Top 5 PropTech Trends to Watch


Far from putting a damper on PropTech growth, the COVID-19 pandemic seems poised to accelerate adoption of new technologies in the real estate and construction industries.  Below are five trends to watch over the next 12-18 months:


VR Goes Mainstream

It seems like Virtual and Augmented Reality (VR/AR) have been the “next big thing” for many years now, yet still have not really entered the mainstream.   While some real estate developers are using 3-D artists and agencies to create interactive renderings of their unbuilt projects, we believe the technology will soon be available to create these visualizations much faster and at a lower cost, which will drive more widespread adoption.   We may not see potential buyers donning clunky (and nausea-inducing) headsets anytime soon, but the power of an interactive 3-D rendering on a tablet, which can be customized on the fly to show off different finishings, seems indisputable.  And with buyers seeking more remote interactions, this kind of technology will move even faster from being a fancy gimmick to a must-have sales tool.


Construction Management Catches Up

The construction industry has been a laggard in technology adoption, even by the low standard of the PropTech sector.  Most innovations have come on the design side, with tools for the actual management of the construction process being still very nascent, save for Procore, the 800 pound gorilla.    We have seen several early-stage startups developing interesting new solutions, whether for automating take-offs, sourcing and monitoring labor, procuring materials, controlling hoists, or tracking and optimizing equipment utilization.   We expect to see much more widespread usage of these technologies, and others which have yet to be imagined, as new construction volume slows and builders confront increased pressure on margins.


Modular Pre-Fab Moves from the Laboratory to the Backyard

Prefabricated or “offsite” construction is not a new idea.   But there are dozens of new startups combining this technique with greater standardization (modularization) of design to drive massive cost and time savings and catalyzing the adoption of energy efficient design, smart building technology, and other innovations.   But even Katerra, the largest and best known of these companies, has yet to see serious commercial traction.  Each has a slightly different approach and it is far from clear who will be the winners.   But the potential market is enormous and there is no question that some form of modular pre-fab will be part of the solution to out of control construction costs.  While we expect the very short term may be challenging for these companies as COVID-19 has further slowed permitting offices (already archaic in many cases) across the country, funding continues to flow to these startups; Veev and Prescient closed large rounds in the last few months.


The CRE Big Data Market Begins to Shake Out

It is an oft-cited truism that real estate is the perfect application for AI and Big Data, because there is simply so much data out there.   Yet that data continues to be inconsistent, dispersed, lacking in any consistent formatting, and more often than not - proprietary and not widely shared.   There are scores of startups trying to better organize data in the commercial real estate market, and others trying to pull in new, non-traditional sources of data to help developers discover which neighborhood will be “the next Brooklyn” (or as we say in Miami, the next Wynwood).  Usage of these systems has lagged and there is no clear winner yet.   We expect this to change and predict consolidation: underfunded startups will fail and there will be 2-3 players that begin to gain significant traction and emerge as leaders from this crowded field.


Flexible Space 2.0: The Landlords Strike Back

Co-working, co-living, and short-term rental platforms are important business model innovations in real estate and were some of the first new businesses in the sector to raise significant venture funding.   But they aren’t really technology plays, and in the last 12 months have suffered the double whammy of WeWork’s fall from grace followed by COVID-19.   We do believe the change in the way space is used, especially office space, is permanent; yet the road will be winding and bumpy, and many co-working operators will go out of business (perhaps including WeWork) before the “new normal” comes into focus.   During this process the margin capture will begin to shift from operators to owners.   We’ve already seen folks like Hines launch their own co-working product - we expect this trend to accelerate. 


Related News

Get great curated articles every week.

Sign up for The Bulletin– our real estate and startup focused company newsletter.
No spam!