PropTech: The Future of Real Estate is Already Here

PropTech has become ubiquitous within the real estate industry it, making it increasingly important to understand its depth, breadth, and scope. Whether through app-based programs, multi-user platforms, or advancements in virtual reality, PropTech impacts the built environment you frequent and your relationship with it whether you realize it or not.

What is PropTech?

‘PropTech’ refers to technology and tech-based platforms real estate professionals utilize to build, manage, and maintain brick and mortar assets and to transact real estate deals more efficiently from beginning to end of the process. In short, PropTech is the strategic and purposeful alignment and synchronization of real estate and technology.

More than $20 billion have been invested into various PropTech tools in the U.S. in just the last three years alone. And with the rise of Artificial Intelligence (AI), tech companies of all sizes have been eager to integrate this technology into their solutions and products, aiming to enhance efficiency both internally and for their customers. This enthusiasm is particularly evident in PropTech and will become increasingly prevalent throughout the built environment. 

Developers, property owners, property managers, investors, sellers, tenants, contractors, engineers, architects, bankers, brokers, attorneys, marketing firms, title insurance professionals, and more utilize PropTech in one form or another and to varying degrees.

The power of PropTech lies in the concepts for their use and their real-world functionality. But the mechanisms that power these innovations come to life through the integration of data, algorithms, photo-scraping and image-recognition capabilities, dynamic-valuation models, customer-relationship management systems, and more.

Pandemic Acceleration 

Though its origins date back to the 1990s, the modern wave of PropTech investment and its adoption by the real estate market was accelerating rapidly by 2019. And while the pandemic disrupted our lives in ways we’re still deciphering, that unforeseen global event fundamentally altered the ways in which we all do business. For the real estate market, it was a game-changer. 

MetaProp’s 2021 year-end survey revealed that 96 percent of PropTech investors believe the pandemic sped up technology adoption and 85 percent reported companies in their portfolio were at or above expectations for customer growth. Whether tenants or buildings utilize keyless entrances, smart desk and conference-room booking software, or hoteling, the integration of PropTech has become table stakes for the industry. 

The Need for Speed 

One of the most compelling elements of PropTech is its ease of use and processing speed. For example, office leasing brokers historically walked up and down the streets of their urban territories, recording addresses of every office building and any relevant notes about them on paper, and manually inputting that data into previous generation digital tools. Not only was this process tedious, cumbersome, time-consuming, and unreliable, programs such as Microsoft WORD, Excel, PowerPoint, and others were only accessible by a single user and did not interface with each other. 

Various PropTech leasing, asset management, and acquisition platforms enable those very same brokers to plug in custom search parameters, then instantaneously produce curated reports which are easily shareable and accessible from anywhere in the world. These platforms also enable multiple users to simultaneously access the same data and input updates in real time, and easily include charts, graphs, and other images, and have tremendous storage capabilities. 

Virtual and Augmented Reality 

Space tours have been a staple of the leasing business. But to arrange for existing or potential tenants to physically visit a site can be a long and sometimes torturous process taking weeks, months, or longer just to get on the books. New PropTech software enables clear, 3-D virtual tours from the comfort of the tenant’s computer or smartphone, digitally ‘walking the space’ from any location.  

When it comes to construction, we have seen the introduction of ConTech, or construction tech, a subset of Proptech. With ConTech, contractors and developers are increasingly integrating updated versions of virtual reality (VR) and augmented reality (AR) into their processes to digitally ‘view’ an existing or planned building down to the studs.  

Often wearing a VR headset in an office, the user can determine with clarity if a support beam, stairwell, window frame, elevator bank, HVAC or other system component are even an inch or two out of place. This allows the development team to feel as if they have visited the site numerous times before ever physically setting foot on the premises, and to make design changes before they arrive.  

Residential Living through PropTech 

The residential real estate market has its own subset of PropTech. Large companies such as AirBnB, Zillow, Compass, and others are considered PropTech, with platforms that facilitate a convenient, efficient, digital approach to leasing, selling, managing, and financing residential living.

Other residential PropTech offerings are geared toward the tenant experience, with smart technology allowing for the digital operation of lights, locks, temperature controls, security cameras, and more through an app on your phone.

PropTech and ESG 

PropTech is also making a considerable impact as the real estate industry increasingly adopts strategies for environmental, social and governance (ESG) criteria. Buildings account for nearly 40 percent of global CO2 emissions. As we strive for a carbon neutral ecosystem, property owners are focused on improving their energy efficiency, particularly in the light of various state and federal regulations demanding that certain benchmarks be achieved.  

Owners and property managers therefore are increasingly utilizing smart technology to monitor an asset’s energy performance, detect operational inefficiencies, and make automatic adjustments. Using IoT (Internet of Things) sensors, tenants and building owners can also monitor indoor temperatures, humidity, and CO2 levels, and more, with alerts notifying them when these factors exceed optimal levels. 

Want to Know More About PropTech?

If you’re a PropTech company looking for a strategic communications partner to help articulate your message or expand your market reach, or a real estate company looking to signal boost your investments into PropTech, Marino is here to assist. We have a robust practice and have outlined steps for how we can work together.