The past several years have demonstrated that real estate technology is on an upward climb, delivering undeniable value to the largest asset class in the world. We’ve seen venture investments increase year over year, with investment in the sector nearing $20B, a 38% increase in 2017, according to Venture Scanner. With these investments, we’ve also seen some of the most creative, innovative, and dynamic purpose-built creations and the industry has shown no signs of halting when it comes to creativity.
One narrative to watch as the industry continues to evolve includes a strong commitment to eco-friendly mechanisms, as they will become a priority for most future employees, corporations, and consumers.
Today, more than 90% of CEOs say that sustainability is fundamental for success and, 66% of consumers are willing to spend more on a product if it came from a sustainable brand. Property technology is no exception to the rule and will see the creation of stronger eco-friendly mechanisms as corporations, on the whole, are being held accountable. There will be an uptick in creations that help build smart, connected buildings that are able to conserve, reduce, reuse resources in efficient and meaningful ways.
We will inevitably see a more user-centric approach to development. PropTech has already proven to improve the work-life integration of its users by improving productivity and efficiency. While we will see a focus on the user and a more people-centric approach it will increasingly be done through an A-centric approach, automation, and tech tools that will help predict and provide more meaning to the end consumers.
We also expect to see a decrease in proprietary software. While proprietary software once allowed landlords to personalize their buildings, it will become a thing of the past. As more and more proptech companies are built and continue to address the needs of different users, landlords will stop trying to build proprietary software as it is not their core business and they are unable to maintain such solutions, and they will leave it to the experts.
Furthermore, it is expected that the implementation, availability, and or access to certain technologies will become a decision point for employees. About 70% of Americans are disengaged at work, while businesses with a strong learning culture enjoy employee engagement and retention rates around 30-50% higher than those that don’t. In the past several years we’ve seen the needs of employees change immensely, from a need to integrate work and life, to a desire for corporate wellness programs. We suspect the demand for a connected technology platform in lease agreements and even employee contracts in on the horizon.
PropTech has proved itself to be one of the fastest-growing investment sectors in the world right now, and like any growing industry, change is inevitable. Predicted to reshape traditional real-estate, the future of the industry is endless. Which, leads us to the reigning trend, one that regardless of the size of your company, your current initiatives, or where you work, will become a pain point for growth. The ability to feed the need for mass integration.
In 2017, VCs put $12.6B into the real estate tech sector, with WeWork and Compass leading in terms of funds raised. Softbank invested $4.4 billion in WeWork and $450 million in Compass. United States-based real estate tech firms comprised nearly $6.5 billion, or 52 percent, of the venture capital funding raised in 2017.
In addition to the rise in real estate tech, there has been a universal understanding from tenants that property owners have little to no brand awareness. The majority of tenants have never interacted with their landlord or property manager. As education of the industry increases, the needs of tenants who want these integrations have skyrocketed. In 2019 and beyond will see a rise in the number of tenants requesting app integration as well as the majority of the largest landlords having implemented or being in the process of implementing a central technology platform to interact with office-goers.
Additionally, an interconnected system in the workplace will no longer be a thing of the past, the linking of manpower, technological devices and other items of business will become a necessity as opposed to just a perk. Office users now use 50 different tech products throughout their day, and none are connected, making being productive less than simple.
A Deloitte study found that 74 percent of survey respondents regularly use text messaging for personal communications. Worldwide 18.7 billion text messages are sent every day, with individuals between 25–34 years old sending and receiving more than 75 texts per day. If this is any reflection on the need for sophisticated connectivity outside of our personal lives, then the proptech industry will be faced with the challenge of developing products that can do for our work lives, what super-apps like WeChat that do a little bit of everything, do for a personal life.
Modernization and customization will define the next wave of PropTech. The ability to innovate aging buildings, bringing standards to a point that will please an emerging workforce while adding value to everyone involved will solidify the industry’s place as a must-have for all buildings and workplaces in the future. This can only be done by integrating what are now disparate systems. Bringing the technologies that power our properties together will eventually be a boon for not only the real estate industry, but the technology companies that serve it.