Day one of the 2019 CRETech New York conference taking place in Brooklyn this week kicked off with over 2,000 real estate professionals discussing the future adoption of proptech in the industry. Some of the topics discussed showed the blurred lines between proptech and fundamental shifts in how commercial real estate is being used with the adaption of concepts such as co-living and modular construction. Here are the main takeaways from the first day of the event:
- Approximately $75.2 billion has been invested in proptech by venture capitalists since 2015, as real estate has been identified as a lucrative opportunity for technology adoption, according to conference attendees. In the first three quarters of 2019 alone, venture capitalists invested $24.6 billion in the sector, making 2019 a record year for VC investment in proptech.
- Expect a number of break-out companies to emerge in 2020 and funding rounds to increase along with deal sizes, according to professional services firm Ernst & Young. Currently, there are over 7,000 proptech companies in the market.
- VC money is flowing into the following segments of the industry: 1) real estate investment and finance 2) flexible space 3) property management 4) IoT and smart buildings 5) construction 6) data analytics 7) visualization such as VR and AR 8) tenant experience. Of these eight categories, real estate investment and finance and flexible space lead the way in funding, with more than $20 billion invested in each.
- Visualization start-ups have so far received around $700 million from investors, but Ernst & Young pegs this sector as the one to watch.
- The best proptech solutions will boost ROI for owners and operators, according to conference speakers.
- Karen Hollinger, senior vice president with multifamily REIT Avalon Bay Communities, identified a number of opportunities for proptech solutions to have a meaningful impact on the commercial real estate industry. For example, using the many vacant storefronts in the market right now as coworking places for remote workers could both mitigate retail vacancies and create convenient coworking spaces. A proptech solution that links these two segments of the market could be a viable opportunity. There could also be a proptech service to handle packages delivered to tenants’ homes, as currently many apartment buildings have lobby areas filled with packages. There is a need for a proptech solution that can help combat rising construction costs in the commercial real estate industry, potentially tied to modular construction. In addition, in dense urban areas, noise levels are rising to record highs, so a solution to help combat this issue is another area of opportunity, Hollinger noted.
- A discussion with Jenny Wong, managing director at real estate investment firm Tishman Speyer, and Britt Zaffir, CEO of Kin, a residential brand, looked at how technology is facilitating how families in a community can work together to combat some of the challenges of urban living. Similar to co-living, Kin aims to drive down living expenses by allowing families to share costs such as on-demand child care or shared play spaces. By sharing these costs, families can save up to $2,000 monthly, according to Zaffir.