Welcome to the land technology forgot. High-end leases negotiated and signed via fax. Millions of dollars in apartment inventory — in some of the hottest real estate markets in the country — tracked on whiteboards with dry-erase markers. Client histories recorded in longhand in legal notebooks and stashed in manila folders.
Multi-family real estate (i.e. apartment buildings) is one the fastest-growing sectors in the country right now. In fact, investment hit a record $43 billion in the fourth quarter of 2015, and multi-family units now account for more than one-third of all new housing.
But the multi-family sector has long proved one of the most resistant to technological change. Owing partly to an old guard of landlords and owners, and partly to the relationship-driven nature of the business, the kinds of cloud-based apps and innovations that have transformed other sectors have failed to make inroads into one of the biggest.
But a flurry of developments in the past few years means change may finally be on the horizon.
For starters, shifting lifestyles in the U.S. have sent demand for rentals through the roof. America’s rental population is expected to grow by 4.2 million people between 2015 and 2025, according to a recent Harvard study. Post-traumatic stress from the recent mortgage crisis and a younger generation less attached to home ownership is fast making renting the new American choice. The push to rent is reflected in plummeting vacancy rates in major cities, which hover at around 1.75 percent in Manhattan and 2.7 percent in L.A., for instance.
In an era when consumer tech is saturated and unicorns are dying off by the day, real estate remains ripe for innovation.
Meanwhile, consumer-based real estate apps like Zillow, Trulia and Rent.com have shown how easy listing and viewing properties can be. Not many renters, after all, are still leafing through newspaper classifieds in 2016. This has created the expectation for easier online interfaces on the professional side, as well — and made calling or faxing rental contracts and leasing information seem increasingly dated. As in other sectors, innovations that started in the consumer space are creeping into the business-to-business marketplace.
At the same time, the habits and preferences of landlords are evolving. A new generation of digitally savvy professionals has never used a fax, and isn’t about to start now. Meanwhile, old-school landlords, now competing with high-tech management firms at new buildings, are being forced to market and lease units more efficiently or risk getting left behind. When dealing with dozens of apartments that may rent for thousands of dollars a month, the ability to share listings in real time can have a sizable bottom-line impact.
Enter SaaS-based solutions. Not surprisingly, given the sheer size of the total market, a new wave of cloud-based platforms has emerged to provide marketing and leasing tools. Innovative services now offer landlords and brokers online hubs for tracking inventory, syndicating verified listings with consumer sites and running analytics on property performance (a big step up versus old-fashioned spreadsheets or even file folders).
And investors are taking notice. Real estate technology investments are soaring, reaching a record $1.7-billion in 2015, up 50 percent year-over-year, according to a report from CB Insights. With some of the biggest names in venture capital, including our own lead investor, Trinity Ventures, doubling down, growth in 2016 is expected to be even steeper. A big part of the reason: In an era when consumer tech is saturated and unicorns are dying off by the day, real estate remains ripe for innovation.
Ultimately, the driver and beneficiary of all this change is the consumer. As a serial renter, I can attest personally that there’s nothing more frustrating than racing to your dream rental listing in New York (or Boston, San Francisco, Austin or any other hot market) only to find the unit already leased hours (or days) ago. Solutions that make the nerve-wracking task of apartment hunting a little easier are long overdue — and bound to find a receptive audience.