PROPTECH ’ S GOLDEN AGE
By leveraging proptech to meet the challenges of COVID-19 , commercial real estate hopes to ready itself for the future .
While many areas of commercial real estate were slowed or postponed by the COVID-19 pandemic , interest in and incorporation of proptech sped up .
Some of this adoption was an immediate reaction to COVID itself , as owners and operators of commercial buildings scrambled to provide safe , sanitized spaces for building occupants . But the pandemic also exposed areas — and opportunities — where strategic technology use could make a significant difference across the CRE spectrum , from operational savings to tenant satisfaction to improved organizational processes and practices .
Investors were paying attention as well . According to a recent study from Houlihan Lokey , almost $ 19 billion in growth equity and debt capital was raised in U . S . proptech in 2021 — more than twice the figure in 2020 .
Innovation spurred by the pandemic tended to center around health and wellness , property management , and climate risk and mitigations . According to “ Proptech : Changing the Way Real Estate is Done ,” a
Recent New Technology Adoption , by Business Area
Percentage of All Companies
60 % 55 % 50 % 45 % 40 % 35 % 30 % 25 % 20 % 15 % 10 % 5 % 0 %
10 %
52 %
Project
Management
6 % 40 %
Construction
5 %
38 %
Space and Use Design
Portfolio
Management
2021 report from the Urban Land Institute and law firm Goodwin Procter , those three areas ranked highest in new technology adoption as a result of the pandemic . Office building owners focused on areas such as flexible office space to aid social distancing , touchless systems , improved ventilation , and controlled energy use in partially occupied buildings . Retailers also faced health and social distancing challenges , as well as new accommodations for the uptick in e-commerce . The multifamily sector pivoted to offer contactless tours and leasing , with many tenants increasingly focused on healthy and sustainable living areas that were now doubling as workspaces .
But the industry slowdown that COVID-19 initiated also gave practitioners the chance to take a closer look at their overall proptech capabilities . “ Some are using the opportunity to experiment with the adoption of technology to get a head start on their competitors when demand returns , as well as be better positioned for the multi-modal future of work ,” says Raj Singh , managing
7 % 35 %
7 % 35 %
Property Management
Leasing / Tenant Transactions and
Relations
Transaction Management
Data Analytics partner at JLL Spark Global Ventures , the strategic investment arm of commercial real estate services firm JLL . “ However , many organizations have decided to wait and see , with the sentiment that once new standards emerge , they will be able to quickly pivot . Neither approach is wrong , but it ’ s likely that early adopters of proptech will have an increased advantage if they are strategic in their approach .”
Proptech ’ s role in commercial real estate can be dizzying in its variety , and the challenges for companies as they move forward are determining what they need , how they ’ ll benefit from it , how they will obtain it , and how they ’ ll pay for it . Successful adoption of technology can make a significant difference in companies ’ bottom lines , whether through energy savings , construction efficiencies , streamlining processes , or efficient data analytics .
Perhaps the most visible manifestation of proptech is smart building technology , which includes physical components such as lighting , HVAC , and water usage ; digital
Health and / or
Wellness
Have Not Adopted New Technology Adopted New Technology
Raising Capital
Climate Risk and Mitigation
Note : Recent refers to about the past three years ; new technology refers to technology that is new to the respondent company . Respondents provided answers for only their current business areas . Percentages total more than 100 percent because most companies reported involvement in more than one business area . Source : ULI 2020 Proptech Survey
9 %
35 % 10 %
26 %
1 % 23 %
2 % 21 %
20 %
20 % 1 % 14 %
Other
1 % 5 %
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COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE SPRING 2022