Buildings Will No Longer Perform Without PropTech
We are now at a point where the property technology (PropTech) is here and readily available and will impact every owner, operator and user of the built environment. The rate of growth in the sector, as a result, is anticipated to outperform Fintech and other disrupted markets.
If you aren’t already integrating technology and smart solutions in your assets and environments – you’re behind. But it’s not too late to start.
When we say PropTech, we mean the systems and solutions that underpin building performance, manage tenant and human experiences and ultimately determine the longevity and value of your assets.
Don’t mistake this for another tech buzzword. PropTech has become a foundational element for both new and existing buildings.
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Big data for buildings
Their overall function is to gather and utilise the worlds of data we create across each stage of the building’s lifecycle and inform how we manage and optimise resources, enhance people’s experiences and save time.
This motivates the way buildings are designed and operated to support people who interact with the built-form, who purchases, tenants and operates the buildings of the future.
Discussion in the industry might suggest the sector is still emerging, but in reality, PropTech has been around for over a decade. Investment has been flowing into organisations that develop and innovate in the PropTech space since the first startup initiatives in 2008, seeing a mere $20 million in investment.
Fast forward to the present day and the sector surges on at an exponential rate, topping $22.2 billion between 2017 and 2018. Quite the upswing in only ten years. By 2023, investment modelling suggests that we’ll exceed $57 billion.
Smart buildings and PropTech versus a risk-averse industry
However, what is preventing growth is the hesitation in the sector to adopt and integrate PropTech. TenderHut Group CEO Robert Strzelecki commented on this in a recent feature with PropModo.
‘So why haven’t we seen these adopted already? It’s tough to pinpoint an exact reason. By nature, the real estate industry is complex and risk-averse. There’s generally little willingness to embrace the risk and experiment, so any serious change represents a massive adjustment.’
Compound this hesitation with fragmented value chains that isolate stakeholders and restrict capital allocation, and we can see how these factors hinder long-term decision-making.
The built-form, as a result, is heavily outdated, comfortable doing things as they’ve always been done. Regrettably, given that there is no better time to innovate and modernise, over 90 per cent of the existing building stock is deemed ‘old building stock’ and expected to undergo retrofitting in the next few years. By 2060, old buildings will still represent around 65 per cent of all buildings.
Future workplaces will rely heavily on smart building technology like IoT sensors and connected devices, Artificial Intelligence and Machine Learning capabilities, Cloud Servers, Wearable Tech, Virtual Reality and wireless communication. It’s an interconnected web that ultimately provides rich data for effective decision making.
Tenant and buyer appetite will also increase demand for tech-enabled or ‘smart’ buildings, a 2018 study reporting increases of as much as 11.8 per cent in lease value where PropTech is being utilised.
Add the fact that failing to build in a new smart-building infrastructure now not only creates a greater expense to do so later on but also fails to create a safeguard for the disruption we’re experiencing today.
PropTech: Laying the foundations
PropTech exists across three connected layers:
The backbone of PropTech is the equipment used to capture live building data and enhance existing systems or operations. Each of these components is deployed to provide insights that the user can leverage for more effective decision making, streamlining efficiencies across each level of operations and maintenance.
HVAC is a popular example. Live building data enables automated systems management, all controlled by AI, to actively increase or decrease energy usage depending on who is using the space, how many people are there and when.
All the numbers have to go somewhere. Failing to have a central hub for data to be captured, processed, analysed leaves you with disparate data and no clear understanding of conditions that influence the decision-making process.
Infinity was our answer to this problem; taking each source of data and integrating these streams to create a single output. It’s the tool we give clients to manage the built-form, reporting, analysis and streamlining of their operations.
3. People and the human experience
The point of PropTech is to create efficiencies and opportunities through a connected value chain. What benefits the property owner creates direct benefits to the occupants too. Whether it’s safety, sustainability, security, experiences, there is a flow of benefits and value both ways.
There has been a monumental shift in influence towards the people side, particularly tenants; their needs and preferences for functionality and flexibility in their working environment, along with environmental and financial mindfulness, have determined much of what property owners and management now prioritise.
When we spend 80 per cent of our lives indoors, smart building tech can greatly affect overall comfort and wellness factors – monitoring air quality, optimising emergency response, or shaping interactions in the space.
Manage building maintenance costs and upgrades
Smart building tech is a value add that immediately drives tenant buy-in. Property owners are reporting increases in rental returns in buildings where they have implemented PropTech, demonstrating that tenants are willing to pay more for this value, with 81 per cent stating a tech-enabled office means greater productivity.
For owners and operators, the benefits of implementing smart building tech-speak for themselves; involving PropTech in your environmental strategy can achieve savings between 30 and 35 per cent, while a predictive maintenance model can be ‘three to nine times cheaper’ than reactive works.
Looking to the long-term, the ability to model building performance like this can help us manage maintenance, costs, and upgrades for five, ten, or even twenty years.
It makes sense for building owners and managers to consider this in aligning their PropTech implementation plan to benefit operational and tenant demands. An approach that benefits everyone also allows the sharing of objectives and identification of key performance metrics, which will produce a greater return on investment over the longer term.
Greater operability, efficiency and sustainability
As we’ve covered in a recent feature, the key to deriving the most valuable data from PropTech lies in how you manage the integration of each process and source of information.
We knew early on that this shift would hold a lot of promise and opportunity. Realistically, it’s the only way forward given greater operability, efficiency, and sustainability demands.
Several prominent thinkers have reflected these ideas in this space – TenderHut Group CEO Robert Strzelecki noted that:
‘With technology tying all the loose ends… It’s important to have an open mind about current developments and what’s to come, especially considering as companies begin to use technology to refine and upgrade their operations.
In order for all of this to work, scalability is crucial since the solution in question aims to solve multiple issues at once instead of being implemented separately.
In part, that is the true promise of PropTech in office and property management: the modularity and scaling under various conditions without any hiccups that allow integration to take place in different stages. This will especially be important as the scope of PropTech evolves as time goes by and digital transformation continues.’
PropTech: The new cornerstone of built-environment
New economic models, the internet of things and big data now govern the baseline for sustainability and subsequently commerciality in the built-form. Within construction, data and analytics have moved out of infancy and become a fully-fledged aspect of everyday operations.
PropTech has very much become a cornerstone of how we’re making the built-environment smarter, safer and more secure by integrating services and solutions that support how we manage the built-form and support the people inside.