The Rise of Proptech in Commercial Real Estate
Innovative and disruptive technology is being developed specifically for the commercial real estate industry. Identified by PWC as an emerging trend, property technology, known as proptech, provides software and digital tools for real estate operations. While investments tapered off in 2020 in light of the global pandemic, venture capitalists still invested $23.8 billion last year in proptech startups.
Analysts are labeling proptech the “next frontier” of commercial real estate. While proptech encompasses a wide sector of real estate — including residential, commercial, retail, and industrial — its impact is especially significant in CRE operations.
The global pandemic of 2020 accelerated the rise of Proptech
Why is the Proptech Sector Growing?
A world in social isolation accelerated the rise of proptech. Many sectors of real estate were tech holdouts, keeping in-person exchanges and paper-based transactions for as long as possible. Commercial real estate is no exception, but necessity predicated the adoption of new technology. What’s more, consumer demand has now shifted so that any CRE firm or professional is without a choice: tech-based tools are essential.
Proptech provides resources for building, leasing, marketing, and managing assets, all of which are key operational processes in CRE. Property owners are prioritizing technology in numerous ways, which illustrate the vast use cases possible:
Drones are helping construction operators in surveying and quickly inspecting buildings for early detection of site hazards and defects.
- Drones can be used to monitor construction sites, enhance security, and even optimize energy efficiency by monitoring temperature and other environmental metrics.
- 3-D modeling and printing can, on a small scale, provide useful tools for design improvements and, on a large scale, provide prefabricated elements or customize building materials on-site and in real-time.
- Virtual or augmented reality tools provide new ways to promote commercial leasing activities by touring prospective tenants.
- Real Estate CRM systems facilitate the automation of business processes, enhancing the effectiveness of operations and enabling on-time completion of tasks. A powerful real estate CRM enables property managers and other real estate professionals to benefit from a variety of features and tools. Everything from viewing and managing property information, monitoring transactions and managing data is available in one system on a single page.
There are endless opportunities for property tech to change the way CRE deals are done. A few companies are establishing themselves at the forefront of this movement.
12 Examples of Proptech Startups and How They Impact the Future of Commercial Real Estate
Here are some of the proptech startups making innovative and disruptive solutions for CRE:
1. VergeSense — This data analytics company has built software that helps businesses track office space usage. Utilization is a key component of optimizing occupancy rates and the profitability of space.
2. OnSiteIQ — A platform that provides visual construction documentation. This next-gen proptech streamlines construction projects with insight into real-time progress, capturing data sets for analysis and better-informed decision-making.
3. Briq — An investment management platform for contractors, project and construction managers, and more. This proptech tool uses predictive analytics to highlight strategic opportunities in active construction projects.
4. Procore — A cloud-based software for construction management, this platform extends beyond active projects and provides tools for pre-construction financial management and multi-team connectivity.
5. TurboTenant — Property management software for the 21st century, TurboTenant simplifies the rental process and makes it easier for property owners or managers to screen tenants, market an open space, filter applications, and collect rent.
6. MeetElise — This platform provides an AI solution for the logistics of managing leased properties. A “leasing assistant,” MeetElise can virtually automate lead management for apartment leasing and communicate directly with prospects.
7. TensorFlight — Automating property assessment through geolocation and other attributes makes it easier for insurance professionals to speed up the underwriting process. That’s what TensorFlight provides tools to achieve.
8. Gleensite — The issue of site selection never fades from the CRE industry. Gleensite attempts to make this process faster and easier, using AI, big data, and predictive analytics to determine the future profit potential of a certain geographic region.
9. Latchel — Vendor selection and management is a component of property ownership and management. Latchel centralizes and streamlines that process by tracking everything from net margins to maintenance requests to opportunities for tenant improvement.
10. Lavanda — This platform optimizes its clients’ real estate assets. The software provides insight into short and medium-term demand for local rentals and has numerous business proptech tools to manage ongoing tasks.
11. Swivel — Transforming the way space is marketed and planned, Swivel is a design experience platform that creates interactive showcases of vacancies and gives prospective tenants and brokers a visualization of what a blank canvass could become.
12. Placer — Reveals the true performance metrics of any retail location and helps retailers and CRE operators remove the guesswork of truly understanding how visitor data, trade areas, and cross-shopping patterns can optimize site selection, marketing decisions, and tenancy.
Earning the aforementioned billions in funding rounds, proptech innovators like these are capturing the attention of the industry.
Proptech is shaping the future of CRE professionals, freeing them up for high-impact and more complex work.
Proptech and the Future of CRE Workforce
Undeniably, proptech is shaping the future of the CRE workforce. The goal of advanced technologies is to replace low-skill, repetitive tasks, freeing professionals up for high-impact, complex work. Responding to the CRE Innovation Report by the Altus Group (2020), CRE leaders expect the following areas to be impacted by proptech:
1. Property management
2. Property transactions
3. Listing marketing services
5. Lending firms
Adoption will be key to hit a critical mass threshold, and CRE professionals should be well-convinced of the arguments in favor of such adoption. In a 2020 paper published for the IOP Conference Series, industry leader Nikolai Siniak makes this observation:
“In this new age, digital technology has already become the defining transformational force. It has rapidly become an umbrella concept for the central new drivers of productivity growth, innovation, and the diffusion of knowledge on a global scale. Those who embrace digital technologies as the central transformational force of this new age are likely to prosper.”
How CRE Professionals are Responding to Proptech
Proptech investment is at an all-time high, but many CRE firms are taking a prudent approach.
The challenges of training alone represent a learning curve for many CRE professionals. Because many proptech solutions address systemic operations — such as touring, leasing, and construction — they cannot be integrated without majority buy-in. That said, the norms of real estate transactions have fundamentally changed. For firms with an eye to the future, this change is inevitable.
Proptech has the potential to reduce risk, optimize efficiency, and automate with precision. The value of these tools must not be overlooked and, for those who wish to earn or maintain a lead, they are truly vital.