Let’s take a minute to think about some of the innovations and new companies that have come out of the PropTech scene in the last few years. The diversity of technologies and applications represented is quite impressive, from solutions meant to improve energy efficiency to robots, creative amenity platforms that blend the service world with the tech world, and a wide range of new materials and sensors.
These technologies are both inspiring and exciting. In general, they push the envelope on what the built environment can achieve by not only solving existing challenges, like increasing access control efficiency, but also by fundamentally shifting the dialogue on what a property can be and how buildings can be interacted with (think about the wide world of space as a service).
There’s a challenge, though. Much of the PropTech coming out that focuses on buildings themselves (and not simply investing in or trading properties) seems to be concentrated near the top of the market. For housing in particular, the benefits that advanced amenities and tech-enabled tenant experience tools offer are ones that show up most noticeably in environments of competition and healthy margins, where adding on a new, possibly-gimmicky feature could turn prospective renters away from other buildings, or justify $50 a month more in rent.
In more value-oriented properties, there isn’t as much of a chance for those sort of benefits to really be felt. For a lot of these renters, $50 can make or break a decision to rent in the first place, with buildings competing on cost or basic qualities like safety and cleanliness. Often times, it seems that our universe of rental-focused PropTech solutions doesn’t fit into this world as easily.
That being said, the value-oriented nature of affordable housing makes innovations and new ideas that can cut costs a particularly obvious fit for the niche. On that note, Wells Fargo announced last week that its Innovation Incubator, co-run with the National Renewable Energy Laboratory, is expanding into the housing affordability space. With that comes a crop of 10 participant companies working to promote housing affordability, generally through clean technologies.
The participant companies are focused on energy and materials, with representative examples including AeroShield, which makes an advanced glass for highly-insulating windows, EnKoat, which is using phase change tech for paints and plasters, and STRATIS IoT.
The efforts of the Innovation Incubator are welcome in the PropTech world. For one thing, addressing the affordability through parallel areas of emphasis, like energy and materials, offers a lot of benefits. Sure, housing affordability could be approached directly, through tax credits, subsidies, or even creative entrepreneurship focused on financing and development of affordable housing in particular. But working on cutting costs through energy use and materials choices impacts buildings across the entire built environment world. These types of technologies are just as relevant for market rate housing as for specifically affordable properties, which instantly makes them vastly more flexible than “mono-purpose” affordable housing innovations.
What’s more, the concreteness (no pun intended) of some of these technologies can help position them as an attractive counterpoint to the branding-heavy, low-tech vision of PropTech currently on public display through the example of WeWork. People can complain all day long that co-working isn’t anything new. That complaint can’t touch Innovation Incubator company Shifted Energy, which is turning electric water heaters into energy storage for the grid.
Affordable housing is a huge issue, one that will take efforts from a range of perspectives to solve. Urban planning, design, finance, governance…even the very nature of our economic system will have a role to play in truly solving the housing crisis for the long haul. The benefits of building better efficiencies into our buildings will be shared by everyone in the market. Technologies like those in Wells Fargo’s incubator are one more step toward housing affordability.