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The Financial Benefits of PropTech for Commercial Real Estate

Proptech is transforming commercial real estate. By using a combination of technology, data analytics, and automation, savvy investors can introduce efficiencies that slash operating expenses while increasing revenue and unlocking predictive capabilities. Here we discuss how proptech offers quantifiable benefits to CRE investors. With the growth of electric vehicle adoption and renewable energy sources, now is an especially opportune time to invest in proptech.


Reduce Operating Expenses

According to Deloitte, predictive maintenance enabled by IoT sensors and AI can reduce repair costs by 8–10%. Fixing issues proactively avoids major system failures. For example, a JLL report showed that reactive maintenance is 300% more expensive than preventative maintenance. Installing smart leak detection sensors coupled with predictive algorithms can flag pipe issues before they become catastrophic. While retrofitting existing properties with sensors and building management systems requires upfront investment, the value is quantifiable. Redevelopments also present opportunities to integrate smart building infrastructure.


Energy management technologies can also directly reduce utility expenses. A study by energy software provider Enertiv found their platform lowered costs by 5–15% for clients via optimized HVAC and lighting usage. On average, smart building technology enables 10% energy savings, according to the US Department of Energy. Renewable energy sources like solar or fuel cells also hedge against utility rate spikes. For portfolios with substantial energy costs, proptech investments here quickly pay themselves back while benefiting sustainability.


Increase Revenue

Using advanced proptech can help property owners provide a better experience for tenants and potentially charge higher rents. A study by CBRE showed that in the U.S., office buildings with LEED environmental certifications had, on average, 4% higher rents from 2019-2022 than those without. Tools like digital features, health-focused building improvements, and tenant-focused apps make living or working there more enjoyable. Proptech can also give landlords data about what tenants like or do, helping them offer better services. By making tenants happier with proptech, property owners can keep them longer, attract new ones, and fill up their properties at higher rates.


Unlock Predictive Capabilities

The predictive capabilities unlocked by proptech machine learning represent further value. AI algorithms can analyze millions of data points from sensors, systems, and external sources to derive insights not possible manually. Data-backed decision-making enables risk mitigation and forecasting that give investors an edge. But AI is only as good as the data; clean, comprehensive data is mandatory to power predictive algorithms.


Conclusion

In summary, well-implemented proptech delivers quantifiable cost savings, revenue gains, and predictive insights for commercial real estate investors. Despite requiring upfront investment and diligent change management, the data shows proptech pays for itself many times over by strengthening portfolios.


At GAIN CRE, we make it our mission to stay ahead of the latest trends and understand how to strategically implement them. With our robust portfolio of properties, including EV-ready properties with advanced charging infrastructure, we understand the importance of proptech. We are dedicated to staying ahead of the curve, offering solutions that benefit our tenants, investors, and partners alike. Contact us today at tad@GAINcre.com to learn more about our portfolio.

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