PropTech, Digital Transformation And The Ripple Effects Of WFH
- Robert Kropp summarizes key takeaways from a webinar about proptech, new real estate models and the investment landscape today.
- The discussion focused on the digital transformation of the property industry and how it can help workplace owners and operators keep up with changing customer needs.
- Speakers included Antony Slumbers, Natasha Terinova from REACH UK, and Yardi’s Neal Gemassmer.
Proptech has been a hot topic for some time now, especially in a year of so much change and disruption. I had the pleasure of joining a discussion on November 4th, 2020, about proptech, new real estate models and the investment landscape today (access the Urban Living Webinar recording here).
Antony Slumbers, a Co-Founder at Real Innovation Academy was moderating the conversation and started us off with the following question:
Does proptech really matter and why?
Giles Horwitch-Smith from Res-harmonics, answered simply with it “absolutely matters”.
“It is part of the wider distribution and digital transformation of the property industry. There are a lot of new models coming through in property in response to customers’ changing needs.
“That is demanding a more innovative use of space and a lot of those operating models are requiring efficient operations… a good customer experience and journey. The tech often provides the ability to deliver those models.”
What is also important is that it isn’t all about technology. The real estate industry and the people in it are going through a mentality shift where much of the focus is on flexibility. “People are looking to be wherever they are, wherever life takes them. Simplicity is key to everything.”
Where will technology have the biggest impact?
Natasha Terinova with REACH UK, stated that “real estate is one of the biggest asset classes”. It is an employer of millions of people, one of the biggest consumers of energy, and one of the largest emitters of carbon emissions. All of this results in “many verticals and subverticals all going through transformations right now.”
She is seeing a massive need for “technology that enables market practitioners to do their job more efficiently… There is also impactful technology in IOT and data, AI and machine learning. They not only provide Capex savings but also create efficiencies across the board, from valuations to giving the control and maintenance capabilities not thought about before.”
As part of this, she also touched on the need for better space utilization within the industry as it continues to grow as a priority for many.
Should we be investing in prop tech companies or build our own?
Jonathan Werth with LiFE Residential, said that it is a “brilliant thing to do, however there are many different reasons to invest” which should be considered.
The questions for their org were “what can we learn and what can we use to put into our organization… If you have the opportunity… do it, but not as a gamble… What can you learn from it? What can you do to hedge your bets (for your existing business)?”
For those that want to build their own prop tech company he would also tend to recommend not building it if that organization doesn’t have the right experience, as there are so many pitfalls and challenges.
How is all this technology enabling new business models?
Neal Gemassmer with Yardi mentioned two primary opportunities:
1. New Markets
As an example, “there are several new organizations that are enabling buying and selling of properties and making it much easier to do without having to view a property.” This is primarily being used for investors but also being tested more for individuals.
2. Process Improvements
In traditional models, many processes have been manual, disconnected or fragmented. “All of these things can be done online now.”
For example, in the residential real estate market you can now “identify a unit or property you want to live in, do a virtual viewing online or maybe a viewing using technology to visit the unit without someone being there, go through a background check online, sign an application (ie rental agreement), make a payment, receive a digital key, and then move in.”
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These types of streamlined processes benefit the customer, the landlord, operator, agency, broker, and more.
Paradigm shifts in the age of Covid
Neal stated that “Covid has affected everyone worldwide… where you are forced to work from home and has exposed huge gaps in terms of the degree of digitization.”
I also dug into this in depth in a recent article: COVID-19 Just Accelerated What Was Already Happening.
Now that working from home and working remotely has become more normal, this change not only then drives what the home, residential, and build to rent environment means but it also drives the amount of space corporate offices need in a traditional downtown (environment).
In addition, “it also promotes flexible office space, to the degree of greater flexibility in terms of how landlords need to balance long term leases with shorter term leases. It also affects hub and spoke models where that greater or short term office space will be closer to where people live and change habits over a longer period of time. I think all of those things are paradigm shifts and how we work on a day to day basis and leverage technology to manage our businesses.”
The amount of ripple effects working from home is having will continue to spread through all avenues of real estate from residential to commercial and even retail.
Should you look at proptech to cut costs or generate revenues?
Giles says it takes both of course, but it needs to first start with revenue.
By focusing on revenue using new distribution channels, dynamic pricing, revenue management tools, and then making sure the onboarding is easy and the experience is great, an organization can then focus on freeing people up inside the business to reduce operational costs and administrative time.
“Increase revenue, reduce costs, make a better margin, you can invest that in a better product, (in order to) look after customers better. It is all interlinked…”
What is the right proptech / business fit? How do you enable the success of the implementation of new tech?
Natasha said that some proptech is trying to fit a “round peg into a square hole.”
Like anything there is no one size fits all. Proptech needs to have a clear value proposition and the organization needs to know how and why they would want to use a new technology.
Giles says that in order to be successful you need to have “targets and KPIs for your business to measure… Lead it with strategy and align it with technology”.
In contrast, Neal also said that “sometimes organizations need to think about rebuilding the foundation instead of layering things on top… If the plumbing isn’t right… then you can’t really utilize the new technologies well.”
I liked Antony’s quote of Steven Sinosky who said that “one of the tricks with technologies is (determining) what to make simple and how simple to make it.” Antony believes that this will be a real skill moving forward in proptech. You can’t separate the two. There will also be a need for clients and providers to work together to develop the best tools for the job.
What is next?
Neal says that for those “organizations that say they have no appetite to want to try something, because I am afraid that it will cost me money, get burned, or lose morale” — they likely won’t be here tomorrow.
He noted that it is absolutely critical to invest today to “digitize processes, differentiate and either drive revenue up, change the customer experience (and/or) drive down expenses” to remain competitive.
Throughout this conversation, it was clear that the real estate industry is ripe for continued change, innovation and experimentation of new business models and technology across all parties. I am definitely looking forward to seeing what is next across the many verticals in the industry. Feel free to reach out to me to discuss flexible workspace, proptech, the workspace gds, or just to chat.
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