In the beginning…
The Financial Recession of 2008 eliminated many real estate jobs. People who lost their jobs during the recession, and people graduating college during the Recession, sought jobs in other industries, most notably technology. Because of this…
- People with new technology skills, coupled with prior experience or current interest in the real estate industry, began applying technology to the most obvious, discrete pain points in the real estate industry – or – the low hanging fruit.
- Like most industries, these single-purpose technology solutions proliferated and competition ensued in function silos, like being able to search for a property listing on the internet, or opening a door lock with a cell phone.
- These single-purpose technology solutions were very effective, but real estate owners and operators were soon burdened with utilizing a single technology solutions for each of the many problems of the real estate industry – which became untenable.
- This was known as Proptech 1.0.
A next wave of technology companies recognized that the effort and cost of managing many single purpose solutions for building owners and operators was untenable, and sought to create organization-specific solutions by…
- First, overlaying current technologies to an organization’s internal legacy, outdated data management solutions.
- Second, acquiring external (market) data via the current technologies.
- Third combining the internal and external data to generate analytics and some operational insights to assist in decision-making.
- This is Proptech 2.0, the current phase of real estate technology.
The key concept of the future will “universal integration.” Technologists are currently conceptualizing and creating the future tools of Proptech 3.0 where there are significant opportunities to…
- Greatly expand the current integration of datasets, which are now largely focused on property leasing & operations and finance, to include design, construction, consumer capital markets and other alternative datasets..
- And / or aggregate and integrate Proptech 1.0 and 2.0 solutions to form new, more comprehensive and powerful technology tools.
- The purpose: Offer organizations the ability to gain a competitive advantage in their respective marketplaces, and generate investment Alpha.
TradeCraft is a technology framework, created by Serge Reda in 2017, that is focused on providing integrated and automated interoperability in the real estate development process.
- Design, construction and financial management are the core functions in the real estate development process.
- To date, those functions are performed by separate entities that retain and silo disaggregated datasets – this creates inefficiencies, errors, and missed opportunities in the real estate development process.
- As the design evolves, the investment analysis is continuously and automatically updated and tested against market forces and constraints, risks, and project returns.
- Functionally, TradeCraft aims to do for the real estate development process what the iPhone did for everyone:
Collaboration is the way forward
The lessons learned from PropTech 1.0 and 2.0 is that progress can be made through collaboration. There are many great technology tools that currently exist.
If the future of PropTech 3.0 will be “universal integration,” then deeper and broader collaboration among existing and new technologies will be required to forge a viable path forward.
Listen to Serge's full thought's on what comes after single-purpose Proptech on Episode 4 of "Building Blocks."
"Jose Cruz and Serge Reda discuss the intersection of real estate, design, construction and technology in their Building Blocks podcast episode. Reda discusses his journey from traditional real estate investment to becoming interested in PropTech, and the realization that organizing data sets is key to generating insights and metrics in the industry. They also discuss the potential for using technology to break down silos in the industry and improve collaboration and communication."