The commercial real estate (CRE) industry is inundated with buzzwords. In the past few years, we’ve witnessed the rise of multiple office space trends that seem to disappear as fast as they come. Out of all these trends, the most undeniably successful movement has been the explosion of proptech.
Short for “property technology,” proptech is a broad term that encompasses a vast array of technology use-cases within real estate. Whether you’re automating core building functionalities such as lighting and HVAC systems, or enhancing tenant engagement through a tenant experience platform, proptech trends address every modern need for landlords and property teams. But where exactly is it heading?
To understand the future of the proptech market, we first need to look into where it began and how it’s currently being used.
Proptech has been around in many shapes and forms for a while — since some can even argue that collaboration technologies like Slack and Zoom fall under its umbrella. However, proptech as we know it can be traced back to 2012, when 72 real estate startups raised $221 million in venture capital. The following year, real estate tech company Compass raised $20 million in Series A funding. The online marketplace for buying and selling real estate eventually became one of the most valuable proptech companies, with an evaluation of $150 million.
Real estate technology trends have only continued to gain popularity since Compass’ inception. Despite the COVID-19 pandemic, funding for proptech startups is expected to grow substantially in 2021 — resuming or exceeding its pre-COVID growth annualized growth of 20%. In fact, many believe that the pandemic accelerated technology trends that were already in motion. Because of this, the real estate industry — in particular, commercial office space — has achieved more innovation in a single year than it has in decades.
Depending on where you look, proptech functionality can be broken down into any number of categories and opportunities — as it is truly an endless, ever-evolving sector. It can encompass contech, or construction technology, that reinvents the construction process by helping engineers and architects. It can include fintech (you guessed it, financial technology) to help real estate professionals buy, sell, or manage their properties. It can even touch upon smart technologies, which shape the future of infrastructure through connectivity, automation, and IoT devices. It also spans across all branches of real estate, from commercial proptech companies to residential.
There are, however, certain real estate technology trends that are more prominent than others. For example, CBRE has identified 10 particular aspects of proptech that are gaining popularity in 2021. The following are just a few use-cases that can be applied to the office:
- Omnichannel experiences: Blending the physical and digital workplaces to provide tenants with a flexible, customer-focused space.
- Space monitoring: Whether it’s for capacity management needs in the wake of the pandemic or simply allowing property teams to gain more insights into their buildings, using digital solutions to understand and manage space usage has become a critical need.
- Sustainability: Proptech can help property teams achieve their sustainability goals by optimizing energy consumption, building automation, and more.
- End-to-end solutions: With a growing focus on the people who are in the buildings, end-to-end platforms that can bring all aspects of an asset together — such as property management and tenant engagement tools — are becoming crucial. This is where platforms like the HqOS™ CRE operating system come into play.
Technology’s Role Moving Forward
As new needs unfold across all areas of real estate, proptech companies will rise to the challenge. These innovative technologies will not only fulfill industry needs, but they will also reshape the buildings they serve.
As a recent Protocol article states, “Businesses and their physical office spaces will change due to the pandemic, reinventing themselves to be more resilient, flexible, collaborative, and digital. Proptech will be critical to adapting to changing needs as we continue to navigate this crisis and future ways of working.”
One thing is certain: proptech companies are strengthening connections between landlords, property teams, tenants, and the spaces they’re in. Just as technology helps consumers optimize and enhance their everyday lives (think Siri, Alexa, and the like), it will do the same for the real estate industry and its end-users.