Goodwin Insights November 20, 2019

Night of PropTech Innovation Highlights Latest Trends

The future of PropTech – where technological innovation and the real estate industry intersect – is still largely unknown, but there is widespread consensus that this evolving sector continues to hold untapped potential.

At its inaugural “Night of PropTech Innovation” in New York, Goodwin hosted members of the real estate and technology industries to discuss the current state of the PropTech market and hear from those who are capitalizing on how technology is transforming real estate development, acquisition, disposition, finance and investment.

Liza Benson, a partner at Moderne Ventures, said people are looking to make everything in their lives digital, and that includes how they secure rental space.

“People want flexibility. They don’t want to have to wait for long lease processes. They don’t want to involve lawyers in getting a simple lease,” she said. “Now, whether the existing asset owners start making their own products, that seems like it would make sense to me. They don’t need to give up the lease or tenant/landlord relationship. They just need to change their relationship.”

At Easyknock, where Jarred Kessler is CEO, the company seeks to free up liquidity for homeowners seeking flexibility.

“Lending standards have become much tighter post-credit crisis and rightfully so, but the unintended consequence of that is that people cannot unlock the equity in their home,” he said. “Their only choice is two things: selling their home or going to higher sources of debt, for example student debt, credit cards, payday loans, all these other things and at higher effective APRs.”

Kessler said the tightening of credit oversight sought to improve conditions for consumers, but “it’s probably created less velocity in the U.S. housing market.”

Zach Aarons, co-founder and partner at MetaProp NYC, said the real estate industry is becoming more aware of the needs of its users.

“We are getting at this seismic shift in the real estate world, not just the PropTech world, but the real estate world of calling our tenants ‘customers’ and we have to treat them in a different way,” Aarons said.  “We have to provide them with these experiences and an additional layer of service, and the issue is there’s no way to scale that without a technology infrastructure behind it. Otherwise, it becomes too expensive.”

Mark Rosenthal, vice president of marketing, sales and customer success at HqO, agreed, saying that properly addressing the tenant experience has the potential to be among the most disruptive technologies in real estate.

“Because for the first time landlords and real estate folks have the opportunity to connect with the end users of their product and understand how they’re using the building,” he said. “It’s no longer just about the four walls.” 

“There’s so much more you can do, especially on the data side,” Rosenthal said. “I really think that understanding how users are using the product, using the building, what services, what amenities, what investments are good and bad, that can drive better spend on the part of the owner is a super disruptive and really exciting change.”

Daniel Fetner, PropTech investor and chief of staff at Corigin Ventures, said the construction industry is one of the most overlooked opportunities for investment and technological innovation.

“Construction accounts for a $10 trillion annual spend a year,” Fetner said. “It is 11% of worldwide GDP. It represents 7.5% of the global work force. Yet in 2017, there was $700 million invested in construction technology. Last year, I think there was $2.5 billion invested in construction technology, but the cumulative funding, half of that went to one company.”

Britt Zaffir is CEO of Kin, a company whose properties feature custom-designed shared spaces, family programming and events and on-demand childcare – all of which can be accessed and managed by Kin’s dedicated app for tenants.

“Young families trying to stay in cities today just don’t have adequate housing, so we look at how can we work together to provide them with something that meets their needs,” Zaffir said.

Zaffir said over the past five years there has a been a rise in the number of people wanting to live and work together in more densely populated developments with a shared, common experience like a village.

“Now the village is a different kind of village that may not be your family and your parents and your grandparents,” Zaffir said. “Instead it’s become really focused on the people around you and your professional community and your peers.”