August 02, 2016
Outdated. Antiquated. Obsolete.
These are just a few words that have been used to characterize the technology used by many in multifamily real estate. The industry has an unfortunate reputation for being resistant to change and slow to adopt new technology. While this may have been true in the past, multifamily real estate today is changing rapidly.
The industry is shifting and becoming more and more tech-centric. Thanks to an influx of money from institutional capital, investors today expect multifamily operators to be as data-focused and tech-savvy as firms in the financial sector. In addition, technology is now built for and tailored to the real estate industry— and using it doesn’t require a computer science degree.
The real estate landscape is becoming more competitive, necessitating firms commit to a higher degree of technological integration. Today’s average multifamily business is no longer stuck in the past, but instead racing toward the future with a smartphone in hand.
Historically Slow Adoption
Most owners and operators would agree that five or 10 years ago, they didn’t use nearly as much technology as they do today. Industry leaders would often wait to see whether the new advancement justified the investment of time required for fluency. This lethargy prevented operators and owners alike from realizing larger profits.
When automated screening, self-service portals and call centers first emerged on the scene, for example, many ignored them. Then, slowly but surely, these new tools became part of the mainstream and greatly improved efficiency.
Today, almost every owner and operator uses not only property management and accounting software, but also revenue management software, CRM and marketing automation. While the viability of these innovations was initially regarded with skepticism, multifamily real estate businesses today could not function without them.
A Changing Environment
The investment dollars flowing into real estate today are driving this technological change. With multifamily demand predicted to grow in the next few years, consistently in some markets, explosively in others, it represents one of the most lucrative and stable asset classes.
This tempting combination is attracting institutional capital, and these investors treat the multifamily product just like all their other investments— as an asset to be analyzed and optimized.
In the market today, getting the best possible returns means leveraging technology to capitalize on portfolio opportunities. Every small, incremental improvement can mean a significant bump in the bottom line. There is clear evidence of renewed focus on operational technology within multifamily.
For example, attendance at NMHC’s OPTECH conference grew 15% from 2014 to 2015, and they expect an even larger audience this year. Multifamily leaders are undoubtedly realizing that operational technology is the key to gaining and maintaining a competitive edge.
The Future Of Multifamily
Technology companies that create real estate-oriented products are starting to receive real attention, garnering tremendous investor interest. In the first half of 2016, real estate tech startups raised more than $1.8B, according to CB Insights. The entire tech ecosystem, recognizing real estate as an incredibly valuable market, has been allocating more resources toward anticipating and meeting its unique needs.
“Well-funded technology companies are building specific solutions for the multifamily real estate industry,” Rentlytics CEO Justin Alanis says. “Instead of picking a single vendor that delivers a one-size-fits-all solution, owners and managers now have the freedom to pick best-in-class technologies from a variety of companies and build their ideal tech stack.”
Real estate leaders benefit from the nascent multitude of options as they begin assembling their portfolio technology stacks or platforms, which promotes sustained long-term growth. With better tools on the market, multifamily real estate is poised to finally quash the persistent negative stereotype of being sluggish to adopt technology.