PropTech: real estate technology, the new frontier of real estate, part 2: advantages

PropTech: real estate technology, the new frontier of real estate, part 2: advantages

January 11, 2022
Commercial Real Estate Bulletin

4 minute read

In part 1 of our series, we introduced the concept of PropTech and how it is revolutionizing the real estate industry in innovative and unexpected ways. If you haven’t read Part 1, please click here.

In this Part 2 of our series, we explore the benefits of PropTech for both companies operating in the property space and consumers of these products.

What are the benefits of companies implementing PropTech?

PropTech offers a range of benefits to owners, investors, property developers and those who create this technology. Benefits include increased commercialization of real estate assets (whether residential or commercial), licensing opportunities for integrated platforms, data collection and analysis, efficiencies and environmental improvements, and social benefits.

Licence. Consumers in the residential and commercial real estate industries demand new and innovative products, not only for convenience, but also for their confidence and ability to stay safe in their homes, offices and public spaces. Real estate developers therefore have the opportunity to license new, innovative and practical PropTech in their developments and improve the consumer experience in these spaces. These licensed technologies make developments more attractive; add material value and interest to developments while maximizing profitability for property developers and PropTech creators. These technologies are delivered primarily through a SaaS model, allowing easy and instant access anywhere by developers, owners, landlords and tenants. Examples include:

  • Locomobi’s solutions that integrate smart technologies for everyday conveniences such as parking, tolls, public transport and storage,[1] enabling developers to introduce highly efficient and interactive Proptech into developments, while reducing costs and increasing security, ease of use and peace of mind;
  • Licensing smart home technologies to condominium corporations or commercial owners enables remote control of building features (e.g. temperature settings, door and window locks, leak detection /soil), which can provide cost savings and environmental efficiencies; and
  • Manage the tenancy relationship (in both commercial and residential developments) through technology that enables more efficient communications, accessibility to key tenant and lease features (such as conference room or game room booking) and increased functionality for invoicing, fee assessment and related reporting.

Better return through data collection. The ability to collect and analyze data about a real estate project, from pre-construction to post-occupancy, provides companies with the ability to improve and streamline future projects. Real estate companies are leveraging technology and data to deepen their relationships with their customers. With information on a project gathered in a single and accessible space, whether it is information on the sale of a dwelling house[2] or engage with commercial space as an office tenant,[3] PropTech helps companies find ways to save money and even reduce their impact on the environment. Other examples include ecobee’s smart thermostats that use technology to maximize energy efficiency[4] or Tread’s digital platform making it easy to move a construction fleet, while improving budgets and timelines through data collection.[5]

Environmental and social improvements. Many consumers continue to seek streamlined services and luxury products at reasonable prices. They are also increasingly socially aware; i.e. more interested in the environmental and social impacts of their purchases and willing to spend more to ensure they reduce their overall impact. As such, business and personal consumers are increasingly investing in ESG (environmental, social and governance) initiatives, and PropTech innovation can be a driver of growth in this key area. Examples include:

  • Carbon Cure, inserting carbon dioxide into concrete to reduce its carbon footprint;[6]
  • Large-scale residential or commercial developments incorporating PropTech focused on energy efficiency, such as smart lighting;[7]
  • Increased accessibility and removal of barriers for people with disabilities; for example, smart lighting allows visually impaired people to control and be aware of their home lighting through their smart device;[8] and
  • Ability of commercial real estate owners to achieve environmental standards such as WELL and LEED certification through the use of PropTech, increasing the attractiveness of their assets to the most qualified tenants.

This part 2 of our PropTech series discusses just a few of the potential benefits of introducing and using PropTech technologies. This is a rapidly growing field and there will certainly be significant innovations and developments in the foreseeable future. However, PropTech is not without its challenges. In our next Part 3 of this series, we will address many of the challenges faced by everyone involved in the PropTech industry.

If you are seeking advice on PropTech matters, including real estate acquisition or leasing, development and construction, software licensing, privacy and data protection, or raising capital, please contact the authors of this newsletter to find out how McMillan LLP’s technology, construction and construction, real estate, capital markets and intellectual property can help you.

[1] “Smart City Solutions” (last visited January 11, 2022) online: Locomobi World
[2] “Properly” (last visited January 11, 2022), online: Correctly
[3] “Lane” (last visited January 11, 2021), online: way
[4] “Smart Thermostats” (last visited January 11, 2022), online: ecobee. For commercial energy savings, see “BrainBox AI” (last visited January 11, 2022), online: BrainBox AI.
[5] “Tread” (last visited January 11, 2022), online: Tread.
[6] “Carbon Cure” (last visited January 11, 2022), online: Carbon treatment.
[7] See for example, “UK ports implement smart lighting for energy and operational efficiency” (last updated 11 January 2022), online: SmartCitiesWorld.
[8] Wirecutter, “These smart home devices can improve independence for people with disabilities and mobility needs” (last updated September 10, 2021), online: New York Times.

by Alex Bruvels, Robert Piasentin, Kailey Sutton, Kaleigh Zimmerman and Madeline Klimek (intern)

Caution

The above provides an overview only and does not constitute legal advice. Readers are cautioned not to make any decisions based solely on this material. Rather, specific legal advice should be obtained.

© McMillan LLP 2022

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