Why Real Estate Tech Platforms Must Diversify

The great American engineer and statistician W. Edwards Deming once remarked that “It is not necessary to change. Survival is not mandatory.”

This concept, often cited in the business world, serves as a prescient reminder that no company, no matter their dominance in the market, is entitled to unending success.

This is especially true when it comes to the fast-moving world of technology. One need look no further than industry titans like Amazon or Facebook to see that their ability to evolve and continuously offer users more reasons to engage has been at the heart of their success. Today, real estate technology now finds itself at a crossroads regarding this very same concept.

Over the course of the last decade, commercial real estate has been successful in transforming many of its most enduring practices – supplementing pure intuition with hard data, tracking tasks and workflow patterns, and trading in manual spreadsheets, checklists and paper records in favor of more streamlined, organized alternatives. Roughly $5 billion was invested in proptech and other real estate technology companies in 2018, according to Crunchbase — a total that will likely be easily surpassed in 2019.

As more and more real estate professionals increasingly adopt property technology across the industry, the years to come will bring a reckoning that will determine which players will dominate the market and which will fall by the wayside. With so many highly specialized tools now available, it is inevitable that many of them will eventually consolidate, or that high-profile platforms will begin to expand their range of capabilities in order to offer more of a streamlined, all-purpose experience to users.

With this in mind, Reonomy recently introduced a new product called Reonomy for Teams – a new offering intended to help foster collaboration and better workflow between teams using the Reonomy platform to identify deals and win more business. Whether they are performing due diligence on a particular property, gathering broader market research or underwriting a transaction, the platform will centralize the research process, while also keeping careful track of tasks and allowing for free-flowing internal communication.

As the use of data becomes more and more ubiquitous across all corners of the industry, many outfits are now turning their attention to improving workflow. Commercial real estate operations are notorious for operating in silos, with different divisions – from portfolio and pipeline monitoring to underwriting and other functions — often totally unaware of important activity updates from team members or status reports of tasks that have a direct impact on their jobs.

In their search for added value and competitive advantages, it makes sense that real estate companies are in search of tools that can break down these walls and foster collaboration and productivity, resulting in fewer but more effective meetings. The rising demand for these kinds of solutions have already contributed to the rise of dedicated workflow and deal management platforms like IMS, and this new product is our way of helping current users address this increasingly visible pain point.

Throughout the real estate tech ecosystem, many other established players are making similar moves to expand the ways in which their customers’ engage with their products.

Off-site construction platform Katerra has begun expanding its capabilities beyond general contracting, engineering and other building services, and progressing toward more of a “one-stop” dealmaking platform for its users. Similarly, real estate referral company Homelight has introduced a new feature that allows users’ to bypass the traditional listing process and offer their property to a network of instant buyers. Along the same lines, real estate visualization software company Engrain recently launched a service designed specifically for asset managers that can detect pricing, revenue or other trends within a single property, allowing them to more easily identify opportunities to increase NOI and maximize a property’s value.

Commercial real estate managed to grow into a multi-trillion-dollar industry, almost entirely without the aid of purpose-built software and other technologies crafted to solve its particular pain points. Today, however, it has entered a new chapter, in which a clear group of winners is beginning to emerge from the ever-expanding pack of specialized tools aimed at optimizing its complex processes and procedures.

In order to ensure they can continue to carve out market share and dominate their respective corners of the industry, proptech companies will not only need to strengthen their commitment to their original mission, but diversify and expand their portfolio of features and products. While their core offerings are likely to remain the same, it is often the small improvements made in the margins that can make or break a product by appealing to an ever-growing customer base with greater expectations.

In nature and in business, evolution has long been the best defense against extinction. As the real estate tech revolution enters its second decade, many of its main players should be prepared to see that maxim bear out first-hand.