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Real estate

How consumer behaviour is driving change in proptech

Jeanne Casey
Global Head of Proptech and Innovation
big city view from top at night

The 21st century has been one of technological revolution. The cost of computing power has dramatically fallen while broadband and mobile connectivity have become ubiquitous. These phenomena have given rise to new technologies and business models that have quickly permeated every part of modern life. Technology continues to change the way consumers and businesses behave, their real estate needs and their interactions with the built world. While real estate has historically lagged other sectors of the economy in its digital transformation, change is rapidly underway.

New technologies and tech-enabled business models, referred to as ‘proptech,’ have emerged that serve to improve the built world. To remain competitive in this dynamic environment, real estate investors and operators need a fundamental understanding of proptech and the digital trends that will continue to shape the future of our industry.

Proptech drivers at a glance

At Nuveen Real Estate, we monitor trends and proactively incorporate proptech into our investment and operational strategies to create value for our stakeholders. The primary drivers influencing proptech include: (1) consumer behaviours, (2) efficiency enablers, and (3) technological advancements.


The accompanying graphic (Figure 1) maps some of the standout proptech themes which fall into the three drivers mentioned above. Our sector teams incorporate these into their strategic plans and determine how soon we anticipate their impacts on real estate will be felt.

The circle of proptech disruption

Consumer behaviours

Omnichannel retail

Omnichannel retail is the evolution and convergence of brick-and-mortar retail and digital commerce. Digital commerce was largely considered a threat to physical retail by traditional investors. However, technology has enabled physical retail to be more dynamic, uncovering new value propositions for the sector. For example, technology has enabled the creation and capture of more data than ever before on how brands and consumers are interacting within a space. At Nuveen, we are embracing new use cases for retail as well as non-traditional retail tenants such as digitally native brands.

Over the past few years, the activity of buying and selling goods online has been largely responsible for driving record demand for delivery services enabled by logistics assets. Conventional retail used to co-locate marketing, transaction and distribution services by selling products at physical stores – consumers were effectively their own ‘last-mile delivery’. As e-commerce has unbundled these services by digitising the marketing and transaction of goods, demand for distribution services (supported by logistics real estate assets) has surged.

The COVID-19 pandemic accelerated the dominance and growth of online shopping. The trend was well underway for decades but exploded during the pandemic, given it was the only channel connecting retailers and consumers amid lockdowns. While differences exist across geographies, e-commerce penetration, measured by sales as a share of total retail sales, has grown two to five times faster globally in 2020 than before the pandemic (Figure 2).

Growth of e-commerce penetration rate


The shift was even more pronounced for fashion retail: in just eight months to September 2020, the world’s online penetration nearly doubled from 16% to 29%, jumping forward six years of growth1. Even the luxury segment, which has been slow to embrace online retailing, had little choice but to adopt digital channels. The likes of Gucci announced a digital-first strategy, with extraordinary online sales largely mitigating the double-digit instore decline (Figure 3).

Sales by channel – 2020 vs. 2019 (% change)


As online channels prosper, physical retail continues to feel the pinch. One example among many was Inditex’s plan to close 1,200 stores worldwide and increase their online sales to 25% by 20222 . While the worst seems to be behind us, e-commerce will remain a key engine of growth for global fashion retailers, meaning the struggle of brick-and-mortar business will persist for some years to come.

Rent tech

Financial technology, or fintech, has brought innovations from the financial services industry to the built world. Fintech solutions for real estate are helping to lower transaction costs, reduce friction, enable innovations in payments, increase transparency and improve accessibility.

Recently, fintech innovations have started to emerge in proptech. A growing number of technology companies are building solutions to address the U.S. housing affordability crisis and improve the accessibility of real estate. Consumers are demanding similar levels of low friction and high flexibility that have been made widely available in many types of financial transactions. Sometimes dubbed “rent tech”, multi-family owners and operators now have new tools in their belt when it comes to offering residents flexible payments, alternatives to security deposits, and credit building services.

At Nuveen, we are piloting rent tech tools that both remove friction from payments and provide additional benefits for our residents. Some of these pilots include digital payments, security deposit alternatives, rental rewards programs and credit reporting and coaching.

Consumers are demanding similar levels of low friction and high flexibility that have been made widely available in many types of financial transactions.

Flex space

The rise of subscriptions and the ‘as-a-service’ economy are profound consumer innovations and real estate disruptors. The premise of the ‘as-a-service’ model is to use the power of technology to enable the delivery of a continuous service, rather than one-off transactions. Importantly, it shifts the emphasis from ownership to access. The real estate industry is evolving to be as focused on providing high quality user experiences as we are on transactions.

Over the last decade, office occupiers had started to expect more from landlords than simple physical space. That trend has dramatically accelerated due to COVID-19’s impact on remote work and the hybrid model that is largely here to stay. These shifts have reinforced office owners’ need to differentiate their offerings by giving tenants greater flexibility, optimising the experience of the space and supporting the health and well-being of office end-users.

Mobile applications and software platforms have helped achieve these goals by providing valuable services throughout the pandemic, many of which are likely to remain commonplace and increase adoption in the post-COVID world. Technology has helped property teams coordinate efforts for tenants with functionality such as managing occupancy through room bookings, soliciting feedback through tenant surveys, sharing building safety protocols and engaging tenants remotely.


Real estate crowdfunding platforms have been around for most of the last decade. Although few have reached noteworthy scale, the largest players have grown significantly and are institutionalising (i.e., acquiring broker-dealer licenses). Transaction sizes are growing and increasingly coming from more sophisticated investors seeking the higher-quality investment opportunities that are now available directly to retail investors. The crowdfunding space is benefitting from tailwinds, like retail investors’ demand for access to alternative investments. In the coming years we expect these platforms to increasingly look to (1) blockchain as their back-end technology and (2) opportunities to build secondary marketplaces to generate more liquidity options.

Virtual tours

As camera technology has improved, virtual tour technology has become available to the built world. When the pandemic forced the real estate industry to revisit its operations, everything from tours and leasing to maintenance requests suddenly had to be reimagined to ensure social distance. During this time, many of us have adapted to viewing, leasing, and even buying real estate online. While sight-unseen decision making is not for everyone, virtual tours and leasing will remain a growing area of focus, especially for residential real estate.

At Nuveen, we proactively think about the experience our residents have from their first touchpoint with our properties. Increasingly, that first touchpoint may be generated online or facilitated through a digital tool like a virtual tour. We have begun to offer virtual tours and interactive site maps at many of our properties that help our future residents explore spaces online or physically navigate a site on their own. Furthermore, we are leveraging technology to centralise leasing and maintenance across our properties in markets where an operator has critical mass.

More to come

While proptech is still in its infancy, the current drivers of the sector demonstrate the long-term opportunities within. The shifts in consumer behaviours as a result of COVID has meant real estate has embraced technology much faster than prior to the pandemic. This digital revolution in real estate showcases the appetite from owners, investors, and consumers for a greater affinity between real estate and technology to provide a more digitised retail experience, while other technology has given way to greater flexibility in services, financing and purchasing real estate.

Consumer behaviour is only one of the drivers behind proptech, with this article being the first in a three-part series identifying where the innovations developing proptech are and why they are impacting the sector.

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1 McKinsey

2 Inditex corporate announcement, 2021

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