Proptech is on the verge of revolutionizing how we build, manage, and use real estate in the modern era — if, that is, we choose to embrace it.
Broadly speaking, the term refers to all products meant to improve the real estate sector. While most of the public focus has centered on home-listing services like Zillow or property-sharing platforms like Airbnb, the term has also gained considerable traction in financial and construction verticals. Investment in Proptech has taken off — according to Venture Scanner, funding in the sector exceeded $18 billion in 2018 alone. However, I would argue that the innovation we have seen to date is piecemeal, tending to focus either on a single aspect of property management workflow or the design of an individual “smart” building project.
I believe that we will unlock Proptech’s true potential if we can create a scalable and adaptable system that uses and applies collected data to wholly support the day-to-day needs of the building, its managers, and its tenants alike. We already have the technology we need; according to statistics published by Deloitte, sensor deployment in real estate is expected to grow at a compound annual rate of 78.8 percent before reaching 1.3 billion in 2020. Now, it’s merely a matter of piecing it together in a way that can automate and optimize operations.
Picture an office building that has integrated IoT Proptech into every aspect of its operation. In every space, discreet sensors track motion, air pressure, temperature, light, and even water flow — then transmit that information to an IoT-enabled building management system that can autonomously analyze and act on the collected data. In such a building, an automated system could unobtrusively change the temperature and control lighting systems when people leave or enter a room, use chemical sensors to determine when waste bins need to be emptied and call for maintenance, and even track room occupancy.
The last point is particularly interesting because it offers a means for commercial tenants to not only optimize their office but optimize the use of the space. With real-time occupancy tracking, those within the building can find and book rooms and equipment without wasting time and effort on checking availability manually. Some tools take this convenience a step further — Amazon for Business, for example, can use an integrated calendar to provide workers with information about a conference call and automatically dial in to start the meeting.
All of these small time-savers translate to real optimization and constitute a cohesive system that actively works to support the property, its managers, and its tenants alike. When facilitated by a cohesive cohort of applications via a standardized, secure, and integrated IP network, Proptech can offer greater convenience, sustainability. Data can also be aggregated and assessed on a portfolio level, thereby allowing large owners the opportunity to gain insights into their buildings and identify what can be improved from a broader perspective.
The benefits are clear and compelling. However, the adoption of this cohesive mode of approach has been virtually nonexistent. Commercial real estate is a notoriously cautious industry, one that tends to veer away from unproven methods. However, I fully believe that the change would be worth it — and that others would as well — if even a handful of investors took the risk and took on the challenge of creating an integrated system.