Proptech in 2024: Here’s What Stuck

In what was clearly a slow and difficult year for proptech, finding evidence of forward movement in the industry can be a frustrating pursuit. For every tech innovation and funding landmark, adoption continued to be slow and fitful.

Yet, technologies such as artificial intelligence, multifamily renter screening, and climate control for buildings have increasingly been in demand, moving the needle for proptech innovation and adoption, according to entrepreneurs.

“I don’t know that I would say there have been game-changing advances this year, necessarily,” said Janine Steiner Jovanovic, CEO of LeaseLock, a Dallas-based platform focused on eliminating security deposits for rental housing. “A trend that I’m seeing that is exciting is the maturation of AI, which for multifamily rental housing has been around for many years. That’s starting to become very effective due to the amount of data, customers and general use. It’s very important for the industry. There’s an expectation from institutional investors and a requirement based on rising costs.”

In addition, escalating rents are making AI’s ability to create centralized automation more important than ever as a tool to empower renters to access accurate information quickly, Jovanovic said.

Digital twinning has been used in commercial buildings for years, but Jovanovic has seen it move into multifamily marketing, as well. “[It] enables renters to experience accurately what they’re going to get when they show up to tour an apartment or move in if they lease sight unseen,” she said. “Matterport’s acquisition [in April] by CoStar was pretty exciting. I look forward to having the funding to put in the R&D to continue advancing that platform, and I’m anticipating a lot of improvements that are going to be really helpful for the industry, starting probably next year.”

On the financing side of proptech advancements in 2024, there was some definite momentum for startups and venture capital firms raising funds.

In October, Manhattan-based 100, a first-of-its-kind multifamily rental software platform, closed a record $5.2 million pre-seed funding round and a strategic partnership with secure identity company Clear to launch a renter fraud prevention service.

In September, Chicago-based Moderne Ventures, a generalist venture capital and growth equity firm with verticals spanning real estate, finance, insurance and sustainability, raised more than $230 million for its MV Core Fund III, while proptech-focused VC firm Era Ventures secured $88 million for its inaugural investment fund.

Still, did such funding benchmarks necessarily translate into technological innovations?

“We see a correlation between the levels of capital formation and market activity with the use of proptech solutions,” Mike Sroka, CEO and co-founder of Dealpath, a leading real estate management software platform, said in an email. “We’re observing the most activity in private debt, data centers, rental housing, industrial and retail. Savvy investors with long-term capital are also dipping their toes back into office.

“AI has continued to advance, and become a real asset to real estate professionals as they navigate and look to capitalize on new opportunities in today’s dynamic market landscape.”

Dealpath was among those companies advancing tech products in 2024, said Sroka. He pointed to the introduction of Dealpath Connect, which allows investment sales brokers to inject listings directly into qualified institutional buyer pipelines, and to AI Extract, which automatically extracts data from investment sales flyers and offering memoranda to screen more deals and build a proprietary database of market intelligence.

A more general view of what technology advances were in demand from real estate users came in a statement from Ryan Masiello, chief strategy officer at analytics firm VTS.

“Solutions that consolidate several technologies for different pain points are what really move the needle in today’s real estate market,” said Masiello. “Additionally, proptech companies that have been thoughtful with how to implement AI into their offerings have also gotten a leg up against the competition. There’s a lot of noise surrounding AI, which will likely persist, but the clear winners here are those who are taking the time to be intentional with considering how AI can best be a part of their platform, and how it can truly solve problems their customers are facing.”

Despite technological innovations, the proptech sector faced funding headwinds that slowed progress, Masiello added.

“The proptech space continues to mature, meaning the field of providers is shrinking due to challenges in obtaining funding and increases in M&A activity,” he said. “Ultimately, we see this as positive for the industry given that the solutions that remain have proven themselves to be ‘must-haves’ — platforms that solve multiple challenges and help customers consolidate and simplify their tech stack, which has also made it easier for real estate professionals to vet and prospect solutions more effectively.”

As extreme climate conditions impact the world, real estate took particular note in the last year of environmental issues involving buildings, said Aaron Tartakovsky, CEO of Epic Cleantec, which sells a sustainable on-site wastewater platform for owners.

“I think it’s a topic that largely used to be relegated to some more environmentally minded developers, or maybe a foundation for whom that was a priority,” Tartakovsky said. “But now we’re seeing it become pretty mainstream, and I think that is a trend that’s going to continue into the next year and the years to follow.”

That interest is driven to a large extent by local government mandates rather than purely real estate profit concerns, he added.

“If you look at the amount of cities and states, for example, embracing water reuse regulations, San Francisco was the first city in the nation to actually require that all new large buildings had to have on-site water reuse,” Tartakovsky said. “But we’re seeing cities like Austin mandate a new program. There’s eight states and the District of Columbia that are all basically developing programs at the same time. And then when you see headlines like New York City issuing drought warnings for the first time in 23 years, we start to understand that these increasingly unpredictable weather patterns that we’re seeing are forcing us to have to rethink how cities are designed.”

As far as any individual who was a game-changer this year, Tartakovsky named OpenAI CEO Sam Altman, an entrepreneur outside of the proptech realm whose work has had an enormous influence on everything, including the on-site building maintenance workforce.

“Obviously, AI and machine learning have been around for a long time, but to see how it has just entered the public lexicon in a brand-new way has been pretty unprecedented,” said Tartakovsky. “There’s not a single department at my company that doesn’t in some way embrace tools like ChatGPT or Claude or all sorts of tools out there. In fact, our own operators, the folks who are out there turning wrenches on job sites, they’re also using AI to make our systems more efficient and to make their operations more streamlined. These are certified water wastewater operators who you do not necessarily always think of as people on the front lines of technological adoption, but in our case we’ve seen that they’ve used these tools to make their jobs easier.”

Jennifer Nuckles, CEO at R-Zero, a South Salt Lake, Utah-based environmental health and workplace experience platform for buildings, agreed that municipal mandates have pushed demand for tech advancements in her field.

“Rising energy costs and regulations like New York City’s Local Law 97 are pushing building owners to adopt technologies that cut carbon emissions and enhance operational efficiency,” said Nuckles in an email. “These pressures have accelerated investments in smart building systems that use automation and AI to transform raw data into actionable insights, optimizing energy use, improving tenant satisfaction, and preserving long-term asset value.

“In this environment, energy-efficient upgrades and sustainable operations have become essential for building owners to remain competitive and future-proof their assets. The convergence of tenant expectations, regulatory mandates, and economic pressures has established proptech as a critical enabler of the next generation of commercial real estate.”

Philip Russo can be reached at prusso@commercialobserver.com.