10 proptech investors see better era for residential and retail after pandemic

The pandemic made the internet a lifeline for shopping, earning a living and maintaining personal relationships. Now, as lockdowns start to lift, the real estate industry has to figure out what that means.

Seeking answers, I surveyed the people who are betting on the biggest and most surprising changes in the sector — proptech investors. While landlords and their lenders may hope for a return to the past, proptech investors are focused on where the notion of place is going in the future. I have an in-depth writeup with many excerpts and my thoughts over on TechCrunch, including a look at the revival of neighborhood retail, the rebirth of cities and much more.

I couldn’t get into all of the great topics, though, including the rapid recent evolution of the residential sales and rental market, construction tech, related climate-tech topics and other issues.

So here are the thousands of words of answers in full, below. Extra Crunch subscription required. If you’re a startup founder, employee, investor, etc., you may also enjoy the previous editions of this survey, from the fall of 2020, spring of 2020 and fall of 2019.

The investors we talked to:

Clelia Warburg Peters, venture partner, Bain Capital Ventures
Christopher Yip, partner and managing director, RET Ventures
Zach Aarons, co-founder and general partner, MetaProp
Casey Berman, general partner, Camber Creek
Vik Chawla, partner, Fifth Wall
Adam Demuyakor, co-founder and managing partner, Wilshire Lane Partners
Robin Godenrath and Julian Roeoes, partners, Picus Capital
Stonly Baptiste, founding partner, and Shaun Abrahamson, managing partner, Urban Us
Andrew Ackerman, managing director, Dreamit

Clelia Warburg Peters, venture partner, Bain Capital Ventures

Above all, I think COVID will prove to be an accelerant to existing trends in both the residential and commercial space. I like to think of it as a decade of innovation acceleration in 24 months.

The pandemic has certainly refocused attention on life at home, and that combined with low interest rates has undeniably made this an incredible period for companies that touch the housing market. Given that I got into proptech through work at a family residential brokerage, this market has always been a big area of interest for me, and I would observe that we were in the midst of some major shifts in this market pre-COVID. The residential transaction disruption is now settling in three core categories: iBuyers (who buy homes directly from sellers and ultimately hope to own the sell-side marketplace), neobrokers (who generally employ their agents and use secondary services such as title mortgage and insurance to increase their revenue) and elite agent tools (platforms or tools focused on the top agents). Additionally, consumers are increasingly open to alternative financing tools, including home-equity-based financing models (where you sell a stake in your home, or you buy into full ownership in a home over time. The growth and proliferation of these new models are consolidating the whole residential market so that brokerage sales commissions and commission from the sale of mortgage, title and home insurance are now functionally one large and intertwined disruptable market. In this context, while some of the valuations we are seeing may be a little euphoric, I think there is no doubt that we are in a period of massive and sustainable innovation in how we buy and hold our homes and I think these trends are going to be enduring.

In the commercial arena, we were also in the midst of a meaningful shift in how companies were conceiving of office space, in many ways thanks to the innovations that WeWork brought to the market. But the pandemic has pushed this much further, fundamentally shifting the relationship between the landlord/manager (who has largely been in a position of power since the 1950s) and the tenant (who is now in a position of much greater power, more akin to a consumer of a luxury product). As a result of this, I think the best landlords will recognize that they are going to be under pressure to shift from simply providing a physical space, to helping provide tenants with a multichannel work experience. This might mean a physical/digital hybrid of systems that include access control, physical space management (both in the hub location and potentially in spoke locations), and a digital space for meetings and collaboration. These assets will need to be provided in the context of a much more human relationship, focusing on serving the needs of tenants. As lease terms inevitably shorten, tenants will need to be courted and supported in a much more active way than they have been in the past.

How do you see the big cities adapting to life after the pandemic — or will they? What solutions are you focusing on in particular for the future of urban living (co-living, ADUs, commercial conversion to residential, etc.)?

I think the experience of cities after the pandemic is going to be highly variable — for instance, the trajectories for Austin and New York will likely look radically different. I am personally uncertain about how co-living, or even commercial to residential conversion will be at play, but I do believe that there will be a few consistent areas of interest.

First, smaller-scale urban life will continue to be a significant trend. I think we will continue to see a proliferation of bike lanes, a focus on living in walkable neighborhoods, and a reliance on tools (such as the app Nextdoor) that reinforce our feeling of connection to our neighbors.

Second, I think we will continue to see a reliance on certain types of outsourced services — ghost kitchens for takeout or rapid provision of groceries and other essentials — and technologies and spaces that facilitate these will be a growth area.

Finally, I do believe that in some more sprawling urban environments ADUs will be an area of growth, particularly with seniors who are looking for an additional income stream so they can age at home. One caveat is that I think this will be something of a winner-takes-all space with a limited number of geographically dominant winners.

The demand for suburban-style living is back — for now. What are you focusing on across this category for the next year or two (new residential services and amenities, build-to-rent housing developments, etc.)?

The current transition out of urban environments and into suburban environments is playing out alongside some broader changes in the way the American public seems to be approaching homeownership. Over the past decade, there has been a net decline in homeownership and a net growth in renting. Some of this is by necessity, and some is by choice. I think one component of the tech-related opportunity in the migrations we see now will be around rental platforms and multifamily amenitization. There is still no data aggregator like the MLS on the rental side, and a number of portals (including Zillow Rentals, Apartment List, Zumper, RentalBeast and others) are competing to provide listing information to consumers. On the multifamily side, many multifamily operators are understanding that the integration of work/life/play is creating a new need for amenitization and greater services in their offerings. I think we will continue to see more and more emphasis on hospitality-style brand creation in the multifamily space, and much of this will be facilitated by different kinds of tech-facilitated amenities.

It’s also important to note the flood of both institutional and private investor money that is coming into the single-family rental space. (It may be that in the future a certain percent of the population is renting their primary home, but exposed to the property market through ownership of these kinds of real estate assets.) This growth is being facilitated by property management services like Mynd, marketplaces like Roofstock, and innovative products like Zibo or Knox Financial.

Finally, this is all playing out in a period where home building starts had been historically low, but have suddenly rebounded. This has generated a big opportunity for tech in and around the home-building space, with companies such as Mosaic (which facilitates construction for midsize home builders) enabling the incumbent industry, and next-generation builders such as Icon, Homebound and Welcome disrupting the full-home building stack.

Commercial retail had already been reshaped by the internet, but what is even going to be left after the pandemic? Restaurants, gyms and salons, and the few other services that can survive, if even them? Do you expect a big renewal of the “in-person experience” focus that retailers had been focusing on before the pandemic hit?

Humans are fundamentally social animals and I think we will all be hungry for in-person experiences once it is safe to return to them. Additionally, I think the shift away from working five days a week in the office is going to create a greater desire for “third spaces” — not home, not a formal office environment. I do think we will continue to see more “Apple store”-type retail experiences, where the focus is less on selling inventory and more on creating an environment for customers to physically interact with goods and experience the brand ethos beyond a website. Because I anticipate that retail rents are going to be meaningfully lower at the end of the pandemic, I actually think we will see even more experimentation than we did pre-COVID. It will be a very interesting period for retail.

I think a big net loser may be midmarket malls that were already falling out of fashion. I think we will see some of these spaces repurposed as fulfillment centers for online delivery and some just languishing as the market figures out what to do with them.

I would actually argue that brokerage is the most advanced area of disruption in proptech, with multiple publicly traded companies in the space (Zillow, Redfin, Exp) and billions of dollars in funding dedicated to the space overall.

I think the two most significant “emerging” areas in proptech in 2021 are construction tech and climate tech. There is an incredible ecosystem evolving around both of these areas, with the emergence of dedicated funds (in contech: Building Ventures, Brick and Mortar and corporate venture funds such as Suffolk Ventures, and dedicated climate focus areas for funds such as Fifth Wall and AO Proptech). [There is] greater industry engagement on both topics and an incredible group of entrepreneurs entering both areas.

Christopher Yip, partner and managing director, RET Ventures

The major trends impacting real estate and our broader society always have an impact on which proptech tools will thrive, so the large-scale change brought about by the pandemic certainly has to be taken into account. Some of the key macrotrends we are paying close attention to include residential migration, housing affordability and vacancy rates in certain regions. The big question that will ultimately get answered is how the home/office dynamic will ultimately evolve, i.e., how much staying power the work-from-home phenomenon has when it’s not mandated by public health guidelines.

That said, while we are always recalibrating our strategy to a certain extent, our focus has not changed dramatically. We have always by choice focused heavily on technology that serves the single-family and multifamily rental markets, and we’re fortunate that those property types have remained fairly stable. Many of the technologies that serve these property segments have actually performed particularly well over the past year because of their ability to shift in-person interactions online or other similar factors.

With millions of jobs going remote, commercial vacancies have increased dramatically, with many businesses holding off on occupying new office space and many residents choosing to work remotely from new suburban or temporary residences. As noted, one of the biggest questions to be answered is whether the remote work phenomenon persists, particularly for the majority of America outside the technology industry.

If workers come back to the office en masse, cities should have a fairly smooth transition after the pandemic, as life gradually reverts back to the way it was. Some changes will likely persist — a populace that has become sensitized to public health considerations may well gravitate toward solo forms of transportation (cars and bicycles) instead of mass transit, and parking-related and bike-sharing tech tools may likely thrive. From a real estate management perspective, technology that makes high-density living more comfortable and healthier will also increase, as consumers will become increasingly attracted to touchless technology and tools that facilitate self-leasing.

On the other hand, if a large number of jobs remain fully remote, there is greater potential for city life to be reshaped in a significant way. In theory, retail and office properties could structurally continue to suffer, and there has been some talk from government officials in certain regions about converting office properties into affordable housing. If market-rate vacancies in cities remain high, there will be increasing demand for short-term rental platforms like Airbnb and Kasa, which enable landlords to gain revenue from hotel-type stays even in a market where residential demand is not strong.

One other change that should be noted relates to the environment. As of January, the United States has reentered the Paris Agreement to fight climate change, and several major cities have implemented building energy-related regulations or guidelines over the past few years. With these emission requirements likely to proliferate, technologies that enable building owners to achieve ESG goals will have heightened importance for at least the next four years.

Remote working has contributed to the resurgence of the suburbs, and many suburban real estate markets have seen increasing demand for homes from both buyers and renters. One of the unheralded trends of the past decade has been the rise of the single-family rental (SFR) market, with a significant number of major investors moving into this asset class. The SFR space is poised to benefit from the migration from cities, and the tech that supports SFR will likely have positive ripple effects across the industry.

SFR portfolios are particularly challenging to operate efficiently and at scale. Compared with a multifamily property, they have more distinct unit layouts and are more spread out geographically. Technology has the ability to streamline operations and maintenance for SFR operators, with smart home tools like SmartRent facilitating self-touring and management of these distributed portfolios. We’re bullish on this space and are keeping a close eye on proptech tools that serve this market.

The primacy of the home has never been greater, and that in itself creates an opportunity to shift aspects of the retail experience to a new setting. Technology tools like Amenify — which staffs for a range of services in apartment buildings, including yoga and fitness classes and also offers a meal delivery service to apartment buildings — effectively transfers retail activities to the home environment. Platforms like Fernish enable people to rent furniture online, to a similar effect. To the extent that retail does falter, we can expect people to turn elsewhere for the benefits retail once provided, as opposed to writing off those benefits entirely.

At the same time, I would be wary about heralding the end of retail. It’s true that retail has been in flux for more than a decade; the list of common e-commerce purchases has expanded from books and clothing to prepared meals and groceries. It’s also true that the pandemic has accelerated e-commerce’s growth, to the detriment of brick-and-mortar retail. But people are still human and crave in-person experiences. Even if cities never bounce back fully, major metropolises will still have enough foot traffic to support a fair amount of retail, and innovative models like pop-up shops can be brought in to help address vacancies. It should also be noted that the public markets still have some confidence in the retail space. While the major REITs struggled in early to mid-2020, many have recovered substantially, and several have actually surpassed their pre-pandemic figures. It has been a bad decade for retail — and a very bad year — but it is just too soon to close the book on the sector.

One of the hottest areas right now is the listings side of the market, with Redfin’s acquisition of RentPath (after a failed bid by CoStar). CoStar’s subsequent bid for CoreLogic underscores the increasing strategic focus on the residential sector. There will likely be further developments in this space over the course of the next year, and we expect to monitor this pocket of the market closely.

Though not an entirely new area, one technology category that continues to become increasingly compelling is construction technology. Because of where we stand in the real estate cycle — as well as the trend toward suburban living — many multifamily property owners are doubling down on new development, and strong construction activity combined with technology innovation portends well for “contech” platforms. We recently made our first construction tech investment in Falkbuilt — an off-site manufactured interior construction solution — and we are continuing to look closely at opportunities in this category.

Another area that should not be overlooked is how remote work is impacting the physical makeup of apartment properties and single-family homes. With many people staying at home essentially full time for the past year, properties have taken a beating — the more “wear,” the more “tear” — and plumbing and other building systems are deteriorating at a faster rate than they would otherwise. We are seeing many startups focused on tech-enabled tools for property management and home maintenance, and this will likely be a significant growth area in the years ahead.

Finally, one of the largest ongoing discussions of the past year has related to rent payments, eviction moratoriums and affordability in general. A variety of fintech tools have sprung up to work with renters and landlords to better facilitate rent payments or mitigate the financial barrier of rental deposits, and this is a clear growth category within the proptech space.

Zach Aarons, co-founder and general partner, MetaProp

As the pandemic hopefully enters its final stages, how are the changes from this period affecting your real estate and proptech investment strategy? Are big trends of the present, like high nationwide housing demand and mass commercial vacancies, refocusing your investing strategy?
Our investment strategy has not fundamentally changed very much between now and six months ago. However, we are actively looking for a company in the hotel technology space that is well positioned to consolidate market share once leisure travel reopens in earnest most likely in the fall.
How do you see the big cities adapting to life after the pandemic — or will they? What solutions are you focusing on in particular for the future of urban living (co-living, ADUs, commercial conversion to residential, etc.)?
Most big cities are going to accelerate trends that were already in motion: fewer cars on the road, more pedestrian life at the ground level, more bicycles and micromobility solutions as alternative means of transportation.
The demand for a suburban-style living is back — for now. What are you focusing on across this category for the next year or two (new residential services and amenities, build-to-rent housing developments, etc.)?
If we were still purchasing hard real estate assets like many of us on the MetaProp team used to do in previous careers, we would be looking aggressively to purchase suburban office inventory. Companies are going to have to offer employees space in an urban headquarters, the ability to work from home in the suburbs, but also some sort of office alternative in the suburbs so the worker can leave home sometimes but not have to take a one-hour train ride to get to the office when needed.
Commercial retail had already been reshaped by the internet, but what is even going to be left after the pandemic? Restaurants, gyms and salons, and the few other services that can survive, if even them? Do you expect a big renewal of the “in-person experience” focus that retailers had been focusing on before the pandemic hit?

We are already seeing pent-up demand for people to return to these activities in person.

Beyond the trends everyone is grappling with, what key areas are just emerging for startups? As examples, virtual brokerages are challenging the existing real estate incumbents for home sales, and various title insurance startups are going after that market — and the traction is early but real.
We believe that the senior housing sector is becoming increasingly interesting for startups; many of the adoption and acceleration trends we saw take shape in multifamily and office a few years ago now seem to be forming in senior housing.

Casey Berman, general partner, Camber Creek

Our thesis hasn’t changed. More than 10 years ago, it was clear to us that brilliant problem-solvers and technology could move the industry from dozens of ad hoc solutions within a single business to an integrated, frictionless real estate ecosystem. The pandemic and the creative responses it is bringing about simply accelerated these changes. It transformed real estate technology from a “nice to have” to a “need to have” for large portions of the industry.

Since the beginning of the pandemic, we’ve seen broad adoption of new software and hardware like Funnel that provides a potential apartment renter the ability to identify a building, do a virtual tour, apply with an automated financial evaluation and sign a lease in lease than 10 minutes.

COVID is having two impacts on cities, which are in conflict. First, and obviously, the pandemic showed that a huge percentage of white-collar work can be moved fully online and remote, meaning that many people can live wherever they want. At the same time, by keeping people apart, it has reinforced the value of proximity, of human contact. I think cities will continue to attract people to live, work and play because they offer density and opportunities for experiences that people crave even more now.

To the extent all of this is true, there will be renewed demand for urban spaces and properties to take advantage of that demand. We have companies in our portfolio providing some of these solutions, and we expect those solutions will become increasingly popular. Flex allows tenants to pay rent online in easier-to-manage installments and in the process makes it more likely that landlords will receive payment on time. Latch’s access control devices are in one out of 10 new multifamily buildings. A lot of people purchased a pet over the past year. PetScreening makes it easy to manage pet records and confirm when a pet is a service or support animal.

The pandemic has accelerated the automation of just about everything, including real estate-related services and transactions.

This demand for more space is part of larger trends in home rental, home purchase and home renovation behavior. We’re working with companies offering innovative solutions in each of those segments. For landlords, Darwin Homes provides full-service property management for single-family rental properties. On the purchase side, Notarize moves the document verification process online. And Curbio takes care of financing and renovating a home pre-listing so that the seller can get maximum value once it’s on the market.

The service sector has made up an increasingly large share of the U.S. economy for decades. I don’t think that’s going anywhere. And people will still want proximity and human connection. The pandemic has introduced more options for what those connections may look like, and many of these options will stay with us.

There have always been high-touch transactions and interactions, like sitting down with a large group at a restaurant, and low-touch equivalents of the same activity, e.g., ordering takeout instead of dining in. The pandemic has broadened the range of high-touch and low-touch transactions. For example, now you can order ahead via an app and have the food placed in your open trunk. For many people that’s a new, very low-touch option. Consumers will continue to want that full range of options for many services and experiences. In-person experiences will continue to be part of the mix, but different retailers will develop niches and specialties all along that spectrum.

The internet and automated tools are making it feasible to manage single-family rental homes at scale with a high degree of quality and efficiency.

The real estate industry is central to any effort to measure, benchmark and mitigate the country’s environmental footprint. We see companies like Measurabl leading the ESG transformation worldwide.

Vik Chawla, partner, Real Estate Technology Investment team, Fifth Wall

Since the inception of the firm, Fifth Wall’s investment strategy has largely been focused on business models reshaping the real estate industry for which we can help play kingmaker, given our corporate strategic partner network and resulting distribution channels. This strategy has remained throughout the pandemic. That said, the acceleration of digitization which has taken place over the course of the last year has shifted certain areas of focus. For instance, the single-family and industrial asset classes have seen marked acceleration in both business at the asset level, as well as in the associated technologies serving those spaces. On the other hand, businesses in the retail, office, and hospitality spaces have seen headwinds, many of which are ephemeral in nature and expected to improve as the pandemic subsides. The multifamily sector has seen mixed outcomes throughout the course of the pandemic, with suburban-level multi-family broadly experiencing an uptick as tenants moved out of cities into suburban centers.

Our team has shifted prioritization in terms of specific investment verticals as a result of these accelerations and decelerations across the market, but our fundamental investing strategy remains the same.

We believe that major cities will continue to attract knowledge workers and top talent post-pandemic, though we expect remote work to become an increasingly critical component to the work economy, meaning that there will be increased flexibility in terms of time spent in the office versus elsewhere.

At a city-level, this means that rents should taper relative to pre-pandemic levels due to lesser demand. That said, the real estate ecosystems in cities which have experienced growth throughout the pandemic will enter a period of innovation, and with it, see an increase in housing density, ADUs, and modular building techniques.

We expect that an increased emphasis on amenities in real estate assets across the suburban market will be a meaningful and tactical pull for individuals given the choice between cities and suburbs. However, the technology ecosystem tends not to favor businesses focused entirely on one pocket of the market. Successful technology businesses are typically highly scalable, meaning that when they work, they work almost everywhere. Software is a great example of this. Operating systems work ubiquitously, rather than differing across countries or regions.

For this reason, we don’t expect to see an uptick in technology companies geared toward suburban dwellers but do anticipate an increased deployment of amenities as a method to attract more tenants to the suburbs.

We anticipate the emergence of companies leveraging artificial intelligence and machine learning to up level compelling, pre-existing businesses models. Think of the sales technology ecosystem. What started off as a market rooted in Post-It notes and Excel spreadsheets, went on to adopt platforms such as Salesforce. Now, we’ve seen a transition toward a new generation of companies like Affinity, Dooly, and Outreach.

We expect to see a similar innovation cycle in the real estate technology sector, and the disruption of already successful models, particularly within the categories of software, marketplace, payments, fintech, and insurance.

Adam Demuyakor, co-founder and managing partner, Wilshire Lane Partners

I think one of the key tenets of our overall strategy has always been a focus on space utilization and identifying the best ways technology can monetize underutilized spaces. This can be seen clearly with many of our newest investments: Stuf and Neighbor (monetization of basements, parking garages, and other vacant spaces), MealCo (monetization of vacant kitchens), WorkChew (monetization of restaurant seating areas, hotel lobbies, and conference rooms), and Saltbox (monetization of empty warehouses). We believe that landlords can certainly use these types of strategies to help mitigate increased levels of vacancies that we’re seeing across the real estate industry today in the medium-term.

And with WorkChew in particular, which just announced this week, we’re seeing a ton of demand for their product both on the demand-side and the supply-side. Hotels and restaurants are excited to partner with them to monetize their less utilized spaces and infrastructure. And of course, employers and companies love WorkChew as an easy amenity that can be offered to their hybrid workforces that increasingly want to spend more time out of the HQ office.

Despite the pandemic, it is still difficult for millennials and Gen Z to afford to live in the most expensive cities (New York, San Francisco, Los Angeles, etc.) at current wage levels. As such, we believe that we will continue to see demand for products and solutions that can continue help alleviate costs and burdens of living in major cities. For example, we think that at its core, co-living is an economic decision. Solutions that continue to help people live where they want to live more easily (ADUs are another example of this) will continue to thrive.

We believe that suburban living is more tenable than ever partially because we are seeing a decline in the requirement of five-days-a-week HQs by corporations during the pandemic. Whether companies continue to insist on massive, in-person HQs (and the burdensome commutes to and from them by their employees) after pandemic subsides, is something we are definitely paying attention to.

However, in the event that a hybrid model (i.e., smaller HQs and some days in the office and some days at home) becomes the norm for major corporations around the country, then you will see great opportunities for companies that can provide goods and services (storage, food, healthcare, entertainment, etc.) more easily and closer to where people live.

We anticipate experiential retail will survive and may even briefly thrive once the pandemic has subsided as people will be craving great in-person experiences more than ever.

However, we also think that retail that is predominantly utilized just to sell goods that people can just as easily acquire online will continue to face sustained headwinds. The data suggests that whereas people were only mostly accustomed to only ordering items like apparel, electronics and furniture online, now due to the pandemic, consumers are now increasingly developing internet-enabled habits for brand new categories — such as groceries, fitness and even healthcare.

Something that has been interesting to watch over the past year is how startups themselves have begun to evolve due to newfound geographic flexibility from the pandemic. Previously, startups (especially real estate-related startups) felt pressure to be “headquartered” near where their customers, prospective capital sources and pools of talent were located. However, we’ve seen this change over the past few months.

I think it will be very interesting to see what startups choose to do themselves going forward (in 2022 and beyond). Startups (A) are frequently the most adept at utilizing the types of technology necessary for effective remote work and (B) simultaneously have to compete ferociously for talent. As such, I think we may be able to infer what the “future of work” may look like as we observe what startups choose to do as the pandemic passes.

Robin Godenrath and Julian Roeoes, partners, Picus Capital

With the effects of the pandemic being felt across countries globally, we are convinced that proptech will continue to play a key long-term role in addressing shifting trends across the real estate industry. While trends like high nationwide housing demand and mass commercial vacancies may shift again as the pandemic enters its final stages and eventually subsides in some capacity, the effect technology has had in enabling/facilitating these trends is leading the ecosystem toward a “new normal” centered around the utilization of technology. We also see strong tailwinds in adjacent business models across fairer and democratized access to housing including, for example, the reduction in cash security deposit requirements, as addressed via insurance solutions by one of our portfolio companies Rhino Insurance. Accordingly, we strongly believe that the key post-pandemic trend across the real estate industry will be centered around the implementation of technology to increase access to and efficiency across the broader real estate space. We have a strong conviction that technology will continuously be utilized to help facilitate renting as well as home buying and selling (e.g., virtual showings, online home buying, alternative financing) and to help enable hybrid remote/in-office work (e.g., flexible office space, shared space monitoring, tech-enabled workflow management). We will be considering the ever-evolving real estate market trends in our investment decisions, while not redefining our long-term hypotheses that were formed prior to COVID-19.

Throughout the pandemic, many major cities across the United States have experienced high positivity rates of COVID-19 with significant clusters in NYC and SF and have been major contributors to the spread of the virus. Given most cities were underprepared for the effects of the pandemic, many cities experienced above average levels of reverse migration (and with it jobs and economic activity). As the pandemic hopefully enters its final stages, cities will be hyperfocused on mitigating the effects of this trend, meaning cities and their major market participants will be highly incentivized to adapt post-pandemic solutions in order to incentivize residents to return to urban living. While there are major question marks around the future of urban living, especially given the shift toward remote work, collapse of the traditional urban social scene (e.g., in-person restaurants, nightlife) and the digitalization of services (e.g., food and grocery delivery), we have confidence that cities will once again flourish and grow post the pandemic and the real estate industry with it. Of course, major questions remain and will need to be continuously reevaluated, especially around the broader densification of cities across mass transit and living. We view proptech as one of the key aspects to enable/drive the return to urban living and enable or integrate newly evolved trends such as food and grocery ordering, remote working, etc. into a seamless tenant experience. Additionally, monitoring solutions will be crucial to enforce potential mass transit occupancy limits and inform riders of transit occupancy levels. Solutions focusing on building management, tenant engagement, digital amenities and community will be crucial to enable safe living (access control, visitor management, capacity monitoring) and social interactions. Additionally, flexible living solutions will allow remote workers to spend time across different cities with a fully managed, affordable and safe rental option for short-to-long-term urban living, while commercial conversion to residential will play a key role in driving down per square foot prices enabling long-term returning residents to afford less densified space. Although co-living densifies multifamily buildings, we believe it will remain an interesting sector as the continued shift to remote work will make living communities increasingly important considering the reduced social interaction on the job.

As previously mentioned, there is an ongoing trend of reverse urban migration causing an uptick in the demand for suburban-style living. Proptech companies have played a significant role in enabling this shift, specifically via digitizing the home buying, selling and renting transaction processes (e.g., iBuyers, alternative financing models and tech-enabled brokerages). Additionally, proptech companies have played a key role in reducing physical interactions through remote appraisals, 3D/VR viewings and digital communications thus enabling homebuyers and sellers to efficiently and safely transact throughout the pandemic. We strongly believe that the acceleration of the digitalization of the home transaction process coupled with the significant increase in demand for suburban-style housing and evolving buyer profiles (e.g., tech-savvy millennials) opens up a multitude of opportunities for proptech to significantly impact suburban living across construction, access and lifestyle. This includes companies focusing on built-to-rent developments, modular homebuilding, affordable housing, community building and digital amenities.

Over the last decade, traditional commercial retail has experienced a significant shift driven primarily by e-commerce changing the way individuals conduct purchases. Throughout the pandemic, retail real estate that is traditionally considered, to some extent, resilient against the e-commerce shift (e.g., restaurants, gyms, salons) have been forced to dramatically wind down operations or shut down entirely. We strongly believe that the digitalization of retail will continue to be a leading industry trend over the coming years; however, we expect retailers that have and are continuing to tailor their offerings to provide a holistic in-person experience to thrive post the pandemic, especially given the strong desire for community and in-person experiences that many people have been lacking throughout the pandemic. Given the strong desire for post-pandemic in-person immersive experiences, this trend will continue to accelerate as the pandemic hopefully enters its final stages. For example, cinemas, many of which are key shopping center anchor tenants, were already reinventing the traditional theater experience by offering a more holistic experiential solution (e.g., reserved seating, 4DX visuals, in-theater restaurants, cafes and bars) and the pandemic has led to an expansion of these offerings (i.e., private theater rentals and events). We have the opinion that this trend will continue to expand across the entire retail real estate industry from restaurants (immersive culinary experiences) to traditional retail (integrated online and offline shopping experiences) and believe that proptech will play a defining role in helping retail real estate owners identify potential tenants and market properties as well as in helping retailers drive in-store customer engagement and gain key insights into the customer journey. We also see a lot of potential for hybrid models combining online and offline experiences without friction. Taking the fitness sectors as an example we can imagine a new normal where in-studio courses are broadcasted to allow a broader participant group and apps tracking fitness and health progress throughout in-studio visits and at-home workouts.

Given the increased utilization of and dependance on technology, broadly due to the remote nature of work caused by the pandemic, large real estate companies, that have traditionally been almost entirely reliant on direct human interaction have been forced to utilize and become more accustomed to technology (e.g., remote management, workflow tools, lead generation, viewings). This has created strong positive tailwinds for the broader proptech industry and of course, opens up a multitude of opportunities that are partially disrupting a variety of markets. For example, while disruption in the brokerage space has been ongoing (e.g., Compass) disruption within the residential real estate space across home discovery, viewings, transactions and virtual brokerages has accelerated and partially moved online over the course of the pandemic. Additionally, with regard to workforce and office management, many challenges have arisen and will continue to arise due to the long-term hybrid remote work model that many companies are moving toward, thus creating opportunities for companies to provide innovative solutions around flexible office space, home office solutions, office management, capacity and access and communication enabling employers to manage a hybrid remote work model. Moreover, while the construction industry has experienced tremendous development over the last decade (e.g., Procore), new trends around digital procurement and monitoring have been fueled by the pandemic, as the construction industry lacked the necessary tools to transition toward a more digital environment. More generally, an increasing amount of proptech companies that were founded as point solutions with one core product offering are now developing into full suite solutions with more holistic and E2E offerings (e.g., Lemonade, Procore). The success these companies have had expanding their core product offerings serves as a major proof point to the general market need for innovation across the broader real estate and real estate adjacent industries.

Stonly Baptiste, founding partner, and Shaun Abrahamson, managing partner, Urban Us

At a high level this is how we think about current trends related to our overall investment thesis.

Then as we look specifically at proptech, for us this falls within densification, so we’re trying to understand some of the common advantages from cities.

Cities have some massively underutilized assets, perhaps the biggest being public spaces that are allocated to cars. So one change we think will become permanent is reallocating parking spaces away from private vehicles to micromobility (bike/scooter/board lanes, parking, etc.). We’re seeing a lot of demand for portfolio companies like Coord (manages curb space starting with commercial vehicles and smart zones), Qucit (manages bike and scooter share operations in many large cities) and Oonee (secure bike/scooter/board parking).

As this happens, the use cases like logistics can shift to electric micro-EVs. Similarly, parklets or seating areas increase social spaces. The EU is setting the pace for banning cars, but overall reduced access to streets for cars is going to be a big change. And likely will make cities attractive — yes, you give up private living space, but you’re going to get a lot more common/social space. This is also likely to drive more co-living so you can decrease cost basis for being in a city, but get a lot more from shared spaces, which have no real comparison in lower density communities. Portfolio companies like Starcity are really thriving as co-living doesn’t just solve for cost, but also for a key overlooked issue — access to community.

We also see room for more nomadic lifestyles. A lot of the discussion about Miami is about people moving there, but it seems like a more interesting question for a lot of places is maybe whether or not people will spend a few months of the year there. So for remote workers this might mean places near specific activities like mountain biking, surfing, snowboarding, etc. Starcity makes it easy to move between city locations and Kibbo takes this far beyond the city by building communities around van life.

At the same time a lot of the economy is still people that need to interact with atoms everyday from food prep to construction. Core city issues remain like affordable housing and transportation options. We don’t see this going away.

This is less of a focus for us as we’re not sure if this is going to be sustained demand. We think desire for community and connection with other people might nudge folks back to higher densities, so perhaps we’ll see a new form of commuting to solve for this.

In short, yes, though it’s not really an area of focus for us. We are seeing interesting proposals for how to use commercial spaces in new ways, but a lot of this seems to relate back to logistics or reverse logistics for circular economy opportunities.

We have a narrow lens here because of our focus on climate; we’re interested how climate risks are going to factor into proptech. It seems like the pandemic has increased the visibility of climate risks along with recent events like the Texas grid failure. We think more people are going to want to understand climate risks and how they might best mitigate from consumers to mortgage holders. In our portfolio teams like One Concern, Gisual and Dorothy are helping different stakeholders to score and respond to the impact of climate change on everything from telecommunications and energy to logistics and housing.

Other areas of interest. Use of delivery has brought into focus just how much we consume, so we’re seeing a lot more focus on all aspects of on-demand from reusable packaging to lower cost, lower emissions delivery options like Kiwibot and electric bicycles.

For remote workers, we think we’re going to see a lot more nomadic options — i.e., people who move around even more than we’re used to, between different places around the globe. Our team is testing out solutions like Starlink because this is probably the main remaining issue for remote workers — connectivity.

For those who cannot work remotely, we’re curious how much effort will go into teleoperations for everything from remote driving to online healthcare.

Andrew Ackerman, managing director, Dreamit

I only invest on the tech side so I’ll leave the question about investment in real estate assets to others. On the proptech side, despite the short-term devastation, COVID has accelerated some trends but not, IMHO, changed the game. Now is undoubtedly a rough time to be selling solutions to commercial real estate but as the market stabilizes, the pain points and opportunities that were there pre-COVID will still exist post-COVID. By and large, early-stage investors are looking for such big opportunities that relatively minor changes on the margin in cost and timing are not generally that meaningful. So while, tactically speaking, I’m paying very close attention to runway and burn to make sure that the startups in my portfolio can make it through to the new normal, I haven’t changed my investment strategy in a big way.

I’ve written elsewhere about how the pandemic experience and the return to work will likely result in more flexible work arrangements rather than the demise of the office which, as leases renew over the next 5-10 years, will lead to a gradually meaningful but not catastrophic reduction in the demand for office space. The question is, what then happens to the excess office space?

Office to residential conversion is tricky. Layout is a major constraint. Many modern offices have deep, windowless interior space which is hard to repurpose. But even with narrow layouts, the structural elements are often in the wrong place. Drilling thousands of holes in structural concrete so you can move plumbing and gas to the right places is a heavy lift.

One of the areas that I’m still investigating is whether co-living or microunits might be a more attractive conversion option. Turning an office break room and interior bullpens into a shared kitchen, dining area, and recreation or work flexspace may be a better way to repurpose deep interior space without a very costly retrofit. And if you don’t have to reroute too much plumbing, if may even be possible to convert (and convert back!) individual floors as market demand for office and residential space fluctuates over time.

Single-family has been neglected, slowly growing more interesting both from an asset and proptech perspective for some time. For example, we [Dreamit] invested in startups like NestEgg and Abode who service this ecosystem. We made these investments prior to the pandemic. COVID has been good to these startups and brought more attention to the opportunities in single-family in general.

This is another example of COVID simply accelerating pre-existing trends rather than creating new ones.

I do believe that there will be a rebound in some areas. I’m already hearing the term “revenge travel” for how pent-up demand for vacation experiences will play out, but I’m not getting two haircuts to make up for the one that I missed during COVID.

Ultimately, however, many of the in-person experiences you mentioned are as much social as they are transactional. And we still want to be around people. Considering that we as a species aren’t that far removed evolutionarily from picking lice and gnats out of each others’ back hair, I expect restaurants, bars, gyms, etc. to be back to normal in a few months.

Rather than open up a grab bag of general real estate tech trends, I’ll lay out two overarching challenges that startups face in the short and midterm.

Startups who have made adjustments to their product sets to react to COVID and sold those services as immediate mitigation needs — will they be able to expand those client relationships beyond COVID services into their primary product line? If they cannot, those relationships and revenues will wither away as COVID mitigation recedes in importance.

On the flip side of the coin, there is an extended gap between COVID and the new normal. Startups need to have a plan to compete and win during this gradual return to equilibrium. If they wait until after the transition period to reengage customers, they will often find that competitors have beaten them to the punch and locked in those customers.

Like this survey and want to share more thoughts with us about cities, proptech and our coverage of those topics? Email me at eldon@techcrunch.com.