A Look at Property Tech Insights for Landlords
The rise of property technology companies around the world is causing a massive shift in the commercial real estate (CRE) industry towards more tech-enabled buildings and work offerings. The latest property tech insights for landlords will ultimately prove to be a competitive edge in the market.
According to Deloitte’s 2021 commercial real estate outlook, “Companies can significantly increase tenant engagement by optimizing real-time updates about facilities and developing a sense of community using mobile apps. About one-half (48%) of respondents who said their company is using digital technologies, such as interactive mobile apps, to increase communication with tenants or end-users, plan to increase investment in digital channels over the next year. Cloud technology could be the backbone for many new capabilities as it offers scalability, data storage, and ubiquitous access. For instance, companies can leverage cloud-based tools for digital marketing and to connect virtually with tenants to build a digital tenant experience.
To expedite the implementation of a digital transformation road map, CRE companies should look for strategic partnerships with technology providers or proptechs. REIT respondents seem to acknowledge this and are being more open to collaborating with proptechs. On average, 58% of REIT respondents have increased their intent to partner, compared to 45% of respondents who are developers.”
What exactly is property technology, and how can landlords and property teams leverage this new innovation in real estate to their advantage?
What is Proptech?
The term “proptech” has only recently become a buzzword for CRE within the last few years. Just as “fintech” is short for financial technologies, the proptech meaning combines properties with technology. This niche market pushes CRE portfolios towards collaborating with top real estate companies rooted in technology — ultimately striving for more efficient building and workplace systems, which can be achieved by new technological advancements that combine the physical and digital worlds. Additionally, property technology companies can help offices align with the modern tech-enabled habits of their main consumers: tenants.
According to Common.com, a more in-depth definition of proptech is as follows: “Proptech is an innovative approach to real estate in which technology optimizes the way people research, rent, buy, sell, and manage a property. The cross-industry technology benefits all parties involved – developers, investors, and property management companies – making it a recent buzzword in commercial real estate. Proptech real estate startups are all those that are attempting to make the real estate industry (especially in highly dense cities) better, more efficient, and easier to navigate for all parties involved. It’s no wonder that New York is a leader in this up-and-coming industry with so many real estate concerns, such as the lack of affordability and of housing units. The rise of this industry considers the need for a technological and mental change required of the real estate sector to address the inconveniences of its consumers.”
Such up-and-coming real estate companies come in many forms and can achieve many things. Now, let’s dive into the latest technology-based property management research to help teams realize their goals.
Emerging Proptech Trends
Commercial real estate technology trends for 2021 show promising futures for both commercial real estate teams and proptech companies due to the proven need for office technology. According to a recent Forbes article covering the latest proptech trends, the proptech industry has grown by 1072% from 2015 to 2019. In terms of proptech investment alone, venture capital firms invested $8.3 billion in proptech companies around the world in 2018.
Jim Berry, Vice Chairman and U.S. real estate leader at Deloitte, explains the continued rise of proptech trends even after the COVID-19 pandemic: “While the pandemic was an eye-opener, we see it as an accelerant of existing trends. It is telling that 56% of CRE respondents to our 2021 CRE Outlook survey said that the pandemic exposed shortcomings in their organizations’ digital capabilities. Only 40% of respondents said their company has a defined digital transformation roadmap.”
More specifically, according to John D’Angelo, U.S. real estate leader at Deloitte Consulting, the future of real estate technology resides in four key trends: the rise of digital twins, direct digital engagement, data and analytics, and robotic process automation. We can break these down as follows:
- Rise of digital twins: By capturing and using data about physical buildings, supplemented by Internet of Things (IoT) data about building operations, the CRE industry can create efficiency in building operations, improve end-user experiences, and preemptively address issues across portfolios.
- Direct digital engagement: Technology can create direct lines of communications with tenants, as well as touchless experiences that promote modern safety and health regulations.
- Data and analytics: Data-driven decision making will continue to evolve as CRE companies also evolve. D’Angelo states that when trying to understand changing CRE patterns and opportunities, “Trying to do this by instinct or gut simply doesn’t work effectively in this environment.”
- Robotic process automation: Robotics process automation allows individuals to configure computer software that emulates and integrates the actions of a human interacting within digital systems to execute a business process. “Robotic process automation (RP) is an example of the slow automation adoption in CRE. As we see CRE companies work to improve operational efficiency and reduce costs, RPA will play a role in overall digital transformation efforts,” said D’Angelo.
The integration of proptech platforms will either make or break commercial real estate portfolios as offices adjust to the digitization of the industry. As Berry aptly points out: “Ultimately, a CRE company’s competitiveness in the [future] world could hinge significantly on the extent to which their people can succeed in a digital work environment.”
The need for such technology is being seen and heard around the world. Though slower than the U.S. market, proptech UK trends are also starting to emerge. Pi Labs CEO and Founder Faisal Butt explains European proptech technology news in a recent report: “It is now hugely important to understand both the threats and the opportunities facing the built environment in order to adapt and mitigate the challenges that organisations of all sizes have and will struggle with. Technology will play a big part in shaping the future of work providing an abundance of opportunities, and the winners in a post-COVID-19 world will be those players that make the right investments to unlock the full potential of what proptech can offer.”
The Future of Property Management
Proptech is also re-shaping the future of property management. The role of a property manager used to be focused on solely building management (security/safety, utilities/energy, reception, and building certifications) and property-level administration (rent collection, ensuring compliance with lease terms, and CapEx administration).
Now, the demand for property managers is much higher, as they are being asked to play a significant role in tenant retention. Essentially, in order to generate value for building tenants and investors, the future of commercial property management focuses on all the aspects of a traditional property management model, as well as communication (with vendors, maintenance staff, and tenants), amenity management (parking, catering, food/beverage, transportation), services management (concierge, networking, programming, health and fitness), and technology services (apps, internet connection, data collection, content generation).
These combined efforts have a huge impact on the performance of an asset. For example, according to CBRE property management data, 88% of tenants say that the quality of property management has a strong to very strong impact on their decision to renew a lease. Additionally, 87% of tenants say that good building management plays an important or very important role in employee retention. Property management industry statistics indicate that increasing this customer retention by just 5% alone can increase overall profits by 25 to 95%.
In today’s world, when it comes to what to look for in a property management company, tenants will want to work with someone who can combine the more traditional property management duties and responsibilities with those that are customer-centric and tech-enabled. Thus, the hottest trend in property management is proptech. Though the modern role of a property manager as a technology provider is certainly challenging, it can produce great value and ensure the success of modern commercial real estate portfolios.
Commercial Real Estate Technology Powers the Industry
As commercial real estate technology in the market continues to grow, and proptech news continues to revolve around creating digital-to-physical experiences for the workplace, landlords and property teams will make or break their businesses depending on the adoption of the right real estate services companies. Such proptech real estate enhancements will serve as a differentiating factor to help attract and retain tenants and generate value.
As the industry embarks on this journey, property teams will get the highest return on investment (ROI) through connecting their otherwise disparate building systems in a singular location. Fortunately, the HqOS™ end-to-end operating system provides CRE owners with a leap in the right direction. The three layers of HqOS — which include our Marketplace, Tenant Experience Platform, and the Digital Grid™ — work seamlessly together to produce compounding positive results for any portfolio.
Our growing Marketplace of best-in-class technology partners — which can be accessed through the Tenant Experience Platform — enables landlords to activate more of their building features, while simultaneously providing tenants with a better experience and property managers with a higher volume of rich data. The Digital Grid then takes these activations a step further, serving as a connected and streamlined analytics offering that can collect tenant behavior, amenities, technologies, and building data all in a single location. By centralizing and structuring data within our CRE-specific data model, it helps owners and operators uncover insights, take action to differentiate their assets, and make intelligent decisions across their portfolio.
Want to take your portfolio into the future of the real estate industry, as well as to learn more about our operating system? Schedule your free demo today!
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