REAL ESTATE TECHNOLOGY PERSPECTIVES THAT COUNT

The multifamily sector is facing challenging market conditions. On the deal side, construction costs and high interest rates are slowing investment and development activity. Operationally, the industry faces a continued labor shortage that property managers are beginning to deploy technology solutions to address.

Real estate professionals have been navigating these market dynamics for the past 18 months, and it’s increasingly apparent that technology can help address some of the most pressing challenges. At RET, we’re proud to be at the forefront of an ecosystem working to innovatively solve these problems — liaising with strategic investors to pinpoint operational challenges in need of solutions, and investing in cutting-edge technologies that address those pain points and drive efficiencies.

As we work closely with our stakeholders to help the industry navigate the current environment, we’re excited to host our second annual “Multifamily Kick-off Summit” at the Blueprint conference on September 17 to talk about the various ways in which technology is pushing the industry forward. Panel sessions at the event will include:

• Centralized Property Operations: Creating Efficiencies Across Leasing, Maintenance, and Broader Property Operations
• Generative AI’s Impact on the Multifamily Sector
• From Concept to Reality: Operationalizing Innovation in Apartment Properties

Among the speakers will be executives from leading multifamily owner-operators, including AMLI Residential and Berkshire Residential Investments as well as real estate tech companies, including PredictAP and Stake.

We’d love to see you at our summit and the rest of the Blueprint event. Join us in Las Vegas by following this registration link.

Early this year, the RET team sat down with a crystal ball to forecast the major trends of 2024. Our predictions include:

Construction tech will help construction bounce back

• Given the major construction slowdown of late, tech tools that can lower costs are part of the solution that will help developers put shovels in the ground.

The real estate tech “haves” will separate from the “have-nots”

• For most of the last decade, real estate tech was a rising tide that lifted all boats (startup life is easy when there is easy money). But in 2023 that changed and startups have been optimizing their business models to extend their runway.
• This year, we’ll see a clear divide between firms that have been successful at delivering a product the market needs with a sustainable business model and those that have not.

The year of consolidation

• Some companies will inevitably find themselves in dire straits. For many of the “haves,” those struggling firms could be intriguing acquisition targets that will bring economies of scale and customer concentration.
• We'll also see consolidation for tech users. Previously, there was a move away from platform solutions in response to innovation stagnation and the need for customization. In 2024, we will see a shift back toward consolidating services under one platform with integrations and economies of scale.

We also asked a few of our CEOs to chime in with their predictions:

"EV charging will reach a tipping point" – Mohammad Akhlagi, Plugzio

• With almost 2.5 million EVs on the road, we will begin to see a winning EV-charging strategy take hold. Owner-operators who haven’t solidified their EV charging strategy will “back a horse.”

"This will be the year of centralization, automation and elimination" – Roman Pedan, Kasa

• As revenue drags across real estate sectors, owners will be more focused on cost savings. Labor cost in most asset classes constitutes one of the largest line items. Owners will accelerate their thirst to centralize, automate or eliminate labor. Technology systems that can prove they do so will thrive.

"Housing affordability and rental regulation as a focus grows" – Tyler Christiansen, Funnel

• Renter regulations will hit the national political stage as a key element of housing affordability with a serious dialogue around “junk fees.” Eventually, this will impact which types of ancillary income are permissible.

There’s no technology trend getting as much attention as generative AI, so let's take some time to preview how it will impact real estate this year.

AI is a trend you cannot ignore
Every real estate professional should be thinking about how ChatGPT — which boasts nearly 200 million users — and similar tools will change the way they work.

• But remember: The technology’s glitz is only as good as the substance that underpins it.

Data is the key to quality
ChatGPT is built on a massive trove of publicly available information; ChatGPT would be nowhere if not for the data it was built on.

• So what? Real estate-focused AI tools will also only be as good as their underlying data.
• It’s still early for RE-focused generative AI and there are just a few RE-focused generative AI companies built on large reams of real estate data.

The winners may have already been chosen
Impactful generative AI companies for real estate aren’t likely to be built by technologists moving into the industry. Instead, existing real estate tech companies with massive amounts of data will be playing the biggest role.

Here is what our portfolio companies are doing, leveraging their data collections and generative AI to provide value to clients.

• • Travtus reviews and analyzes troves of information (emails, service requests) to understand a property. Its digital employee — "Adam" — then uses that information to address resident concerns, train employees and reduce costs.
  • Markerr launched its generative AI dashboard for market analysis in the summer to help real estate professionals identify emerging market opportunities, predict future growth, and assess risk factors with precision.

• Lula, a smart property y maintenance platform, uses generative AI to converse with the system and residents regarding maintenance requests.
• Picket, a tech-enabled property management platform is leveraging generative AI to simplify massive HOA CC&Rs into structured resident rules; and automating the responsive capabilities of the system for resident questions.

We also have other portfolio companies using AI in similar ways, using large troves of proprietary data to develop powerful insights.

• Funnel Leasing, a multifamily CRM and automation platform, is leveraging generative AI to transcribe and summarize prospect and resident calls, saving leasing teams valuable time.
  • It’s also using AI to engage, answer, and convert prospects via email, SMS, chatbot, and voice in a quick and human-like manner.
• OnsiteIQ, a construction intelligence platform, analyzes visual data from under-construction projects and leverages AI to track progress across 18 major milestones, identifying patterns of inactivity and predicting potential delays across an entire portfolio.
• PassiveLogic, the first platform for generalized building autonomy, is creating an ecosystem of solutions that enables anyone to design, deploy, operate, and maintain their own autonomous building systems.
• PredictAP, is a machine-learning invoice ingestion and coding product for real estate accounts payable (AP). The tech ingests a historical record of a company’s AP coding data to build an automated, self-learning ingestion and coding protocol that can flag instances of fraud and identify spending inefficiencies across the business.

Even amid a challenging 2023 for both the real estate AND venture capital industries, RET continued to pursue our core investment program.

As a firm, we’re proud to look back on a year with many highlights, including:

Investing in four new portfolio companies, including:

• OnsiteIQ — a construction intelligence platform for developers and other stakeholders to document, monitor and verify progress on development sites.
  • Why? 70% of construction projects fall behind schedule; OnsiteIQ leverages video and computer vision to detect and address potential issues early, mitigating project delays.
• PredictAP – a machine-learning enabled invoice ingestion & coding solution for real estate accounts payable.
  • Why? Large real estate firms rely on key stakeholders to code thousands of invoices a month; PredictAP uses automation to systematize coding knowledge and to reduce the labor time by 80-90%.
• Rent Butter — a tenant screening solution that combines ID and document verification, banking history, and credit behavior analytics into a predictive tenant performance report.
  • Why? Property owners have traditionally used credit scores to accept or reject tenants; Rent Butter leverages alternative financial data overlayed with financial behavior analytics to create a more predictive decision model for tenant screening.
• Sparkfund — an energy transition management platform that helps commercial institutions manage the participants that deliver green capital projects.
  • Why? Sustainability teams are understaffed and overwhelmed with conflicting demands from key stakeholders (management, regulators, vendors, and consultants); Sparkfund provides technology-agnostic expertise, analytics, and deployment capabilities to cut through the noise. It helps real estate firms deliver on sustainability goals and save up to 35%.
• Follow-on investments in many of our most successful portfolio companies, including:
  • Conservation Labs' $7.5-million Series A round
  • Engrain’s $12-million Series A round
  • Gigstreem’s $59 million strategic raise
  • Markerr's $6.6-million Series B round
  • Picket’s $20-million Series B round
  • Funnel’s $32-million Series B extension

Organizing the first ever public RET event

• The Multifamily Kick-Off Summit at Blueprint featured four curated panels on timely topics at the intersection of real estate and innovation.

Expanding the RET team

• Former RealPage and On-Site.com executive Monte Jones joined as a senior advisor alongside other industry veterans Jerry Davis and Shawn Mahoney.

Data has always been critical to business decisions, and today’s uncertain macro environment has only made data-focused analysis an even greater imperative for real estate investors.

During RET Ventures’ “Multifamily Kickoff Summit” at the annual Blueprint event in Las Vegas, RET Partner Christopher Yip moderated a panel entitled “Big Data and its Applications to Rental Housing,” featuring panelists Paul Morgan, Senior Vice President and Head of Data Science and Research at Carmel Partners; Joshua Glastein, Chief Information Technology Officer of Berkshire Residential; Brian Lichtenberger, CEO and founder of Markerr; and Jindou Lee, CEO and founder of HappyCo.

Throughout the conversation, the panelists explored some of the diverse use cases for machine learning and predictive analytics in the multifamily industry from informing investment decisions to optimizing operational efficiency. The speakers emphasized the importance of incorporating human input alongside data in decision-making and discussed some of the biggest challenges associated with data aggregation, integration, and regulatory and privacy concerns.

The informative session, which also included commentary on generative AI’s impact on multifamily decision-making,  left the audience with practical insights into how data analytics can enhance their organizations and a reinforced understanding of how data is reshaping the real estate landscape.

Watch the full session below:

This September, RET Ventures partnered with the annual Blueprint event in Las Vegas to host the “Multifamily Kickoff Summit” — a conference that explored many of the pressing topics facing the multifamily industry, providing attendees with valuable perspective into how owner-operators can leverage various technologies to address significant opportunities and risks in the market.

To kick off the summit, RET Ventures Senior Advisor Shawn Mahoney moderated a panel entitled “Technology and the Future of Multifamily Leasing,” featuring expert panelists Amy Weissberger, SVP of Corporate Strategy at Morgan Properties; Austin Lo, CEO and Founder of Peek; Tyler Christiansen, CEO of Funnel Leasing; and Steven Maltz, VP of Standardization and Process Improvement at Essex Property Trust.

Throughout the conversation, the panelists discussed the importance of the renter experience, diving into opportunities to improve the leasing journey through technology. The speakers gave actionable insights on virtual leasing assistants, CRMs, self-touring, and other digitization solutions that have elevated leasing processes over the past decade, analyzing how these technologies can drive operational efficiencies for leasing teams while eliminating pain points across the leasing journey.

In concluding the session, the panelists explored the next frontier of leasing solutions, sending attendees off with strengthened insights and a more defined roadmap to establish a streamlined renter experience.

Watch the full session below: