Proptech, fintech, edutech, healthtech - in every industry, so much tech innovation is happening that it’s hard to keep up. What seems to be a sudden overuse of tech terminology across all kinds of businesses has left some to question whether it’s all just unnecessary hype and buzzwords.
It would be easy to doubt that any significant changes will happen, industry and consumers will revert to type and go forth with the status-quo as it has for decades, but could this skepticism be a regretful position to take given there’s so much appetite for change post-pandemic? We’re going to take a look at Proptech in particular and what it could mean for the commercial real estate industry.
What is PropTech?
Proptech is a portmanteau formed from the words property and technology and broadly describes the application of technology in the real estate industry. Proptech encompasses any technology that assists in the merging of physical buildings with digital technologies to increase efficiencies and improve experience for the inhabitants or tenants in the case of commercial real estate (CRE).
Proptech is a broad term in that there are other technological terms that can be overlaid with it, demonstrating the many advances that are happening across each and every sector of CRE. The FinTech industry is alleviating pain points in the financial processes involved in a real estate transaction and smart real estate is a sub-sector of proptech focused on the use of automation technology in creating sustainable commercial buildings.
Applications for PropTech in Commercial Real Estate
Proptech can be used to drive efficiencies across all stages of commercial real estate - from purchase and financing through to development and building management, proptech is changing the way the CRE industry operates. These changes are enabling a level of connection that wasn’t there before as technology-driven insights provide the intelligence needed to streamline operations and real estate professionals can add value to investors, supporting them in maximizing the ROI on their portfolios.
Every diverse area of commercial real estate can benefit from the adoption of proptech, here are just some of the applications along with some of the proptech startups of the last decade or so that have enabled progress in the CRE industry…
Finding Property and Securing Tenants
Property search, particularly in the early stages, can be enhanced with virtual showings and 3D modeling to assist remote decision-making and take time out of the process. Likewise, tenants will also benefit from a better search experience utilizing technologies like ‘Matterports’ 3D virtual tours which can convey the vision of a property when it’s difficult for potential occupiers and developers to see it themselves.
Construction Management
Proptech software such as PlanRadar allows the seamless flow of information and communication between teams on the ground and those based in an office. Property owners, architects, engineers, contractors and anyone involved in the building lifecycle can collaborate, manage and exchange information easily using one tool. Other proptech startups are looking at solutions to the current high costs associated with construction, many of which have been caused by the pandemic and supply chain disruption. These emerging technologies present ways to manage payments between vendors and contractors, reduce waste and cost and move towards off-site construction and even on-site 3D printing of materials.
Portfolio and Property Management
The IoT and 5G are enabling smart monitoring of property and energy usage and occupancy so that potential efficiencies can be identified and addressed. For property owners, proptech represents real-time, data-driven decision-making in a process that’s traditionally been siloed and slow. One example of this in action is web-based proptech solution VTS which allows landlords to streamline their leasing process and identify real-time trends around which tenants are more active, in which locations and view lease signings as they happen.
Workplace Experience
Proptech companies offer solutions for a soon-to-be returning workforce. With hybrid workplaces becoming the norm, technologies that allow employees to connect and be productive from anywhere are essential to new ways of working. Integrating sought-after facilities into commercial buildings is now vital to secure long-term tenants - tenants that are now in the driving seat and would take
Cut Costs and The Competition with PropTech
Opportunities to cut cost and complexity out of the CRE process are immeasurable currently. Commercial real estate firms are on the cusp of an opportunity to move the industry strides forward by adapting technologies that reduce their costs and set them apart from competition. Whether it’s through in-house technology or partnerships with leaders in the PropTech space, there hasn’t been a more exciting time to be part of a much-needed movement in the CRE industry.
Big CRE companies are already investing billions into expediting the use of PropTech, a market which is said to have grown by over 1000% over the last decade according to proptech company HqO. This signals a market that was coming-of-age, even pre-COVID, from which point it accelerated even faster. Proptech is not reserved for the chosen few, just those that recognize there’s no coasting along in a new era, CRE companies must move with the times and times are changing drastically. Commercial property management needs the winning combination of skilled people and proptech to deliver above average investment returns.
Reach out to PCG with any questions you might have on proptech and how it’s impacting commercial real estate investment.