceed with building plans. This same systematic approach that we apply to our physical world is likely to translate to any planned and developing community in the augmented reality/virtual reality (AR/VR) realm.

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One major difference is that in the metaverse, programming codes, as opposed to zoning and development codes, will control planning and development. These programming rules might be established by an authority who can restrict what kinds of programming codes you can implement to build out your real estate project. For example, can you code a pool into your metascape? Can you have a storefront on your parcel near a celebrity’s virtual home?

The end result, in theory, is exactly the same: A system of rules and regulations governs how users or community members can develop space within the virtual landscape or metascape. Whatever your mind can conceive can be created as long as it follows the rules, whether those rules mirror traditional zoning codes or encompass a new set of codes determined by the programming administrators.

The major question is who will decide which groups or individuals retain the power to make these decisions? Will these communities be governed by the same hierarchical system we use in the physical world, or will they lean more to open-source systems and pure democracies? It is probable these systems will face hacking and other modes of corruption. Perhaps the decentralized foundation of blockchain has the ability to protect against that corruption.

Limitless Imagination, Limited Resources

One thing we do know is the metaverse and AR/VR worlds offer a massive number of experiments and case studies, limited only by resources, just like the physical world. Despite the limitlessness of imagination, boundaries always exist. To continue to advance, the metaverse will require vast electrical and server resources. It will also require demand, even in the seemingly boundless cyber world. Coded restrictions will help to limit supply and maintain the growth of this new universe. But even with limited supplies and higher prices, the electricity and server resources required to mine bitcoin do not necessarily lead to a sustainable environment. Users will have to work to create a utopia.

As the metaverse becomes a more tangible entity and virtual real estate a more accessible concept, investors will find themselves facing similar risks to the real world. Investing in a virtual property worth millions of dollars could be the next real estate dream—or the next bust, especially without a physical property to fall back on and keep in your portfolio. If a metaverse platform goes under, so does your investment.

As with real estate in highly regulated industries, there will be a learning curve in the metaverse; the question is when that learning curve will be felt. Regardless, staying in tune with the metaverse will be important for real estate development investing going forward, and we can only hope various platforms have a vision and plan to maintain the effective growth of this opportunity.


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