Since the first luxury multifamily building was constructed in New York City in 1830, developers, owners, and managers have been seeking new technologies to lower operating expenses, increase tenant retention, and reduce turnover — anything to improve the net operating income (NOI) of the property.
That first luxury building had private lavatories, a technology that did not make its way into multifamily industry until nearly 75 years after it was invented.
As private bathrooms became the standard, innovations in building materials eventually led to the LEED (Leadership in Energy and Environmental Design) movement, which became widely accepted for its ability to lower ongoing maintenance and operating costs. Recently, Internet of Things (IoT) devices have found their way into the technology stack of real estate professionals. These devices not only reduce capital and ongoing costs but also improve tenant satisfaction by allowing residents to digitally interact with their living spaces.
On the back of these connected devices, a new industry was born: PropTech. This industry features a collection of specially made hardware and custom-designed software, all controlled from a smartphone.
In just the last five years, PropTech has come to dominate discussions and attention at real estate conferences, in publications, and during internal strategy meetings. And for some early adopters, it has meant the difference between market-leading investment returns and subpar ones.
As the multifamily industry continues it’s shift from high-touch to high-tech as a way to develop, own, and manage more efficient buildings, attract new residents, and retain existing ones, outside investors have also taken notice.
But using PropTech in new developments or existing properties can be expensive, as there are purchase costs, installation costs, and management costs to consider. While it’s easy to understand and appreciate the reasons to want PropTech in your building – especially if you are tailoring the living experience to a certain demographic – it can be difficult to avoid the costly pitfalls of including new technologies.
This guide is for the industry leaders who see the future of property technology and want to embrace it before it becomes just another norm. Use this as your compass for navigating the growing ecosystem of PropTech, and to ensure your property is one of the top performers achieving market-leading returns.
“PropTech is reshaping the real estate sector in the same way technological innovation has transformed so many other industries, like Uber’s shakeup of the taxi business and Airbnb’s rapid expansion in the lodging market.”