Smart Buildings

PropTech is Triggering a New Era of Opportunity in Commercial Real Estate

The use of the term PropTech has increased significantly recently. But what new element of this space does PropTech represent, and what is “the Proptech Phenomenon” we keep hearing so much about? “Despite commercial real estate’s reputation as a technology latecomer, a new wave of innovative solutions is transforming the business. PropTech refers to the technology and tools to find, purchase, evaluate, finance, construct, lease and manage property,” explains our latest report StartUps and their Impact on Smart Buildings 2019. “The CRE technology landscape, as indicated by the number of companies in the sector, has grown tremendously over the last 5 years, with at least 500 new companies entering the space since 2001,” the report continues. Proptech is an umbrella term to categorize the innovative products, services, and new business models presented by the recent wave of startups in the real estate sector. It has always been too easy to label something a phenomenon but […]

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The use of the term PropTech has increased significantly recently. But what new element of this space does PropTech represent, and what is “the Proptech Phenomenon” we keep hearing so much about?

“Despite commercial real estate’s reputation as a technology latecomer, a new wave of innovative solutions is transforming the business. PropTech refers to the technology and tools to find, purchase, evaluate, finance, construct, lease and manage property,” explains our latest report StartUps and their Impact on Smart Buildings 2019. “The CRE technology landscape, as indicated by the number of companies in the sector, has grown tremendously over the last 5 years, with at least 500 new companies entering the space since 2001,” the report continues.

Proptech is an umbrella term to categorize the innovative products, services, and new business models presented by the recent wave of startups in the real estate sector.

It has always been too easy to label something a phenomenon but does the PropTech Phenomenon warrant such a title? Proptech is still dwarfed by its older brother Fintech, but investment in proptech has been growing at a remarkable rate. Global proptech investments were about $186 million in 2011, to $2.67 billion in 2016, then $12 billion in 2017, according to Zak Schwarzman, a partner at MetaProp NYC. That kind of growth does probably justify the increased adoption of the term PropTech Phenomenon, at least since 2016.

“It is clear from our analysis that there has been explosive growth in the number of new vendors and offerings targeted at the real estate sector. Attention to Proptech has mushroomed in the last 2 years. It is now considered to be something mainstream stakeholders in the built environment need to take seriously in order to remain competitive,” explains our comprehensive report that breaks down its overall investment figures into nine segments, including Workplace Management & Space Utilization, Asset & Maintenance Management and Occupant Engagement Platforms.

Space optimization is by far, the most widely quoted use case for solution providers, according to the report. A symptom of the increased interest, by building owners and commercial tenants, in office design and layout as tools to improve occupant productivity and to maximize real estate utilization.

Asset and Maintenance Management include solutions that monitor and assess the health of assets and equipment together with software which manages maintenance activities in buildings and infrastructure. The report identified 21 new entrants, divided into providers of Data-driven Mapping and Visualization platforms, CAFM/CMMS software, Predictive Analytics services, Combined Energy Management, and CMMS platforms and Insurance Focused Property Inspection Services.

Occupant Engagement, meanwhile, refers to the process of encouraging occupants or tenants to become more active participants in the buildings which they inhabit in diverse ways, for example, by contributing to the overall performance of the building through energy cost reduction or in interactions with facility managers or building operators to improve working conditions or to report maintenance issues or equipment malfunctions.

“There is a recent trend to focus on providing building occupants with more personalized and local control of their office environment, as there is a demonstrable link between occupant comfort and workplace productivity,” explains the report. “At the same time, new players are entering the building and facilities management space with solutions that interact with workspace users in a far simpler way, where they provide intuitive multi-channel access to services and leverage the new channel of choice, which is currently likely to be a smartphone.”

The PropTech Phenomenon is reaching every corner of commercial real estate, the report goes on to explore; Indoor Mapping & Location Services, People Counting & Tracking, BIM & Digitization of Buildings, Smart Water Management, Data Centre Infrastructure Management, as well as Drones and Robotics. Together they are creating a new tech-rich era for buildings and an incredible era of opportunity for the property sector.

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