The PropTech sector has seen a deluge of investment in recent years, with nearly $24B invested in it in 2020. The pandemic accelerated technology adoption in the market, and investor confidence remained high for PropTech in 2021. According to JLL, the number of real estate technology startups has increased 300% over the past decade.
As we look ahead to 2022 PropTech trends, such strong momentum in the industry comes as no surprise to MRI Software. We founded the PropTech category in 1971 and have helped our clients realize its potential ever since. Here are a few real estate technology trends that we expect to see in the coming year.
Proptech for all. Proptech isn’t just for real estate anymore. The need to manage employees within a facility – whether it’s a distribution center, retail space or office – has become paramount. Organizations across all industries are leveraging technology to optimize space utilization and make strategic decisions around what they need, what they don’t, and ways to change their existing workspace layouts. PropTech will be the go-to technology to connect the workforce with workplace management, linking real estate and HR together in a collaborative, post-pandemic environment.
Buckle up, AI is taking off. Applying artificial intelligence (AI) to an industry that relies on an abundance of manual and paper-based processes is a recipe for positive transformation. The computing power available today is poised to revolutionize all sectors of the real estate industry and provide significant benefits around automation, time savings, operational efficiency and productivity. AI will be coming soon to a PropTech solution near you – if it’s not there already.
The application of AI to real estate data has already reduced the need for dashboards. Instead of requiring a human to evaluate the data presented in a dashboard and then determine what to do next, AI can skip over the decision-making step entirely – kicking off a workflow for the actions that need to happen next in the process. With AI, you can build in appropriate decision processes, so you won’t need a dashboard at all – automating mundane tasks like generating renewal correspondence with tenants whose leases are expiring soon.
Space as a strategy. Landlords and property owners now view space management as part of the business strategy, which gives facility management teams more responsibility and a bigger seat at the table. Technology will be necessary to drive collaboration between finance, human resources, real estate and other departments to achieve a holistic plan that aligns productivity with business goals. AI-powered lease abstraction played a critical role during the pandemic as landlords and tenants needed to quickly review their contractual lease obligations and determine the best options for their business.
Flexible technology will allow owner/operators to handle changing space usage needs, such as managing co-working options and making use of space in new and creative ways. For example, if tenants won’t need 100% of their space for a few weeks, then landlords have an opportunity to leverage it for other purposes. According to the MRI Market Insights report survey of landlords and tenants in September 2021, both parties plan to expand existing or adopt new technology to manage changes in space usage.
Data is key. Everyone understands the importance of data, but now that we’ve emerged from the “unprecedented times” of 2020, we realize it’s even more imperative. From powerful analytics tools that help businesses pivot sharply into the unknown, to industry data that provides insight into sector-specific trends, PropTech will continue to be a source of information. Check out the NMHC Rent Payment Tracker and MRI Software Market Insights reports on multifamily to see how PropTech is keeping a finger on the pulse of the industry.
The office as a destination. For commercial landlords, managing space now includes managing occupancy. According to the previously mentioned report, nearly 80% of respondents have increased the availability of remote work. Office tenants have shifted toward a hybrid working model and hot desking over the past year and many are considering potentially modifying their space requirements – this means landlords and property managers will need to find ways to make the building more attractive to occupants and lessees. Amenities will play an important role here – the employee experience is a key aspect of their interaction with the workplace. Incentives and perks offered by the property, such as free or discounted lunch on site, can be tied to employee tracking apps to help landlords and tenants understand whether the space is meeting the business needs. Just like a destination hotel, employees will visit the office because they want to – not because they have to.
Landlord and tenant communication. PropTech will enable landlords and tenants to keep building on the close collaborations that began in earnest in 2020. Efficient communication about changing space needs – and the best ways to woo employees, as mentioned above – will be critical to both party’s success in the future. Landlords will continue to shift from lease-centric to client-centric relationships – maintaining occupancy through increased tenant engagement and greater focus on health, wellbeing and community.
Energy management and sustainability. Environmental, social and governance (ESG) is here to stay, and it will be a huge factor in valuations, leases and investment decisions for commercial properties. It’s no longer a nice-to-have feature, but rather a long-term expectation that will drive value for properties and avoid wasting energy.
Throughout the prognostications for real estate tech in 2022, there’s a common theme of flexibility. The need to work smarter and be nimble is greater than ever, and PropTech plays an integral role in helping businesses run strategically and efficiently. Open and connected PropTech platforms that have the flexibility to integrate with the latest and greatest point solutions from tech startups and other third parties will offer limitless possibilities for growth and scalability.