Widespread adoption of proptech advances during the pandemic have dramatically increased transaction speed across all CRE property types, with multifamily assets leading the charge.
Multifamily properties posted the sharpest decline in days-on-market, with average close times declining by 16.75 percent from Q4 2020 to Q1 2021, according to a new Crexi report. It’s a precipitous increase after a three-month freeze at the start of the pandemic, which peaked in Q3 2020 as investors continued cautiously with the wait-and-see approach they adopted in March 2020.
But since Q3 2020, the average time on the market has decreased by 13.1 percent across asset classes, “with even more accelerated adoption emerging in Q1 to Q2 of this year,” according to Crexi analysts.
“These increased speeds point to improved market outlook and a heightened adoption of digital tools to close deals in a more timely manner,” Crexi notes in a recent analysis of the data.
And while CRE often lags in tech adoption, a recent Counselors of Real Estate report notes that “pandemic was a stress test, revealing vulnerabilities, appetites, and new and increased risks.”
“We have been awakened to some familiar but nascent areas of importance, namely cybersecurity, supply chain logistics, and price instability,” the report notes. “None of these are new concepts, but in a span of months if not weeks in some cases, we saw high profile hacks, shortages of resources like microchips, lumber and labor, and rising prices across the board. The accelerated upgrade of connectivity, security, and hosted processes mean utilization is being maximized and any place is now a potential workplace. This creates new pools of vacancy and pools of availability enabled by technology.”
But as the pandemic panic wanes, an undeniable truth has emerged: lease expirations, construction projects, mergers, and dispositions will all continue to be impacted and driven by technological advances.
“The acceleration and adoption of technology during the pandemic has impacted everything, and real estate is no exception,” the Counselors of Real Estate report notes.
“The question remains: what will stick? Real estate is long-lived and capital intensive. Lasting impact requires the creation of value. Mere response to a pandemic-driven anomaly is insufficient to make permanent shifts. Value creation will be driven by three things: risk management, generating trust, and increasing utilization.”
A recent Global Proptech Confidence Survey from MetaProp shows that investor confidence in the proptech market is at 9.2 out of 10. This is likely due to accelerated technology adoption during the pandemic and high-profile tech transactions like Airbnb’s long awaited IPO, as well as the debut of a dozen new proptech-focused SPACs. In addition, ThomaBravo’s acquisition of Realpage and CoStar’s acquisition of Homesnap, both drove investor confidence in the sector.
Author Lynn Pollack, Globe Street