Property technology’s (proptech) presence in the CRE industry has been slow, but steady. The sector brought in approximately $186 million in annual revenue in 2011, but $31.6 billion just eight years later. That number is expected to continue growing, but a potential recession might make people think twice about investing money in a new technology. That hesitancy would be a mistake for anyone in CRE however, Parkable.com CEO Toby Littin recently wrote for Forbes.
“If you don’t embrace proptech now, you’re at serious risk of getting left in the dust,” he said.
Littin explained that it’s possible for the CRE industry to stay head of the proptech game without “breaking the bank”—even in the current economic climate.
Part of the reason Littin recommends CRE owners continue to explore proptech is that they have no choice if they want to remain viable. U.S. offices reached 50 percent occupancy in January—it was the first time since the COVID-19 pandemic hit in 2020 that offices hit that mark.
While promising, it still means that offices are also half empty. Building owners are now tasked with holding on to their current tenants while enticing new ones to occupy the vacant spaces. Meanwhile, tenants who have inflexible lease agreements have to figure out how to make the most of their unused space as many employees still prefer to work remotely or in a hybrid environment.
Proptech can be the key to creating more stability for CRE owners while keeping tenants happy, according to Littin.
Proptech adoption in CRE
Using technology tools can help CRE owners create a “digital layer” between them and their tenants. This layer can offer benefits for both parties—tenants gain some autonomy when it comes to making maintenance requests, while businesses can leverage workflow automation capabilities, avoiding unnecessary human labor, as well as efficient asset allocation. CRE owners can also lean on tech to help solve issues that might come up between them and their tenants.
While investing in proptech might seem expensive at first, Littin notes that a successful implementation can boost tenant satisfaction, leading to longer lease periods. The longer a tenant stays put, the more revenue that’s generated for the property owner, who also doesn’t have to spend time filling that vacancy again.
The keys to successful proptech implementation
Proptech’s main purpose is to improve the CRE industry and simplify it for everyone. What’s beneficial to one CRE owner might be different for another, so the tech used may vary. But there are a handful of common, overarching tech categories CRE owners can leverage in 2023, according to Littin. This includes artificial intelligence (AI) technology, which allows building owners to gain more insights on their properties and makes it easier to process. CRE owners can use AI to track building occupancy and address tenant parking issues.
Other major proptech categories include communication, where tech can help solve problems between clients and property managers (talking directly to each other through apps rather than the property manager); convenience—proptech makes it so CRE properties can be managed from anywhere; and cost cutting—investing in proptech helps reduce costs in the long run, from managing building upkeep to reducing manual work.
“The key outtake for investing in proptech tools requires thought about key benefits being sought and interoperability between platforms,” Littin said. “For property owners and occupiers, the benefits are proven to be both financial and experiential and critical for the success of the property industry as we move through 2023.”