Take a look down any train platform in the morning and you’ll see commuters deeply immersed in their smartphones. Or scan people in a meeting and you will see half the room face-down checking emails.
We are spending much less time in the real world and much more time on our devices.
Consumer technology has created an entirely separate digital world where we now spend much of our lives messaging, sharing, tagging, and transacting.
Now, there is an emerging wave of innovation and technology — realtech — that promises to augment the physical world in which businesses live, work and play.
What is ‘realtech’?
Realtech refers to any new technologies, innovations or business models that impact the real estate sector and the broader built environment.
Realtech goes well beyond technology in our homes — it impacts how we work in our offices, how we shop with retailers, how we send and receive goods, and how we live within our cities.
Rather than creating new digital spaces, realtech improves the physical world that we live in today by embedding technology into how place is imagined, created and operated.
Since 2013, entrepreneurial activity in real estate innovation has expanded rapidly, with venture capital investment in the sector growing from US$500 million to US$20 billion globally in 2018.
Notably, 60% of venture investment into the sector came from the Asia-Pacific during this period.
For Australian businesses, realtech presents a technology opportunity that moves beyond simply selling and marketing online and digitising business processes.
Realtech will help small-to-medium entrepreneurs to have a fundamentally different relationship with their customers, their employees and the spaces in which they operate their businesses.
For tenants, the commercial office sector is undergoing a radical reimagining.
Along with other co-working concepts, WeWork has defined the ‘Space-as-a-Service’ category. Rather than sign fixed-space and fixed-term leases, businesses can flexibly rent just the right amount of space, for just the right length of time.
Collaboration in a co-working environment is a natural outcome of different businesses working alongside each other, sharing the ideas, opportunities and capabilities.
Research from diversified real estate group JLL has predicted up to 30% of all office space will be flexible by 2030.
For employees, realtech is focused on improving their workplace experiences.
Digital engagement platforms such as WorkWell create better engagement between operators, occupants and tenants and help to manage amenities in the building. Such initiatives improve the daily lives of employees through wellness initiatives and community activities.
Small-to-medium employers leasing fixed traditional spaces should explore emerging realtech alternatives to substantially reduce rental expenses, as well as improving the lives of employees — making businesses more productive and attractive places to work.
The emergence of e-commerce over the last decade has resulted in consumers enjoying an unprecedented expansion of choice, convenience and savings.
At the same time, bricks-and-mortar retailers with traditional inventory management and supply chain systems have scrambled to reposition themselves to stay relevant.
‘Omnichannel’ retailing has been proposed as a hybrid response to pure online competitors, where established retailers embrace digital marketing and sales channels to create a holistic shopping experience for consumers.
The key challenge for true omnichannel is bridging online and offline experiences, which requires an equally strong understanding of consumer preferences and behaviour in both contexts.
Consumer experience platforms such as Local Measure deliver insights into profiles of customers in-store, facilitate real-time feedback and interaction and integrates with existing systems to better manage customer relationships.
In addition to software, realtech is producing a range of hardware solutions, such as Internet-of-Things sensors that observe shoppers’ on-premise behaviours and guide consumers to optimise their own experiences.
Smart navigation platforms such as PAM move beyond navigation systems and digital signage to create customer experiences that connect visitors with spaces, events and brands in real-time.
Retailers have been on a path of fundamental transformation over the past two decades. Early gains from moving sales and marketing online have been exhausted — realtech solutions now present an opportunity to tightly integrate the online and offline worlds for a true omnichannel experience.
Reimagining everyday lives
For consumers, realtech will continue to become embedded in our everyday lives, whether at work or at play.
Marketplace models that use dormant assets, such as Uber and Airbnb, have become fundamental tools for how we get around in cities and how we find lodging when travelling.
Such technologies offer outstanding consumer benefits and experiences, whilst at the same time making the most of under-utilised, capital intensive assets like cars and homes.
Like WeWork has done for offices, emerging groups such as Hmlet are applying the shared space model to the residential segment, building premium ‘co-living’ facilities where residents have private spaces, access to additional amenities and live as a co-located community.
Such shared asset models offer potential solutions to the challenges of increasing urban density and asset scarcity in cities around the world.
Due to the scale of these problems, we are starting to see technology giants once focused on building new digital worlds now turning their innovation capabilities to our physical environments.
Google has launched Sidewalk Labs to completely reimagine how our urban environments are planned, developed and occupied, starting with a section of the Toronto waterfront.