Why Everyone Needs a Proptech Strategy
In a few short years, the industry's adoption of new technology has increased exponentially. More companies are being created and funded, meaning that operators have many more options for solving problems than they used to. The activities of evaluating and selecting technology have become more onerous as the pace of innovation has increased.
As we learned while researching our 20 for '20 white paper—an annual review based on 20 conversations with multifamily industry leaders—companies are changing the ways they think of technology. Both vendor and technology evaluations are falling increasingly into the remit of dedicated innovation leaders and committees. Property technology or "proptech" is a growing part of the technology platform, as the confluence of the Internet of Things (IoT), AI and cloud technologies broaden the range of problems that can be solved for operators.
Every company needs a technology strategy, covering its platform, proptech and analytical capabilities. The more holistic that strategy, the lower the likelihood of suboptimal technology decisions. Vendor risk, poor integration, and the inability to reap the intended benefits are all consequences that tend to haunt operators for years when they do not start with a coherent technology strategy.
At D2, we have seen the movie many times before. Our long leadership experience on both the operator and vendor sides informs our view of technology strategy. Our ongoing research, like our annual 20 for '20 review, keeps our insight current. We help clients to formulate technology strategy and evaluate technology, all the way through to the point of running technology selection processes. Few companies know multifamily technology as we do.
Like most industries, multifamily housing has been subject to considerable change in recent years. We live in a time when many new and exciting technologies are helping to deliver ever-improving living experiences to increasingly digitally native renters. It is hard to think of any technology with as much potential to revolutionize multifamily housing operations than smart building technology.
Long before macro-economic factors combined to disrupt our industry, smart building technologies were transforming operating models. Forward-thinking operators were already reaping the benefits, removing friction from their residents and site teams' day-to-day lives, and creating new automation opportunities.
Self-show provides an excellent example of an innovation that both streamlines multifamily operations and improves prospect experience. To deliver self-show, multifamily operators must solve for "curb-to-couch" access control, a foundational component of the smart community.
While self-show is by no means the only use case for smart building technology, it is contextually important to understanding the change in attitudes towards smart building technology. For example, during the 2020 lockdown, residents became increasingly dependent on delivery services, placing a higher priority on smart locks and building access. The impact on customer expectations is likely irreversible, which is one of many reasons why we think that smart building should be part of every operator's technology strategy.
Multifamily innovation excites us! Our team has firsthand experience designing, developing, using, purchasing, writing about, speaking publicly about, selling and marketing some of the most revolutionary new products in the multifamily industry!
To understand technology, you must look at it both from the operator and the vendor's perspective. Every technology sounds plausible based on the sales pitch, so multifamily operators need to be judicious in their choice of vendors, and vendors compelling in the language and strategies they use to reach customers.
Through our popular industry blog and our frequent publications on technology and industry best practice, D2 is an active participant in the industry conversation. Our unique buy and sell-side perspectives help us understand how to position products and companies to maximize their relevance in the increasingly competitive multifamily market.
D2 helps technology companies in diverse ways, from collaborating on research and developing industry-leading content to the broader positioning of their brand, sales and marketing materials. We use our deep experience of demand generation to turn content into leads and revenue for the leading technology companies we work with.
For some years now, D2 has championed the cause of Short-Term Rentals (STRs). In a world where demand for rental housing and lodging has been evolving rapidly, platforms like VRBO or Airbnb offer an alternative revenue stream for multifamily operators.
Recent changes to the macro-economic environment, particularly the travel industry environment, have been challenging for the STR sector. However, STRs represent an attractive revenue opportunity to multifamily operators, so it seems likely that they will ultimately settle into a more normalized business environment.
To capitalize on the opportunity of STRs, operators must address the operational considerations in delivering short-term hospitality in a predominantly long-term lease environment. They must also understand the ever-changing ecosystem of intermediaries and their business models.
For the foreseeable future, markets will be uncertain, and we can expect a variety of demand conditions across markets and submarkets. Flexibility will be critical to revenue management success. And flexible rentals will become a more useful and ultimately essential part of the revenue mix.
Talk to us!
D2’s team has decades of firsthand multifamily technology experience from senior leadership of both owner/operators and technology providers. If you’re an operator defining your next step in technology, or a vendor looking to expand your reach in the multifamily market, talk to us about how D2 can help.