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Proptech Firms Eye Expansion

Proptech — or property technology — is a term that’s being used more frequently in the real estate industry. It’s a modern approach in which technology optimizes the way people research, rent, buy, sell and manage properties. 

A few well-known proptech companies include Zillow Group Inc. and Redfin Corp., both of which use technology tools to help renters, buyers and sellers find properties and close deals. Proptech is being utilized by several players in real estate, including developers, agents, property management companies and buyers.  

Sherman Oaks-based RentSpree is a provider of rental software that helps renters, real estate agents, and landlords navigate the rental process. The company’s chief marketing officer, Channing Fleetwood said. “We are actually focused on streamlining and speeding up a lot of the different processes related to marketing those rental properties, getting people into the property in terms of screening, digital leases, rent payment and just providing more efficiencies around those rental related transactions.”

Fleetwood said the challenges faced by proptech companies have been an industry-wide issue. 

“The challenge of equities and kind of inequality when it relates to real estate as a whole, that’s something that the whole industry is tackling,” Fleetwood said. “And (thinking) about the investment in proptech, there are a lot of companies, including RentSpree, that are really looking for new ways to tackle those inequalities.”

Proptech companies received $13.8 billion in investments from venture capitalists last year, according to data firm Statista. The growth doesn’t stop there. This year’s Mid-Year Global Proptech Confidence Index from MetaProp, a venture capital firm focused on the sector, found that 62% of investors expect to make the same number of proptech investments over the next year.

Follow the money

Peter Belisle, president of the southwest region at brokerage Jones Lang LaSalle Inc., said the impact of technology on the real estate industry has accelerated dramatically over the past five to 10 years. JLL has implemented technology in its own practices, while also investing heavily in the proptech industry. 

JLL has created a division called JLL Technologies to focus on how the company thinks about technological platforms, how different software applications will be used, and ways to better conduct real estate.

“We’re investing in that space not just for our own accord, but also we’re investing in third-party technology solutions and thinking about how they might be tools that are implemented even outside of JLL,” Belisle explained. 

Belisle said JLL engages in a decision process of whether to stay with a company as an investor or acquire the company as it develops.

And Belisle said the way that transactions are made will change. 

“There’ll always be complex transactions that require the advisory services of a sophisticated broker, but I think on some of the more commoditized transactions, there’s a lot of elements of the process of transacting real estate that you can get better operational leverage from with technology,” he explained. 

Proptech companies have seen firsthand how technology tools speed up transactions.

Marina del Rey-based Commercial Real Estate Exchange Inc., known as Crexi, is a proptech company founded in 2015. According to Eli Randel, chief operating officer at Crexi, technology has helped accelerate real estate transactions. The company accomplishes this through its data-product tool for investors and brokers called Crexi Intelligence. It lays out data such as market-level statistics, market trends, previous ownership history and rental rate information. 

“It’s a slew of very interactive data that helps buyers and investors and tenants and brokers make commercial real estate decisions,” Randel explained. 

A majority of this information is owned by Crexi; however, some is also collected from other sources. 

Randel was unable to provide a price point for the product but said “the return is multi-fold.” Randel said he sees the real estate industry becoming more enhanced in the next five years. 

“I think it’s going to get faster. Better information is going to be more democratized; the investor pool is going to widen because it’s going to be more accessible to a wider audience,” Randel said. “Transactions will be more streamlined. You won’t have a nine-month sale process; it might be one or two months in some instances. I don’t think (the real estate industry) is going to get drastically changed, it’s just going to be enhanced and put on steroids.”

Looking to the future

Vik Chawla, a partner at venture capital company Fifth Wall who co-leads the firm’s real estate technology investment team, said what drives investment in proptech companies is the need for better digital tools in what is one of the largest and most important global industries. 

“Real estate is the largest asset class on earth and among the most underdigitized of all asset classes, which just seems counterintuitive,” Chawla said. “I still believe incremental investment is taking place in the process phase because the asset class desperately needs more digital tools to be better, run more efficiently, and give consumers and businesses a better customer experience.”

Chawla explained that real estate technology tools have changed how business processes run from accounting software to front-end customer acquisition, and also save money by digitizing their manual business practices. “When you accept that the future is digital and there’ll be large digital platforms serving proptechs, it’s very clear where the market is going,” Chawla said.

Hannah Madans Welk
Hannah Madans Welk
Hannah Madans Welk is a managing editor at the Los Angeles Business Journal and the San Fernando Valley Business Journal. She previously covered real estate for the Los Angeles Business Journal. She has done work with publications including The Orange County Register, The Real Deal and doityourself.com.
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