Surviving the Commercial Real Estate Downturn: Is Proptech in Danger?

Unprecedented vacancies have littered the commercial real estate industry because of significant challenges due to the economic downturn. There has been a shift towards e-commerce, remote work, and a rise in flexible office spaces since the COVID-19 pandemic; causing a sharp decrease in demand for traditional office buildings and retail spaces. This trend has left notable repercussions within the AEC industry and the property technology (proptech) sector alike. With a lowered need for traditional commercial real estate, a new demand for innovative solutions is needed to accommodate the changing needs at hand. For example, a new solution for companies would be redesigning office spaces to suit the needs of remote or hybrid workers.

Due to the current optics of the space, real estate companies are becoming more prudent about spending, which will have a direct impact on proptech, as many of its biggest investors reside within this sector. Reduced investment activity in order to conserve expenses on shoring up core assets will leave proptech startups and their fundraising on the backburner.


With an increase in vacant space, developers and property managers will become less willing to invest in technology solutions, in this case proptech. This stagnation of real estate growth will remain steady until proptech solutions are utilized to alleviate some of the current challenges that are being faced by the industry. By developing new tools and technologies to support the shift in the industry, proptech companies can help these property managers and developers to adapt to the changing market conditions and begin to plan ahead of the curve.

Despite the industry-wide struggles, there are some bright spots to consider within the current state of the built world. If valuations continue to decrease, this will make it more accessible for investors to mobilize capital into startups. Clients of proptech solutions may also start to increase their technology investments to increase their efficiency and offset these costs with savings in other sectors of their business. Overall, the unprecedented vacancies within the real estate industry do pose challenges within the built world, especially towards the stunted growth of proptech. However, there is an opportunity to enact innovative technology solutions to navigate the rough waters of the current economic state and emerge stronger for resilience against future obstacles.

BuiltWorlds' 2023 Buildings Conference is swiftly approaching, with events beginning as early as May, 16. Within the conference, there will be a panel called "Intersection of ConTech and PropTech", which will dive deeper into the content that was discussed within this piece. Speakers will take a more granular look at the intersection of proptech and contech and how they coexist within the built world.