This year we have seen a dramatic shift in the way that businesses operate around the world. Due to COVID-19, companies and entrepreneurs have been forced to restructure their business models to adapt to a long list of stay-at-home orders and social distancing regulations. This has been prevalent across all industries, including real estate, and has resulted in an increase in demand for technology to assist employees and employers in continuing their operations.
How Has COVID 19 Impacted the Real Estate Sector?
Limitations placed by municipalities across the county have caused brokerage firms and other related companies to close their doors, negatively impacting the ability for real estate agents to operate. In addition, new regulations have placed restrictions on property showings and transaction processes. Therefore, agents and investors have had to shift the ways in which they conduct business to adapt to these changes. For example, meetings are being conducted via video calls, and information on webpages and email blasting is increasing in popularity as an avenue for agents to connect with buyers, sellers, and investors. Plus, online communication tools, such as drop box and communication platforms (like Slack), are becoming the new normal way in which communication is conducted.
These changes have proven difficult, especially for older generations who were comfortable with the traditional ways of conducting business. They have been forced to engage in these new avenues of doing business, which many anticipate is the new normal for our future. In essence, we may be approaching the last generation of non-internet business models.
PropTech is Our Future…
As mentioned, companies over the last several years have been delving into the idea of how technology can improve the process of real estate transacting – This is known as PropTech. It considers both the technological and mental shifts being experienced in the real estate industry in relation to the attitudes of both agents and consumers, and produces innovative concepts to help change the future of the industry. Best written, it is used to “describe innovation in the commercial, residential and industrial real estate sectors and can range from construction and building materials, architectural design, smart building automation, property management, and smart contracts. Virtually everything from designing energy efficient landscaping to using virtual reality to provide commercial and residential tenants and buyers with property tours is considered PropTech.” The demand and growth in this sector are continuing to rise, and in 2019, it was reported that venture capital investment in PropTech companies hit $14 billion globally at mid-year.
With the current shifts in business operations occurring as a result of COVID-19, and the anticipation of long-term impacts from the pandemic, it is expected that investment in this sector will continue to increase.
One firm that has a strong presence in this industry is Navitas Capital – a venture capital firm focused on investing in technology for the built environment, with a mission to identify, invest in, and help build the next generation of defining companies in real estate and construction. Since inception, they have built a strong portfolio of companies that have impacted various aspects of real estate, including commercial, residential, lending, etc.; they have invested in companies such as Orchard, Procore, Openspace, Livly, and many more. One that has made headway in the CRE community has been Truss , an online platform that makes leasing office or coworking space simple. Individuals or companies seeking a new space can fill out a questionnaire that identifies their needs, and the AI finds the most suitable locations that meet their criteria. Through the process users are paired with a Truss broker who can help answer their questions. The platform provides tours, price comparisons, and the broker even helps negotiate the lease. Truss provides a one stop shop for those who need a new office space but do not have the time to weed out the locations on their own.
These new ideas are creating new avenues for professionals in the industry to advance in ways that they never previously saw possible. They are taking AI and using it to provide opportunities to buyers, sellers, investors, and agents.
It is saddening to think that the impact of COVID-19 is what brought pushed light to these innovative companies, but at the same time it is exciting to see how the future of real estate will change. More opportunities are being presented to the smaller investor, agents are streamlining communication with buyers and sellers, and lenders are using technology to improve their appraisal processes. Success in the future will now be driven by the implementation of these technologies, and those withstanding the changes will struggle to build their wealth and business in the future.
