The commercial real estate industry might be one of the last to fully embrace technology, but property technology’s (proptech’s) benefits are making even the biggest skeptics willing to adapt, ReadWrite reports.
How the pandemic unveiled proptech’s importance
The CRE industry could have always benefited from proptech, but sometimes it takes a major event to prove how critical something can be. In the case of proptech, the COVID-19 pandemic revealed its true value. The pandemic forced agents, brokers and other CRE professionals to find new ways to show their properties virtually as people couldn’t meet face-to-face. Technology made this possible with virtual tours that helped prospective tenants feel as if they were exploring a property in person.
The pandemic also created a new work environment where some employees aren’t in their office five days a week. Companies that offer a hybrid work environment need assurances that those working in the office can communicate with their remote colleagues efficiently. CRE owners whose buildings have the technology available to make this happen are much more likely to keep their current tenants happy — and attract new ones.
Embracing proptech amid this new way of working has also proved beneficial to CRE owners when it comes to their bottom lines. With fewer people coming to the office, there’s not as much space being used, meaning there isn’t as much need for lighting, heating or air conditioning throughout an entire office. Buildings can be equipped with sensors that can detect when people are in the room and adjust the lighting and temperature accordingly. When an area is vacant, the lights can shut off automatically, saving property owners money on energy costs.
Who’s using proptech
There’s been a divide between more experienced CRE leaders and the incoming generation when it comes to proptech, ReadWrite reports. In 2020, approximately 78 percent of brokers used paper files, emails and PDFs to manage their back-end processes, according to CRE marketing web app Buildout.
The trend looks to be shifting in the office sector and venture capital, however. Since the beginning of the pandemic, 9 out of 10 real estate professionals said they’ve implemented digital tools in their practices, according to real estate school, Aceable. Meanwhile, 82 percent said they believe they will need proptech at some point in the future.
Venture capital firms have also shown confidence in proptech’s potential. A record $4 billion was invested in proptech during the first quarter of 2022.
How proptech benefits CRE
There’s been no shortage of ways proptech has helped CRE owners, industry professionals and tenants, whether it’s collecting data, collaborating or increasing productivity. Businesses no longer have to manually update and track CRE data points. Instead, proptech software can manage those manual inputs and workers can use that time to create strategies based on the data.
Additionally, proptech can automate lease management, eliminating the need for filling in spreadsheets manually, while also ensuring leases are being managed intelligently. Using tech can also help minimize the risk of human error — 90 percent of spreadsheets have errors in them, according to ReadWrite. Proptech can do a better job of memorizing important dates, forecasting rent escalations and keeping track of all the leases within a CRE owner’s portfolio.
“Real estate, though slow to change, does undergo tectonic shifts occasionally,” said ReadWrite’s Matt Giffune. “Proptech is one of those tectonic shifts. Those who understand how and why this massive shift has happened and take the necessary steps to adopt proptech tools can ensure they are on the right side of the divide.”
