The intense lockdowns and strict social distancing policies have gone on for months. But today, parts of the world that have already borne the brunt of the covid-19 pandemic, including China, Western Europe and much of the US, have begun the methodical process of re-opening buildings, borders and economies.
However, the coronavirus remains a looming threat, one requiring unprecedented precautions. It exposes previously overlooked vulnerabilities for property owners. As they look for ways to ease the transition back to normalcy, get ahead of future disruptions and emerge stronger, some are turning to technology.
Proptech is an umbrella term covering a variety of advancements ranging from physical operations and maintenance to administrative software. It is a niche part of the real estate industry largely dominated by venture capital, but it has grown substantially over the past five years. More than $75 billion was invested in the space between 2015 and 2019, including almost $25 billion in the first three quarters of last year alone, according to a report from consultancy Ernst & Young and property technology events and research firm CRETech.
As the report notes, adoption of many proptech innovations has been slow and uneven. Fundraising and consumer acceptance have been strong for online marketplaces such as Airbnb, Opendoor and Compass, as well as flexible space providers like WeWork and Medici Living, with those two categories accounting for nearly $28 billion and $23 billion, respectively. Meanwhile, more industry focused start-ups – catering to asset management, smart buildings, data and analytics, construction, and tenant experiences – have attracted considerably less attention and capital, with all other categories of proptech accounting for less than $25 billion combined. This is because installing these services and systems often does not yet yield a compelling return on investment, EY and CRETech note.
Yet, the current health crisis is changing that. Already, property owners have begun leveraging management software systems to monitor tenants’ risk of default. One such platform is bison.box from the Germany software firm control.IT, which counts Augsburg-based manager Patrizia among its investors. Another is Till, a US-based outlet that tracks the income and expense patterns of multifamily tenants to create custom rent payment schedules. “It bridges the messy financial reality of households with the structured financial realities of landlords, reduces late payments and prevents eviction cycles. It also provides landlords with an ability to get a real-time picture of what the financial health of their rent rolls looks like at a household level,” Zak Schwarzman, general partner at the proptech VC firm MetaProp says. “Those solutions are really increasing in demand right now.”
Other proptech offerings that were once viewed as luxuries could become essentially components to a safe and seamless re-opening. The following are five categories of innovations best positioned to do so:
The degree to which real estate transactions have been able to continue during the covid-19 crisis is a testament to digitization. Products such as Matterport, an application that enables users to scan spaces and create 3D models for virtual tours using their phones, have enable leasing to continue remotely.
These practices have been most common in multifamily and student housing settings, as most commercial buyers still require in-person site visits. However, Alex Edds, director of innovation at JLL, said the Chicago-based brokerage is working to incorporate the successful components from virtual residential platforms to its commercial-facing NXT platform. If nothing else, these advancements will speed up the return process. “New tools are emerging all the time and as technology further advances, then so should its infiltration into real estate decision time frames,” Edds said in a statement. “The typical three to six-month process could be sped up.”
Other parts of the property ecosystem have also been boosted by remote capabilities, including worksite inspection through tools such as OnSiteIQ, and property appraisal by companies such as Bowery Valuation. “That work has now become much more efficient and it’s gone completely offsite,” Schwarzman says. “These are categories of professionals that could have never done their jobs remotely before, that now have the tooling to do that.”
“Internet hardware and software would be installed to enhance tenants’ well-being and increase sustainability,” Arnie Sriskandarajah, managing director of Round Hill Ventures, a division of London-based manager Round Hill Capital, tells sister publication PERE. The internet of things is a catchall term for wireless connectivity between computing devices – typically smartphones – and the digital and mechanical systems around them. This technology could be used to limit the number of touchpoints where the virus and other germs can be transmitted.
Schwarzman said the internet could be used to streamline the entry process for office buildings, allowing for contactless security check-ins and automated elevators. “The ideal is, from the moment you enter a building’s front door, that building knows not only that you’re authorized to be there but where you’re authorized to go, calling the elevator down to you and telling it where you’re supposed to go,” he said. “From there, you can walk into your office and any place else you’re authorized to go.”
Another key to a healthy return, according to JLL, is keeping employees distant within workspaces. Through the internet, groups such as CARTO, VergeSense, Density and SpaceIQ can gather anonymized data about spatial use within offices. With this information, Schwarzman said, tenants can recon-figure their office layouts to prevent the clustering of employees in common areas and re-balance floor plans to take advantage of underutilized space.
In a reduced-density office setting, another likely circumstance of the initial return to work, communication between building owners, tenants and employees will be key. Platforms like HQO, which serves as a dashboard for community activities within buildings or complexes, could be repurposed to deliver crucial scheduling updates about when parts of properties are being cleaned or utilized, Schwarzman said.
As property cleanings become more necessary, frequent and hazardous, some groups are delegating those duties to non-humans. Collin Lau, founder of Hong Kong-based Bei Capital, has committed to using robots to disinfect his firm’s hotel properties in Beijing and San Francisco. Bei will partner with fellow Hong Kong company Avalon Biomedical, which has deployed its boxy, roving robots into the city’s subway system to disinfect train cars by dousing their interiors with a chlorine-based solution. “Bei will adopt their various disinfection techs for uses in the real estate and hospitality industry,” Lau tells PERE. “There is nothing more important than restoring confidence of safety to our customers and staff.”
This article first appeared in sister publication PERE.