Source Code: What matters in tech, in your inbox every morning
How, if at all, does increased adoption of remote work affect the direction of future proptech products?
Moving away from physical property-specific technology and enhancing technology for home offices are among the directions proptech could go, according to to members of Protocol's Braintrust.
Co-CEO at JLL Technologies
Remote workforce numbers were trending upward long before the pandemic, and, as the current climate continues to develop, many proptech companies are well positioned to address new workplace norms.
In recent years, proptech has seen a flood of investment, from both established real estate firms and venture funds, and for good reason: It's a big industry in need of new technology solutions. While the pandemic has affected startups in different ways, it brought into focus opportunities for real estate technology that stretch beyond the four walls of a building. In fact, proptech no longer feels like the proper term because the physical building isn't always the main concern. It's about the experience companies provide for their workforce, wherever they are.
Companies are seeking technology solutions to connect and communicate with their distributed workforce and facilitate the eventual return to the workplace. The office experience will be novel, and only by upholding and communicating new processes to meet new health and safety standards can businesses build trust with employees. For example, companies can look at data from occupancy sensors, like those provided by VergeSense, to identify hot spots, reimagine office layouts and monitor cleaning protocols.
Many companies providing tech-enabled real estate services are also well-positioned. JLL continues to service clients using the JLL Tenant Experience platform to immerse tenants in 3D virtual tours and build 3D space plans. LandTech, a U.K. startup, has seen increased demand from investors looking to source and assess property development opportunities remotely.
In a more distributed world, real estate technology and proptech companies have a major role to play.
Partner at RET Ventures
Increased adoption of remote work gives greater primacy to the home than the workspace, and — by extension — to residential-focused proptech as compared with office-focused proptech. So, while both will still exist, we can expect the former to receive increased attention.
Perhaps most significant will be the category of proptech companies that help turn the home into an optimal working environment. For example, web connectivity in apartments is more important than ever, and solutions like GiGstreem, which delivers gigabit internet at very competitive prices, will become paramount. Also poised to grow are platforms such as Fernish, which can make the home a better workspace by providing high-quality rental furniture for apartment residents. Solutions like these are likely to receive the greatest focus from entrepreneurs, capital and end users alike. And, in fact, both of these companies have already seen spikes in demand since the lockdown, with Fernish enjoying its best week ever after stay-at-home orders were passed.
On the owner/manager side, building staff is also working from home in greater numbers, and property managers will increasingly adopt tools that make their staffs more efficient in a work from home/no-touch environment. For example, our portfolio company Nestio provides software that allows a leasing staff to more effectively manage prospects and remotely execute leases online. Combined with SmartRent's smart lock access system, this enables a property manager or leasing agent to have prospective residents tour the property and even sign a lease — all while the leasing agent works from home.
CEO at Equiem
During shelter-in-place orders across the world, we interviewed our clients, landlords and property managers and surveyed our community of 175,000 occupiers to understand how COVID-19 had affected them, and how we could best help them solve their immediate pain points.
From this research, we quickly understood how landlord and occupier needs had changed. And how the underlying "rules of successful proptech firms" had to be rewritten due to the increased prevalence of remote work:
- First, your product must now be able to provide value to occupiers working remotely, not just those in the building. A significant percentage of occupiers will continue to work from home, even post-lockdown. Platforms whose only interface is within the built environment will struggle with relevance when buildings are empty or half-filled. And when occupiers don't see value in your platform, chances are landlords won't, either.
- Second, you must be able to provide value to the landlord, even if their building isn't fully occupied. Landlord and operating budgets are under pressure, so any investment in proptech needs to demonstrate it can help reduce costs, streamline operations, collect valuable data and insights, support retail or generate new revenue streams.
- Third, your platform must help landlords convince tenants that the office is a safe work environment, once again. Rent collection is still the number one priority for landlords, and rental abatements are a massive risk. Provide landlords with ammunition to help convince tenants to renew or even just pay their rents, and you will likely be a "must-have" or "must keep."
After conducting our research, we rapidly adapted Equiem's product offering to address these new needs. In March, we launched Remote, a new variant of our platform specifically designed to help landlords communicate and service tenants working from home. Then in May, we launched Return to Workplace, our comprehensive set of solutions to help landlords safely return tenants to the office.
Existing proptech players will need to innovate rapidly in order to remain relevant in the face of changing customer needs, while new firms will need to offer value against the realities of the new normal.
Managing Director at Sapphire Ventures
Across both residential and commercial real estate, proptech helps win over buyers, sellers, residents and tenants. That's the case right now — and longer term. Technology has been helping those in the real estate industry gain a competitive edge for years. COVID-19 has merely accelerated the trend by creating the forcing function real estate needed to upgrade its processes and tools.
A Deloitte survey published before the pandemic found that 56% of commercial real estate executives said they plan to increase their investments in tenant experience this year. Digitizing the workplace was already top of mind. But now as many retail businesses reopen and employers develop return-to-work and hybrid remote/office strategies in a post COVID-19 world, it's a critical time for proptech startups in the commercial real estate sector to adapt to new tenant needs — and fast.
For example, Density uses computer vision technology to help employers measure and control the density of people in an office, which will be a key tool in determining return-to-work strategies for many employers. HqO creates software that helps office buildings operate digitally. HqO enables tenants to enter the building, order meals for delivery and more, all via its app. And SmartRent designs custom device packages based on information gathered during on-premise inspections of community properties. Landlords are able to facilitate lease management and work orders directly from one app — an essential capability in a world where in-person interactions are no longer an option.
Proptech is also increasingly being used to help commercial real estate owner/operators adjust to new traffic patterns in a post-COVID world. Startups such as Placer and LocateAI are helping retailers determinate where to open new locations based on traffic patterns. These tools are also essential for helping determine lodging needs, which is an industry on pace to lose up to $400 million in room revenue per day. LocateAI data shows that hotel traffic in certain cities are well ahead of the nation, which can be useful for discovering relative investment opportunities.
Partner at MetaProp
The adoption of remote work due to the pandemic has served as an accelerant for continued growth and development of remote tools. While the market has shifted priorities, more than anything it is serving to galvanize the real estate industry's engagement with technology and will become a catalyst for the industry's further maturation.
This change is occurring in the midst of the largest wave of innovation activity to ever sweep across the real estate industry. In the past decade, real estate and proptech has grown from a tiny backwater of the broader startup economy to one of the fastest-growing sectors in tech.
Today's startups seek to enable remote workers to do their jobs better, faster and at lower cost, while others aim to more fundamentally alter the nature of how these jobs are performed. Broadly speaking, these companies either enable or benefit from an enhanced level of visibility, control, efficiency, flexibility or customer experience compared to the status quo.
Proptech's rise has been in motion for many years now, but new remote work themes have taken on a particular resonance in today's climate including community and communications (e.g. HqO), wellness (e.g. Real, hOM), and operations-oriented technologies like professional tools that enable work remotely (e.g. AirWorks, OnSiteIQ) or more efficiently and effectively (e.g. Bowery, Side), data and business intelligence solutions to help leaders make better, faster decisions (e.g. Briq, Cherre), or tooling that plays to the further institutionalization of real estate (e.g. VTS, Entera).
See who's who in Protocol's Braintrust.
Questions, comments or suggestions? Email email@example.com.