It’s never a good sign when the meaning behind the latest trend sweeping its way across a handful of industries seems a bit vague. Despite the confusion among some observers on what exactly PropTech is and how it will revolutionize marketplaces, technology within the real estate space is set to explode.
Which companies or startups will produce the software, hardware, building materials, or manufacturing that will more sharply define it beyond an all-encompassing buzzword? PropTech augurs a larger digital transformation in the property industry, and fiber is at the forefront of making sure commercial buildings can support these demands.
This argument needs to be made because, even though the overall understanding can be a bit ambiguous, PropTech isn’t some kind of niche phenomenon anymore. Think of it like how defining “smart cities” was confusing under a decade ago, and how that seemingly far-fetched technology now seems within our grasp if we take the right steps.
To put it into perspective: PropTech still doesn’t even come close to the closely-related FinTech, yet a handful of PropTech companies reached billion-dollar valuations in 2016 alone. Venture capital funding pushed past $12 billion worldwide in 2017, and 96 percent of investors were estimated to make serious investments in PropTech in 2018 — up from 76 percent the previous year.
As businesses invest time, effort, and — most importantly — money into PropTech and space-as-a-service trends, fiber emerges as the stand-out essential that provides present and future occupants with the capacity they need to make the most out of their environment, and future-proof for what is to come. This means meeting their expectations by providing ubiquitous fiber connectivity, which connects the physical layer of the building to a digital foundation.
It’s going to take some convincing to change the technological groundwork of the real estate industry for consumers and businesses. But here’s why it will work.
Tomorrow’s Needs Today
Think about the time way back when electricity was an emerging technology. As the systems to provide that service got more and more put into place, and gradually became a technological reality, any arguments against the importance of that advancement would have been impossible. If anyone objected, they were quite literally left in the dark. The same mentality goes for fiber’s importance to PropTech.
In 2016, the Federal Communications Commission (FCC) voted to open the flood gates on fifth generation (5G) expansion by freeing up spectrum, promoting wireless infrastructure and modernizing regulations. Today’s consumers use more data for longer periods of time, and across more devices, than ever before. While full 5G is on the cusp of being a reality, the robust optical infrastructure built using fiber is 5G-ready and deployable. It’s waiting to carry the next technological wave that will transform residential and commercial spaces to likely become the industry and societal standard.
Establishing rigorous fiber infrastructure is essentially PropTech’s best first step. The problem is that many buildings still rely on outdated infrastructure that is not sufficient for data-heavy services. This soon-to-be obsolete framework is not set up for the high-speed data connectivity required to support next-generation applications.
Matching the cutting edge nature of 5G with ubiquitous fiber-based connectivity will provide an almost infinite amount of bandwidth and faster wireless internet both inside office buildings and public spaces. Current fiber can already transmit millions of times as much data with minimal changes in equipment for years to come.
As buildings become more technologically advanced, they are basically becoming big information generators. Fiber empowers PropTech to provide buildings enough leverage to be future-proofed as technology continually expands.
Meeting IoT Demands
Taking a first step means you can take the second, third, and so on. With a fiber-enriched backbone in place, occupants and building managers can then reap an accumulation of PropTech benefits.
Consider the number of thermostats, security cameras, alarms, elevators, HVAC equipment and countless other devices already in commercial and residential spaces. There needs to be strong level of connectivity to manage and glean insights from the data constantly emitted by these so-called internet-of-things devices. Fiber can relay those huge amounts of data from IoT devices, which will only increase as the technology becomes more widely utilized.
In the commercial space, over half of retailers worldwide already utilize thousands of sensors to gain real-time observations to inform them how to tweak in-store experiences. Eighty percent of businesses that use IoT devices have improved efficiency, while 72 percent of say these devices helped increase profitability.
On the residential side of the argument, fiber infrastructure can also enable optic sensors to respond to changes in room temperatures, humidity, lighting, ventilation, and other variables. They can also detect anything from temperature changes or electricity surges, to structural fails as a way to provide important diagnostic information for building managers. This is especially important when it includes a lot of systems that aren’t meant to be handled by the property management company.
All these collective building systems become a river of data that sends out critical information from all the devices that feed data streams into it. That data needs to travel on some kind of connection, and it would quickly overburden existing building management networks.
Flexing the Portfolio
While PropTech is largely about the property management business, much of the innovation in the space will have to come from technological influences outside the property management business. In this way, fiber should be viewed as adding value to a real estate investment.
When we talk about future-proofing, we’re talking about ensuring cutting edge capabilities right now. But we’re also talking about how such technological advancements will increase property value or ROI over time. Since optical fiber will effectively become a requirement to implement next-generation connectivity services, commercial and residential building owners can adopt these changes to differentiate themselves from a property value standpoint.
In surveys from even a few years ago, renters indicated that they were willing to pay 8 percent more for a fiber-connected apartment. Property owners also said they added 10 percent to their net income due to an increased satisfaction from renters — which also reduced turnover and attracts new lessors.
That enthusiasm for renters to stay put revolves around connectivity convenience. Similarly, it’s become a critical decision-making factor for commercial tenants. As more next-generation services proliferate, building owners have to be ready to meet these requirements by working with fiber providers. Right now, it’s a strike-before-the-iron-is-hot moment beneficial to both the property managers and tenants.
PropTech means many things to many people involved. Tenants want technology that can connect them to their environment, businesses want to create systems and solutions to help run their companies better and meet new technological changes, real estate developers want to increase efficiency and reduce churn to meet new and evolving demands. All these groups will see benefits from the connectivity advantages of fiber technology