Last year, I penned a blog post titled, ‘Why We’re Excited About Rent Tech’ shortly after we announced our first fund — the category delivered on its promise and then some in 2019. In fact, proptech investment hit $14 billion by mid-year 2019, more than all of 2018 combined. All of this activity is luring major generalist VC firms towards proptech which is a major development as they’ll provide not only large pools of capital but also experience scaling global businesses to emerging proptech and rent tech businesses. The real estate technology ecosystem is maturing nicely and we expect big things in 2020.
Specifically, there are three trends that have us excited for the rent tech space in 2020:
Smart Apartment Tech Extends Beyond Apartments
The operations and cost savings that mature smart apartment technology provides is now enabling owners to deploy portfolio-wide as opposed to unit-by-unit. With proven IRRs and implementation becoming easier and more affordable, smart apartments are now mainstream across rental properties. It’s more common than ever for an apartment complex to provide smart features to their residents — such as smart thermostats, locks and lighting. Utilizing smart technology for asset protection is also becoming mainstream, with leak sensors virtually eliminating major water damage incidents.
Two of our portfolio companies — SmartRent and GiGstreem — are major players poised to facilitate this trend. SmartRent is a leading smart home platform company that is seeing very strong industry adoption, for multifamily property managers and renters that enables greater visibility and control over apartment assets. Some of SmartRent’s offerings include smart locks, thermostats, light switches, leak sensors, building access and parking control that improve resident experience, while also allowing property owners to take better care of their assets.
GiGstreem specializes in providing high speed internet service to multifamily properties. By working with GiGstreem, property owners can offer reliable internet upon move-in, thus eliminating the need for residents to select and set up individual cable and wireless packages. In addition to offering residents high-end amenities such as this, GiGstreem’s building-wide Wi-Fi solutions ensure that all other smart apartment technology, such as SmartRent’s solutions or individuals’ smart home devices, run reliably 24/7.
In 2020, we’ll see rental owners continue to embrace smart apartment tech as they use it to streamline their operations, enhance the resident experience and discover new revenue streams. Think smart tech for building access, parking access/control and providing in-home security systems. This trifecta of fully integrated unit access, unit security and building access will enable self-touring and has the impact to help solve the package delivery problem.
The ‘Hotelification’ of Rental Properties
We’re seeing multifamily and single-family owners make significant investments in high-end amenities. This “hotelification” of rental properties is a major opportunity as it allows organizations to create new revenue streams by adding services like dog walking and apartment cleanings that greatly enhance resident experience. Over the past year, Hotelification has introduced new product categories to multifamily and single-family rental property owners.
Many multifamily and single-family residences are using Amenify’s ‘resident experience platform’ to broaden their amenities offerings. With Amenify, residents easily book high-end amenities with third-party providers; over time this will include offerings such as cleaning, hiring personal trainers, pet services, events, or concierge support, with their mobile phones. This enables property managers to effortlessly offer residents top-tier services and create new revenue streams while offloading much of the work that would traditionally be required to offer such amenities, like vetting services, setting up local partnerships, or hiring additional staff.
There are also a burgeoning group of high-growth companies, such as moved, that handle all aspects of the moving process, from providing boxes and other packing materials, to hiring movers and managing residents’ schedules. Moving is one of the top life events that people stress out about so many rental property owners are using moved as a compelling incentive to simplify their transition to one of their buildings.
We’re also seeing startups like Fernish, for home furnishings that cater to evolving consumer behavior trending towards experiences and renting over owning (e.g. Rent-the-Runway). Millennials are delaying home-buying and want to avoid purchasing and moving furniture multiple times which makes furniture-as-a-service companies a simple solution that saves them money and gives them access to an evolving selection of on-trend high-end furniture they otherwise wouldn’t want to purchase outright.
Multifamily and single-family organizations are also making a more concerted effort to respond to short-term rental companies like Airbnb and VRBO by taking a page out of their own playbooks. A growing number of rental properties directly oversee and offer units to business visitors, tourists or tenants’ friends and family to take advantage of otherwise under-utilized units to create new revenue streams and amenities — but only if they can ensure existing tenants are not negatively impacted. It’s important for rental owners considering this strategy to work with like-minded partners and closely monitor regulations around short-term rentals and partner with municipalities whenever possible to ensure compliance with local laws.
Self-Touring Paves the Path Towards Self-Leasing
The multifamily industry is abuzz with empowering people to view prospective apartments without a leasing agent. Numerous companies have emerged with solutions from lockboxes, to iPads, to fully integrated access control systems that allow prospective residents to enter and tour the property at their leisure. We see this as just the first step towards a larger opportunity we see happening in 2020: self-leasing.
Multifamily and single-family organizations are building end-to-end leasing experiences that will allow a prospective resident to tour and execute a lease on their own time and whenever convenient for them. We are seeing an increasing amount of our LPs seek to utilize several technologies to assist them in this initiative including CheckpointID for identify verification, SmartRent to manage activities like building/unit access, and Nestio or Funnelfor the CRM tools to manage all leasing activities and determining when and how a leasing agent should interact with a potential resident. This is a win-win scenario as people are free to tour, and potentially lease, apartments on their own schedules while rental owners and operators are able to better utilize leasing staff to engage prospects that need extra attention or on higher-value “concierge” activities.
As we head into the New Year, our team is incredibly grateful to continue working closely with an incredible group of entrepreneurs and multifamily and single-family organizations to support the burgeoning rent tech market. We’re confident that the proptech surge shows no signs of slowing down in 2020 and beyond.