How Landlords and Technology Companies are Creating Partnerships that Last
Technology has impacted and changed every sector in our lives, from consumer behavior to communication, work, and travel. These changes are continually becoming more prominent in the real estate world as we see more proptech companies maturing with prevailing market shifts. We see more collaboration between proptech companies and real estate owners and operators. Technology companies are constantly providing owners and operators additional tools to enhance a better physical experience. Whether it is improving the process of leasing properties in a more efficient manner or assisting in running real estate investment analysis and closing on acquisitions quicker, these technology-driven changes are prevalent. Covid-19 certainly expedited many of these shifts and the prominence of digitization within the real estate investment world.
Here are two primary areas in which real estate owners and operators are leveraging digitization:
Real-time data allows real estate owners and property managers to gain unique insights in terms of the product that they are offering and certain changes that they may need to make in order to facilitate their commercial tenants or residents needs. Examples of real-time data digitization that is being implemented by forward-thinking owners and operators include aggregating property energy use information, beacon technology, and the use of sensors in order to determine engagement on properties, real-time rental rates, and instant customer feedback in order to determine which property amenities are most valued by tenants.
In the multifamily sector using real-time data can provide unique insights into whether a resident will be renewing their lease or leaving the property. In an industry in which retention has a significant impact on the bottom line, these insights can be crucial. These various data points can ultimately lead to more efficient operations, an enhanced user experience for the property tenants and residents, which in turn can increase asset value and investment returns.
Perhaps the most prominent digital advancement that has occurred in the multifamily sector following the onset of Covid-19, is the ability to perform virtual tours. While the tools to perform virtual tours have existed for over 5 years, it became clear how few owners and their property managers were utilizing existing technologies. Those who were ahead of the technology game were able to quickly pivot to a digital-first leasing strategy, while the majority of the industry’s landlords spent several months playing catch up.
The term Phygital is used to express the ways in which we can leverage the digital experience to support the physical world in order to create a more unique experience for the end-user. There is no doubt that a great digital experience, accompanied by a superior physical experience, will be a prominent trend moving forward and has the ability to have a multiplying effect on overall real estate investment performance. Forward-thinking owners and operators are able to utilize the customer’s user experience to derive important data points, such as how long a property tour took for prospective residents, what their physical experience looked like, and areas for overall improvement when marketing the property.
When working on innovation strategy, owners and operators should view their interactions with technology providers as a partnership. The world of real estate and technology are full of moving parts and it will require long term partnerships and commitments from both sides. The onset of the pandemic showed us how the lack of technology “know-how” can force landlords and property managers to play catch up. Going forward, and particularly post-COVID-19, technology integrations within real estate investments and property management will be particularly important. Passive investors who invest with real estate sponsors should ensure that their real estate managers are forward-thinking managers who have an innovation strategy in place in order to stay ahead of the game.