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.
We’ve outlined some of the most important narratives to watch, and in no specific order, and without further adieu, here are our predictions from the proptech industry:
A commitment to eco-friendly mechanisms will become a priority
A sustainable brand can be defined by its ability to integrate environmental, economic and social issues into its business operations. Today, more than 90% of CEOs say that sustainability is fundamental for success, while 88% of business school students think environmental and social issues are priorities in business, and, 66% of consumers being willing to spend more on a product if it came from a sustainable brand.
Proptech is no exception to the rule, and will see a stronger eco-friendly mechanism 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.
A focus on the user
Proptech has already proven to improve the work-life integration of its users by improving productivity and efficiency. Proptech helps people that are on the move, keep moving, whether it’s streamlining the most simple day to day activities or providing off-work-hour activity recommendations. The overall ecosystem is elaborate and complex and is more than just a place to organize your workplace. As the ecosystem matures it has become and will continue to become a place for users to find solace in their everyday work-life balance. By providing solutions for the workplace proptech is improving connectivity and ultimately building the community in the place you spend more than half your day. 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.
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. 69% of tenants have never interacted with their landlord or property manager. As education of the industry increases, the of tenants who want these integrations has skyrocketed, 74% of tenants said they would download a mobile app for their building.
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.
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.
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, and an overall need for a more personalized, integrated and connected workplace. We suspect the next trend will be a demand for a connected technology platform in lease agreements and even employee contracts.
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. Can technology solve all of the industry’s problems, from affordability to community? We think so, and at Lane, we’re excited to continue to grow with the needs of today’s generation and the biggest names in real estate.