By Gregory Grossman and Heidi Azulay

The market for companies working at the intersection of real estate and technology is seeing explosive growth, as innovative new forms of technology impact how properties are constructed, occupied, managed, bought and sold.

Proptech is designed to streamline and connect processes for participants in all aspects of the real estate market, including builders, buyers, sellers, brokers, funds, lenders, tenants, landlords and property managers. Although it’s still an emerging field, proptech is being driven forward rapidly by developments in technology that aim to maximize efficiency and minimize the costs and resources devoted to real estate transactions.

As companies strive to stay on the cutting edge, here are some of the trends we anticipate will play a significant role in the continued development of the industry:

• Deployment of 5G: Digital connectivity is becoming a crucial differentiating factor in attracting tenants to commercial and residential buildings. With the coming deployment of 5G, more building owners will move to future-proof their real estate assets. As consumers gain access to 5G through devices slated to hit the market more widely in short order, and the 5G networks mature, users will expect similar capabilities inside commercial real estate buildings.The demand for data from consumers, cloud-based services and smart building IoT devices is increasing exponentially, and commercial building owners who want to compete for high-paying    tenants will need to adapt their structures for 5G.
• Space-as-a-service platforms: The commercial real estate industry is undergoing a massive structural change through a concept known as space-as-a-service. The SPaaS business model, in which landlords provide a suite of services enabling tenants to utilize their space efficiently, includes digital connectivity to furniture, fixtures and even staffing required to operate their businesses.SPaaS is a paradigm shift in the way the commercial real estate industry has provided products and services to tenants, and it’s expanding the role of commercial landlords from rent collectors to service providers.
• Co-living spaces: Rising rents in dense urban areas, coupled with the increasing success and prevalence of co-working enterprises, are giving rise to co-living arrangements. As rent continues to increase, efficiently designed co-living micro suites and studios that include a bundle of shared services and amenities – such as a cinema, gym, pool or cleaning services – are becoming an attractive housing alternative to an increasingly mobile and transient millennial workforce.
• Smart building apps: As the emphasis on tenant experience and occupant comfort continues to drive rent prices higher and remains a competitive differentiator for commercial landlords and owners, smart building apps that enhance occupants’ lives, foster a sense of community and provide new experiences inside commercial and residential buildings are proliferating. Smart building applications are now shifting from traditional energy savings objectives to include features that enhance the user experience, such as the ability to request building repairs, manage visitor parking and control lighting and temperature based on personal preference.
• Real estate asset fracking: The ability to monetize existing real estate assets − including office spaces, conference rooms, desks and even parking spots − in new ways is an enormous area for growth. Startups are unlocking the value in real estate assets that are not being used on a 24/7 basis, by, for example, offering the option to rent meeting rooms by the hour.

Technology is also the foundation for some of the monetization efforts. For example, Building Information Modeling (BIM) enables architects, engineers and construction professionals to plan, design, construct and manage buildings and infrastructure efficiently through the use of smart 3D models. Blockchain allows owners, tenants and service providers to interact with real estate ownership information and transaction history in a transparent and secure way. Geolocation technology extracts data about properties from maps of their location, which can be analyzed and used to predict future trends and make more accurate valuations, enabling informed decision-making.

• Continued investment growth: Investment in proptech is expected to continue to grow. According to the latest MetaProp Global PropTech Confidence Index, 60 percent of proptech investors surveyed planned on making more investments in 2019 than in 2018, an all-time high.

For more about recent developments in the area of proptech, please reach out to Gregory Grossman and Heidi Azulay, the co-chairs of DLA Piper’s Proptech initiative.