Two years ago, we wrote an article about the three trends to expect for PropTech and the built environment. In retrospect, it is interesting to look at what we identified as leading trends on the eve of the COVID-19 outbreak, something no one saw coming. For a quick recap, here are the three trends we picked back then.
Mixed uses: we predicted a blending of use types for building as residential and commercial increasingly blurred together.
Emphasis on experience: we predicted an increasing focus on delivering a great experience for occupiers across office and multifamily properties.
Big conversations: we expected a major dialogue in particular focusing on the role of sensors in the workplace, and the way work gets done, such as hourly versus salaried roles and remote working.
Perhaps it is because we painted with such a broad brush here, but it’s interesting to see how despite our article being written before COVID-19 hit, the trends we expected nonetheless ended up being very relevant to the global property and PropTech dialogue. Remote work forced the conversation around blending working spaces and living spaces, while the global shift toward focusing on hybrid and back-to-the-office strategies certainly pressed home the concept of experience and new ways of working. Meanwhile, contact tracing and keeping people safe in the office certainly tested the waters of trust toward sensors and employee tracking.
Enough about the past. What is our take for the three trends shaping PropTech and the built environment in 2022?
ESG is a dominant force in 2022. It seems like a good take that the COVID-era focus on workplace health and safety gradually morphed into wellness as vaccines rolled out, which itself falls neatly under the umbrella of ESG.
But while the dialogue surrounding ESG seems to be all-encompassing, a deeper look at the subject would suggest that the jury is still out on just how ESG is going to impact real estate long term. While there is clearly strong interest in the metrics that ESG focuses on, across Environmental, Social, and Governance areas, views are increasingly rising to the surface that the way we combine ESG may not be the best right now. Consider the recent series of critical articles shared by the Wall Street Journal, or the take by the Bank for International Settlements suggesting that ESG is too poorly defined and standardized to be effective as a real metric.
Needless to say, there are already funds focusing on ESG, banks willing to finance only projects and companies that follow their ESG criteria, renters prioritizing sustainable buildings, and government programs mandating or incentivizing ESG-forward development. But is this the best way to measure ESG? Should E, S, and G be presented (and measured) together? And how can owners actually measure these things effectively (and cheaply)? These questions are still unanswered.
The rise of the metaverse
Hype train or not, the metaverse is here and it will likely cast a long shadow over the property business this year. With property NFTs launching and people buying virtual real estate, the metaverse seems like one of those things, like bitcoin, that will be on the fringe of everyone’s attention until after the time to really capitalize on the opportunity has come and gone.
In part, this is because many metaverse headlines seem so gimmicky and contrived. Buying expensive NFT avatars, for one thing, certainly resonates with a certain type of techy hypebeasts but likely alienates many more people than it excites. Real estate, as a typically conservative-skewing field, may not respond well to those sort of theatrics and it may take something more palatable for the idea to really set in within the industry. A likely candidate for this would be metaverse experiences that tie into and enhance occupier engagement for upscale apartments or modern offices. Metaverse experiences that augment brick and mortar retail are another space to watch this year.
Optimizing hybrid work
Finally, it’s a trend that is already being implemented but absolutely deserves to be here. Hybrid work is here to stay and while most businesses seem to agree that it works in at least some cases, there is much less consensus on how to implement it.
While hybrid does offer benefits for all sorts of firms and situations, its strength, flexibility, is also the source of its weakness. Hybrid workplaces have so many levers that managers can use to improve productivity and satisfaction that it almost boggles the mind. Schedules, office design, tech solutions, policies, teambuilding, active or passive management – hybrid work combines all the challenges of traditional working with the challenges of managing a remote team. And while solving this gordian knot is nothing less than mandatory for modern firms, no one said it is necessarily going to be easy.
In our estimation, these three trends will shape much of the PropTech and commercial real estate dialog of 2022. We’re happy to say that this time around we went with slightly more specific, measurable trends than last time, but we also feel that these trends will survive anything 2022 will throw at us, whether that is yet another Greek letter of COVID-19 or something else.