For at least five years, the growth of technology has been one of the most significant storylines within the real estate industry, and this trend shows no sign of abating. On the heels of a 2020 that saw financial markets pause for several months, proptech bounced back with a fury in ’21, and the sector registered an all-time high in venture capital funding last year. Even more significant, many of the societal changes that became ubiquitous over the past 22 months—from remote working to increased e-commerce activity—have positive implications for real estate tech.
At the same time, the entire world is in a state of flux. With labor shortages and inflation, several question marks surround the economy and supply chain issues are impacting the real estate industry in a major way. As the calendar turns to 2022, here are three proptech trends to expect in this dynamic environment:
ESG-Related Technology Will Be Increasingly Critical
Depending on where the lines are drawn, there may be no larger segment of proptech than sustainability-related tools. Many technologies designed to improve property management, building systems, or construction processes have ancillary “green” benefits, and the number of tools designed primarily to reduce carbon emissions is also significant.
The technology innovation in this sector has been incredible, but adoption is always the other half of the equation—and adoption of these products is being buoyed by legislative measures. In New York and several other areas, municipalities are compelling property owners to reduce building emissions, and, given stated priorities of the current administration, it’s conceivable that there will be similar requirements on a national level.
But equally significant are other stakeholders. With growing global pressure to reduce greenhouse gas emissions, environmental, social, and governance (ESG) pronouncements have become de rigueur, but rare is the industry participant that actually demonstrates how those values are put into practice. With greenwashing becoming a greater concern for corporate entities, the industry will have to put its money where its mouth is. This year, we’ll see the rise of technologies that help developers and investors make a material dent in their carbon footprint—and also demonstrate the environmental return on investment of those investments. Along similar lines, we’ll see companies make efforts to fulfill their “social” and “governance” commitments—the overlooked components of an ESG program—which will spur the growth of technologies that promote desirable social outcomes like housing affordability.
Construction Technology Will Take Small but Steady Strides
Construction is one of the subcategories of real estate with significant inefficiencies, but we expect tangible progress to be made in 2022.
To be sure, attempts at technology innovation have not bypassed the construction sector to date. But the number of moving parts in a construction project is massive, which has made construction tech a particularly tough nut to crack. The most ambitious attempts have tried to transform the sector in one fell swoop, but none of those attempts has been fruitful. Especially in light of the labor shortage, which has hit the construction sector with a vengeance, pragmatic tools that can help contractors improve their operations in the immediate future are sorely needed.
In light of this reality, in 2022, we’ll see greater adoption of various technologies that solve distinct pain points for general contractors and other stakeholders. Expect this year to be a boon for tools like off-site fabricated and componentized products and tech that standardizes the construction process, which simplify the process of constructing a building while lowering the human capital required on-site.
Smart Home Tech Will Graduate to Being a “Must-Have” for Apartment Properties
Smart home technology has been on the upswing in multifamily properties for years, and this year it will graduate from a “nice-have” feature to a “must-have.” When the pandemic hit and agent-guided tours became ill-advised, many property owners pivoted to smart locks that enable renters to enter an apartment at a specified time and conduct a self-tour. Once it was clear this was viable, it also became clear that many renters simply prefer touring on their own, as it allows them to come in after work or at other times the leasing office is closed.
Right now, many major owner-operators are already in the midst of deploying smart locks to their entire portfolios. Over the next 12 months, we'll see a sustained increase in smart locks and other smart home features, as operators ensure that their apartments are just as attractive to renters as units in neighboring buildings.
