There has been a lot of buzz around real estate technology recently, from startup pundits to the Wall Street Journal, citing mostly the astonishing rise in number of companies and the growth in venture investment to $1.6 billion in 2015 – a 350% increase over 2010.
When I began to explore real estate technologies, I wrongly assumed its narrow parameters. I decided to break it down by players in the ecosystem to better understand their pain points, and the ways in which technologists are addressing them.
Developers are taking note primarily in a subcategory called property tech in which companies are working to increase energy efficiency, enhance security, and improve tenant experience. With global warming, rising costs of energy, heightened security concerns and more demanding competition, developers are using new technologies to lower construction costs, identify key development opportunities, and attract discerning tenants and buyers. Predictive mapping and zoning software from CartoFront, is uncovering prime development potential by using actionable data to maximize decision-making.
The “internet of things” (IoT) revolution is also having a huge impact on new development. I recently visited a newly built home in Vermont that has over 70 devices installed in the home and connected to WiFi ranging from the kitchen appliances, and light fixtures, to surveillance and entertainment systems. With this type of constant connectivity, smart electrical use will become even more critical in real estate development – especially with after hours processes, which are being modernized by Genea to more effectively manage HVAC and lights, among other services.
The Sales Broker
Anyone who has discussed marketplace technologies with old-school brokers knows that it can be a touchy subject. There is a real fear of disintermediation, but evidence suggests that the most successful companies are tapping the brokerage community as primary users of their platforms.
This is especially true in residential sales brokerage, where Zillow and StreetEasy have used brokers as a way to grow their marketplaces while providing brokers and leasing agents a medium to connect with new and prospective clients.
Brokers across the country have adopted technology to prospect for new business, and to more effectively market their listings. One such company,Floored, creates interactive 3D graphics for space visualization to assist brokers in illustrating the possible uses of a space.
While the aforementioned fear of disintermediation is real, and it may impact brokers eventually, we’ve seen that both tech companies, and consumers value the relationships and expertise brokers provide – that the human-touch of a broker goes a long way.
Mortgages are a commodity; they are impacted by a number of relatively standard factors such as credit, leverage, risk, term, and location. They are also a competitive business with many players vying to underwrite the most attractive assets.
Alternative forms of lending, including peer-to-peer and crowd funding, have introduced competition into the market. Platforms like Better Mortgage, and marketplaces like Raisal are forcing lenders to work faster, be more transparent, and provide better terms to prospective clients.
The Property Manager
The need to collaborate, track jobs, compare bids and report on every event occurring with a property can be a nightmare of disorganization and inefficiency. While many managers continue to communicate with tenants by phone or email and work manually through issues, platforms like Yardiand Appfolio are helping managers improve communication, provide faster service and ultimately save money.
Online property management software (OPMS) has provided smaller shops with best practices and the opportunity to compete with the larger companies, which has been a factor in prices declining overall. Lastly, cross-departmental integration of these software’s and mobile compatibility has led to a significant uptrend in its adoption.
In my opinion, the most exciting and disruptive technologies coming out of the recent real estate tech “boom” are in this space – broadening access to real estate investment and changing the way deals are sourced and transacted.
Traditionally, commercial real estate investment was reserved for the high net-worth individuals and investment firms that had relationships and could participate in exclusive syndications. Today, crowd-funding platforms have lowered the barrier of entry to average investors who are seeking to diversify and reap the benefits of strong returns larger real estate investments can offer.
Even for more sophisticated individual and institutional investors, access to strong deal flow can be hard to come by. With new tools and online marketplaces, deal flow is improving and the transactional process is being streamlined with better data to improve due diligence.
Tech’s Competitive Advantage
Traditionally seen as lagging in terms of technology adoption, the current generation of real estate professionals is forging ahead with unprecedented technology adoption. The leaders of the real estate tech revolution understand that their competitive advantage – and ultimately their success – is based on their ability to leverage the tools available to them to provide better services to their clients.