After four decades of looking at emerging trends in real estate, you might think we’d become jaded. The cost of borrowing by property owners rises and then falls. People move away from cities, then they move back. Has anything really changed?
Actually, yes. More than ever, technology is upending how we work and shop. One of the many trends that we cover in our latest Emerging Trends in Real Estate report, PropTech is changing the way leading real estate firms are managing their properties.
Technically speaking, PropTech is innovation in information technology tailored to the real estate industry. In practical terms, firms can use it to cut costs and gain deeper insights. They can also streamline operations ranging from marketing and financial reporting to investment and property maintenance.
Investors see PropTech’s potential; we expect they could channel a record $6.3 billion to such innovation worldwide in 2019.
Many real estate firms are seizing on the new technology at a faster pace than ever before. Yet we’ve found that even the most sophisticated companies can probably do more. Here is a description of some of the most promising opportunities in the PropTech toolkit.
Large commercial real estate companies have made huge strides in efficiency by using big data and advanced analytics.
The firms have ditched manual processes for gathering and analyzing backward-looking data that took teams weeks to complete. Now they use automation and software to do the same work in a few minutes on a single desktop. The result: The firms mine internal and external data in near-real time and review thousands of properties at once. Managers gain a deeper firm-wide view into revenue and expenses and a fresher, more detailed look at performance.
At the C-suite level, staff can quickly create nuanced and timely reports, and share them on a single dashboard. By drilling deep into the data, top executives can spotlight their best- and worst-performing properties. They can compare holdings by region. Or they can highlight the costs to run individual properties. They can also identify cross-firm trends in various costs such as electrical or plumbing upkeep. Using such granular data, leaders can make smarter decisions in property management and investment.
At a lower level, mall landlords can use data analytics focused on specific tenants to gauge foot traffic and other benchmarks. They can leverage such insights to diversify the retail profile across their property. They can also identify the most appealing features of a mall and highlight those attractions to gain more shoppers.
PropTech is cropping up in other forms that also deserve a look:
To be sure, adopting PropTech isn’t always easy. You’ll need to upskill your employees while encouraging openness to new ideas and processes. By upgrading data analytics you’ll give employees access to loads of information. So you’ll also need to strengthen data management, privacy and cybersecurity.
Still, when the next downturn hits real estate, you’ll want every available tool to ride out the market turbulence. PropTech can help you hold down costs, spot new opportunities and stay ahead of your rivals.