VCs, Principals and Analysts Sound Off – Commercial Observer

If proof is needed of proptech’s building importance for the real estate industry going into the new year, the stampede of commentary in response to PropTech Insider’s request for 2024 proptech predictions might be all that is required.

While the real estate industry is known for its boundless — and sometimes foolish — optimism, the last few years of COVID, high interest rates, and foreign wars have tempered the expectations of many who responded by email and otherwise, including those in proptech.

However, despite challenges old and new facing real estate and proptech, the predictions by proptech leaders sampled here offer hope that demand for technological innovation will override any obstacles that may arise in 2024.

The demand for proptech and where it will come from elicited a number of opinions, with investment and innovation in smart buildings, overall infrastructure needs, and the continued growth of artificial intelligence (AI) dominating.

“In 2024, proptech investment will be driven by critical infrastructure investment,” said Troy Harvey, CEO of PassiveLogic, a digital twinning platform for autonomous buildings. “SaaS companies selling non-business-critical solutions will struggle to invite investment as they will compete with other high interest rate vehicles. The focus will shift to higher-gain, long-term durable goods with intrinsic value. Proptech products that address critical infrastructure and building needs will see increased interest and investment.”

Business sector demand for proptech will come from “life sciences, manufacturing, higher education, health care, and industrial buildings,” said Nick Gayeski, co-CEO of Clockworks Analytics, a provider of automated building software. “There will be continued demand for innovative solutions in facilities management. Commercial real estate will continue to bifurcate into top-tier buildings with demands for scheduling, tenant engagement, energy and sustainability innovations, while much commercial real estate suffers from low occupancy, reduced budgets and asset value.”

Agreeing that demand will come from “every sector to some degree,” Cameron Steele, CEO at prophia, an AI data-driven commercial real estate portfolio platform, added that, “the underlying question is which markets are going to generate strength and therefore capital for innovation? Each sector from office to industrial is faced with different challenges, but there is no better time than right now to get ahead of market challenges. This is particularly true for struggling classes like the office sector.”

Caroline Frith, chief strategy officer of Cove, an integrated tenant experience platform that works across portfolios, sees demand coming from everywhere in 2024: “We continue to see customer demand to leverage proptech across asset classes.”

However, Frith added a note of caution: “If interest rates remain high, CRE transactions will continue in a holding pattern with…