The speed and depth of the two processes need not coincide. According to these authors,
we are experiencing a period of acceleration of the former human-replacement effect. This
process is creating tensions that are surfacing in the form of income stagnation among
workers whose tasks are easily replaced by machines or software.
A solution to the labor-market problem of automation in the short- to medium-term—
according to Levy and Murnane (2013)—involves retraining these workers so that they can
compete with highly-educated employees for new opportunities.
Some technological innovations are hard to measure, and generate new activities that
cannot be monetized,thus situating themselvesoutside of the realm of economicmeasurement.
By following instructions on YouTube, it is now easy to figure out how to grow a vegetable
garden, brew beer or learn French-style cooking. Social media is substantially changing our
leisure time.Similarly we can now devoteourselves to reading blogs andother unpriced online
resources. The implications of the widespread proliferation of such unmonetized innovations
on GDP and consumer welfare are as-of-yet unagreed upon. A team of economists
(Brynjolfssonet al., 2019) have recentlyassigned large economic valuesto the use of Facebook
and other innovations. While a consensus about the accuracyof such valuations willtake time
to emerge, an even moredifficult question to answers is: does theconsumption value of these
innovations compensate for the loss of jobs IT generates in other arenas?
Economic tensions are also surfacing in real estate markets. Many older industrial regions
are struggling to adapt to the new economy, and commercial real estate (CRE) and housing
values there lag behind those in more dynamic areas. On the flip side, metropolitan areas that
specialize in IT, media, the medical sector and biotech are booming.
Besides the obvious ebb and flows of the local economies that sustain real estate cash
flows, technology is changing the sector from the inside out. After all, buildings provide basic
economic services, the delivery of which is itself subject to technological change. Countless
innovations are reaching the market every year, in a process of creative destruction. Without
being exhaustive, software and online real estate applications are now available for: property
and asset management, leasing, monitoring and security, site selection, zoning, design, 3D-
visualization, building-operations management, financial underwriting, price benchmarking
and indexing, legal and accounting work and so many more areas. Some of the numerous new
applications, products and online platforms will not survive the market test. And yet, a few of
them will have tremendous impacts in the ways we experience, finance, operate and transact
commercial properties. In addition to these software products and online platforms—on a
parallel track—big data is also starting to change practice in urbanism and real estate
(Hughes, 2017;Barkham et al., 2018).
As change pervades the property industry, only a relatively few research pieces are
illustrating or—more importantly—providing insights about the likely economic and
financial impacts of IT penetration. Similarly, only a few papers have so far addressed the
economic viability of the alternative business models of the tech startups targeting real estate
markets and transactions.
In this paper, I choose to focus on three separate arenas where the IT revolution—
sometimes referred to as Proptech, as applied to real estate—is having discernible impacts:
sales and brokerage, space commoditization and online finance platforms. I describe some of
the most salient emerging firms and market niches, with a focus on the United States. The
United States is pioneering many of the innovations, so that lessons learnt here can actually
be useful to an international audience of researchers and practitioners.
In the paper, I invite the reader to think seriously about the economic fundamentals that
may—or may not—sustain new business models in Proptech. Real estate economists and
investors alike need to be critical of new business models, especially when they are being
aggressively marketed by their promoters. Trying to avoid any hype, I provide thoughts