In many industries, technology is one of the biggest drivers of disruption, and real estate is no exception. It’s something that many real estate investors are anticipating. According to CB Insights, global property tech (proptech) investment is projected to reach a record US$6.3 billion across 382 deals in 2019, compared to US$4.5 billion invested across 399 deals in 2018.
To support this emerging breed of startups, new programs and investment firms are cropping up. In Canada, Alate Partners is one such investor. Launched in 2018 with backing from Relay Ventures and DREAM REIT, Alate invests mostly in early-stage tech companies that are augmenting or strengthening how real estate is built and managed.
After a year in the business, what has the firm learned? We chatted with Courtney Cooper,principal at Alate, to get her perspective on tech trends and insight into what to expect in 2020.
A year in review
Overall, Cooper has seen investment opportunity for “lightweight” tech solutions in real estate. These types of solutions can use existing technology to solve immediate needs, so that startups delivering them can see traction right away.
Some examples of Alate’s portfolio companies in this category include Eden, a marketplace that makes it easier for office and facilities managers to run their office, and Branch, which provides flexible furniture options for company offices.
Generally, there has been a higher demand for flexibility and convenience from consumers driven by tech solutions, and the real estate industry isn’t immune to this.
“Look at the kind of technology that we use every day, from collaborating in Slack and Google Drive to calling an Uber and paying automatically,” said Cooper. “A lot of these technologies exist in other industries, and now they’re getting applied to real estate.”
Proptech doesn’t always have to include technology on the inside of buildings; it can also be about how technology is impacting the way we interact with the world around us. Alate Partnerscounts e-scooter startup, Bird, among its investments because its platform helps people move between the places they live and work.
“Parking garages and some of the properties around the building can be places where Bird or other micro-mobility options can be accessed off of public sidewalks or adjacent to the sidewalks and streets,” Cooper said.
The future of proptech
Moving forward, there may be continued shifts in the mindsets of real estate decision-makers. Often, many stakeholders—including asset managers, property managers, architects and the like—are involved in the decision-making process, making it difficult to coordinate efforts to integrate technology.
“Some of the biggest challenges and opportunities for proptech are found in areas that require coordination between many stakeholders, including lenders, real estate owners, governments, tenants, and service providers,” said Cooper. “When you think about how we build buildings, how we use them, and how they integrate into our cities, there are numerous decision-makers that need to buy in.”
There are also questions about how property technology will impact government policy. Emerging living situations like co-living may push stakeholders like lenders and government officials to consider how these new spaces should be defined and regulated.
For its part, real estate operators will likely take some time to figure things out with proptech.
“I would say that most of the industry is still starting to experiment and do pilots to understand how they can apply technology to specific areas of their business,” said Cooper. “As we see early adopters prove that new solutions and business models can drive leasing and performance of their assets, we’ll see a tidal wave of adoption.
Jessica Galang
Jessica Galang is a tech journalist who has been tracking the Canadian tech ecosystem for the last several years. In the past, she was news editor at BetaKit and a reporter at The Logic, interviewing hundreds of entrepreneurs in emerging industries.