Two constants have guided my professional life: venture capital and real estate. Every year, I eagerly await to see which portfolio will produce greater returns. Today, in the words of the great (fictional) New Yorker George Louis Costanza, “Worlds are colliding!” Enertiv, a New York Angels investment, keeps growing with an impressive client list of property managers and building owners. The smart building hardware startup is the latest in a slew of property technology or PropTech innovations disrupting the $16 trillion realty market.
Investments in PropTech have grown from $730 million in 2013 to close to $16 billion this year. In turn, this has birthed a formidable herd of unicorns, including Trulia, SMS Assist, Compass, Kattera, Uptake Technologies, and Desktop Metal, to name a few.
Equally impressive is the cadre of backers that represents the gambit of industry giants from SoftBank and Starwood to Brookfield Asset Management. “In the last three years, real estate technology has arguably created more enterprise value and spawned more unicorns than any other single industry sector in venture capital,” said PropTech venture capitalist Brendan Wallace of Fifth Wall.
While values have exceed expectations, most analysts still think the market is in early innings, leaving the door open for more billion-dollar enterprises. I recently reached out to three PropTech AI entrepreneurs recognized for their contributions in revolutionizing the landscape of property management, construction, and hospitality.
Sensors speed construction management
At ff Venture Capital, we have two drone investments in speeding construction workflows, SkyCatch and CivDrone. However, in densely populated urban centers, an unmanned aerial vehicle is not practical, nor can it provide a continuous data loop.
Still, property owners, architects, and construction crews demand a 24/7 bird’s-eye view of the site. Today, everything in the work zone is being connected to the Internet, including safety vests, power drills, and terrestrial equipment. This generates an overwhelming amount of information to decipher.
However, the crane has eluded project managers as the single solution to provide 360 degree operational awareness. Israeli startup Versatile Natures is transforming these towering machines into smart Internet of Things (IoT) devices, collecting field data, and improving onsite safety.
By delivering real-time actionable data, Versatile can increase bottom-line performance and reduce crane accidents. Last year alone, 44 people were killed and 175 injured in the U.S. because of cranes.
“The data we capture gives our users smart insights that support them in making better decisions. Decisions that improve budgets, speed up site production, and set new standards in safety, learning, and team performance,” said Meirav Oren, CEO of Versatile Natures. “We are working with some of the country’s biggest and most ambitious GCs to increase site production rates through powerful data insights.”
For Versatile’s founder, it is not just about the proprietary sensors, but the application of the technology by her team of experts.
“Many of our team grew up in construction and are motivated to make it better,” asserted Oren. “With our practical background in the industry, we have navigated the needs of the site team with deep technology and robust tools.”
According to Oren, the company’s value proposition is simple: “We transform construction professionals into superheroes and construction into a truly controllable manufacturing process.”
The hospitality industry is in panic mode, as 1 million jobs across the country remain unfilled. “The number of guest rooms rose to 5.3 million in 2018 — but with a 66.2% occupancy rate and the seasonally adjusted number of accommodation and food service job openings at 6.1%, there aren’t enough workers to keep things running properly,” reported Business Insider.
“Our biggest challenge remains recruiting and retaining talent,” said Pace Cooper of Cooper Hotels. “How technology can alleviate the stress of this challenge is something we know will be available in the future, but is not obvious in providing options currently.”
Jeremy Cooper, his son, added, “Therefore, some big steps are eliminating housekeeping and front desk labor as well as programs that automate revenue management.”
In Japan, the Henn-na (“Strange”) Hotel famously showcased a humanoid staffed front desk, but then pulled back and had to add cybersecurity measures. Many hotel operators in the U.S. are taking a less gimmicky approach, upgrading their receptions with self-serve kiosks in place of employees.
Housekeeping is still one of the most critical guest amenities, but comes at a high cost of $22 per room per day. As more hotels rely on online travel agencies such as Booking.com, Priceline, and Expedia that take 15% commission, many operators are running on razor-thin margins.
In 2016, Maidbot introduced an industrial-strength robot vacuuming cleaner to the hospitality industry to increase property performance. Several large hotel brands are already using Rosie (inspired by The Jetsons) as the first step towards automating housekeeping.
Micah Estis Green, Rosie’s creator, characterizes his innovation as “essentially a mini self-driving car that focuses on cleaning carpeted areas of commercial real estate – from hotel guest rooms to corridors to office space and airports.”
In addition to sucking up dirt, Rosie has other important features, said the roboticist, including collecting “actionable data on the operations and environmental conditions for the operators to improve efficiencies and the guest experience.”
Green claimed that this enables hotel staff to spend less time physically cleaning the room and more time bolstering “guest satisfaction scores,” in addition to expanding the “lifetime of the asset (carpets) in the respective properties.”
He also told me that his robot is actually improving the working conditions for employees, as many cleaners have “reported a reduction of discomfort and pain – from calluses on hands to pain in shoulders and wrists.”
PropTech makes buildings smarter
While tourists gawk at New York’s brilliantly lit skyscrapers, building owners are nervously attuned to the hum of their basements supplying tenants power and heat during the winter months. Although many software upstarts have streamlined leasing and accounts-payable activities, an overwhelming amount of physical plant information is still recorded by hand.
As energy consumption is reaching peak levels with rising occupancies, profits are declining due to increased service calls to meet demand. Most equipment failures start as small (untracked) problems, before racking up thousands of dollars in labor fees and overtime charges.
To alleviate these challenges, Enertiv’s sensors digitize heating, ventilation, and air conditioning equipment to maximize usage and predict maintenance failures.
“With Enertiv’s data, we were able to see significant savings from implementing simple optimizations, such as shifting interior supply fan schedules by a few hours,” explained Edward Piccinich, chief operating officer at SL Green.
These tweaks included $15,000 in savings from “delaying the startup time of interior supply fans from 5 a.m. to 7 a.m” and “$17,000+ in savings from installing VFDs [variable frequency drives] on a condenser water pump and a chilled water pump,” Piccinich said.
“Beyond that, SL Green and Enertiv identified another $138,000 in potential savings at 919 Third Avenue,” said a company case study. “The next steps include expanding the scope to capture more equipment-level performance data, as well as identifying opportunities to deploy IoT sensors to track additional data streams such as temperature and humidity.”
If SL Green would apply the cost reductions from 919 Third Avenue across its entire portfolio of 93 buildings, these savings would amount to over $12 million annually.
The success of predictive maintenance startups like Enertiv reflects a new attitude by commercial real estate owners.
“Landlords can no longer get away with providing four walls and collecting rent checks,” said Connell McGill, founder of Enertiv. “Owners are worried about anything that negatively affects their tenant experience, such as elevator entrapments and indoor air quality or temperature issues.”
In today’s competitive leasing environment, compounded by the growth of co-working spaces and short-term leases, McGill described how PropTech owners are embracing fleets of new unmanned systems.
“There is certainly an uptick in demand for autonomous solutions in the market, although we are still early in the deployment,” he said. “Drones are being used to automatically survey construction sites, robots are taking 360 and lidar scans of tenant spaces and mechanical rooms, and an ever increasing number of processes are being automated.”
Enertiv’s entrepreneur states that it is not just about automating electrical meters and HVAC systems; it is about connecting the entire building structure to the cloud.
“And it’s not just equipment,” McGill added. “One salient example of literally keeping operators up at night was one client that would pay their engineers overtime to sleep at their buildings during the coldest nights of the year in case a pipe froze and burst, a disaster scenario. Instead, we’re deploying temperature sensors at critical points in the buildings and giving operators warnings well ahead of time so they no longer have to sleep on site.”
The PropTech trend is further validated by Enertiv’s success in signing up notable landlords such as AvalonyBay Communities, Equity Residential, Prologis, and Related Companies. PropTech is the first line of offense in transforming urban communities into smart cities.
“I can see a world where buildings essentially manage themselves,” said Enertiv’s McGill. “Every possible issue will be predicted and resources will be deployed dynamically.”
“In the future, we’ll see autonomous vehicles connected to warehouse dock door for traffic controls and last-block robotics distribution,” he said. “Maintaining this distributed system will have to be sensor-based and predictive, something we’re laying the ground for today.”
This PropTech metamorphosis will turn real estate assets into pulsing technical hubs, complete with rich data, dynamic sensors, and buzzing bots keeping tenants happy. As Green predicts, “Robots are best for tasks that are dull, dirty, or dangerous. To me, the best service is taken care of before the guest even has to ask.”
Going to CES? Join me for my panel on “Robots and Other Humanoids at Retail” on Jan. 8 at 10:00 a.m. at the Las Vegas Convention Center.
Editor’s note: The Robot Report will also be moderating a panel on “5G and Robotics” at CES 2020, and Robotics Business Review will be running a track on “Robots for Good” at the event.
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