What is proptech and how might it shape the future of commercial real estate

15 September 2022
167 Green Apple Wallet

The commercial real estate industry in the US is a nearly trillion-dollar business and visionaries across the spectrum have aims to bring the next great industry innovation, but as with any behemoth, change takes time. It’s no wonder the disruptive effects of an ever growing stable of technologies have been slow to transform the CRE world, but there is growing evidence that the tech revolution of the commercial real estate industry has started to gain steam.

What is proptech?

Proptech refers to any technology which improves the process of researching, building, managing, buying, renting, or selling real estate. There are several household names which fall into this category of tech like, Zillow or Redfin, both of which aim to improve the home buying process. But that is just the tip of the iceberg. Consider, by the end of 2019, $31.54 billion had been invested in US proptech companies and in 2020, even with a nearly 25% decrease in venture capital investment globally, another $23.75 billion had been invested (Forbes).

So, what makes this new subset of technologies so enticing to CRE investors, producers, and tenants? The simple answer is that there are benefits on all sides. Below, we explore just a handful of the most popular proptech innovations and how they are being used by Focus to benefit partners, clients, and residents alike.

As discussed, proptech has roots in the residential real estate industry. Some of the best known proptech companies got their start by catering to the needs of the individual home buyer. Services like Zillow and Redfin brought the real estate market to your fingertips through the internet and empowered buyers and sellers alike.

Fundamentally, it is a tool by which to improve the quality of real estate products by enhancing the experience of tenants and ultimately improve the financial outcomes of properties. Proptech aims to do the same for owners and users of commercial multifamily, office and hotel properties.

Atworth at Mellody Farm Package Room

Proptech for commercial multifamily properties

One of the most customer-forward, high-touch areas of the CRE industry is multifamily real estate. These properties are designed and built with a person in mind and as such, they aim to deliver on promises of a higher quality of life for their customers. It is this inherent goal which made multifamily real estate a natural ambition for proptech developers.

There are countless ways technology can improve our home lives but take for example the process of receiving, storing, and delivering packages. The average person in the US receives 21 packages in the mail a year (FedEx via Forbes). Extrapolate that stat to a multi-unit property where residents total in the hundreds, that’s thousands of packages over the course of a year. As any property managers will attest, the task of receiving and distributing packages within a multifamily property could be a full-time job. Enter Luxer One, a proptech system which automates and secures the receipt and distribution of packages without the 24/7 support of a property manager. This simple and effective tool enables properties to turn an analog package room, into a digital, surveilled space where tenants can access packages as they are delivered. Not only does the service reduce the amount of work required by the property manager to handle package volume, but it acts as a service for tenants by providing alerts when packages arrive, 24/7 access, and a sense of security. At Focus, secure and automated package rooms are a part of the standard amenity package for recent multifamily projects.

167 Green Building Lobby

Technology for Office Properties

Technology in commercial office properties is also on the rise. With roots in the early 2000’s and spurred forward to address the impacts of the Covid-19 pandemic on the traditional office model, proptech in offices aims to improve the experience of workers, companies, and property managers. Early forms of office property technology include secure access systems and co-working models powered by apps. Today, we’ve seen those technologies develop and transform to meet the needs of the current environment. For example, at 167 Green, an office property developed by Focus and Shapack, teams developed several solutions to address access and sanitation concerns after the 2020 pandemic. First, the team rolled out a new VRF (Variable Refrigerant Flow) HVAC system which gives tenants and managers the ability to better control air circulation. The new technology ensures that the air circulating in any segmented space within the building is not cross circulated with that of other spaces and that all the air is circulated with fresh, outside air. In combination, the technology provides cleaner air and prevents cross contamination between spaces, allowing better control by tenant and property manager alike. Additionally, 167 Green was the first multi-tenant office building in the United States to offer all tenants building access through employee badge in Apple Wallet. This proptech feature is further distinguished as it was developed specifically by and for 167 Green and in true proptech form, it provides benefits for tenants and building management simultaneously. By rolling this technology out, tenants can access all spaces in the building without the need to carry around an additional key card. This benefits building manages as well by reducing the need to replace cards, grant access when tenants have forgotten their cards, and reduced the number of staff necessary to operate controlled access during peak traffic hours. Not to mention, it’s a unique amenity feature which tenants love.

It is clear, proptech has broken through the proverbial gate and is making real impacts in the commercial real estate industry. From improved user experience, to integrated building financial and leasing systems, proptech is creating efficiencies and improving the functionality of all sorts of commercial real estate properties.

To learn more about how proptech is being used by Focus to improve project performance, or to discuss a project of your own, please reach out today.

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