Proptech in 2025: Principals and Investors Sound Off

Entering 2025, proptech is set to grow and consolidate in unprecedented ways, as investors and entrepreneurs attempt to gauge the effect of artificial intelligence and other digital integrations on real estate demand for greater return on investment.

That’s according to proptech investors, principals and other participants, who described the upcoming year as one filled with high expectations that AI will continue to accelerate data processing even as the industry faces challenges in vertically integrating the digital information flood and converting it to more cost-effective and efficient operations.

The following opinions cover those issues and more as proptech further penetrates the real estate industry.

“There’s two major themes that we’re tracking for next year,” said Casey Berman, founder and managing partner at proptech venture capital firm Camber Creek. “The first is the actual implementation and scaling of what we’re calling the new wave of automation. The mainstream media is talking a lot about AI, which we classify into the bucket of automation. We view this first bucket as real estate companies, service providers and the industry in general not just looking at it, but culturally changing and adopting purpose-built solutions to do our business more efficiently.

“The second thing we’re tracking for 2025 is further consolidation in the market, which we view as very beneficial to the end user. That end user being real estate companies, the service providers, and in a lot of cases the actual full end user — the residents of the apartments, the tenants of the office buildings and so on.”

Despite the spike in interest rates in recent years, startup valuation multiples went up too fast, leading to a recalibration in 2024, Berman said. That recalibration is healthy for the overall real estate ecosystem, as several companies attempt to solve a specific problem, leading to one of them competing successfully with incumbent platforms, he added.

“What we’ve seen in the past are amazing examples where the startups will be competing with each other,” Berman said. “Meanwhile, the incumbent platform has massive market share. What works very well to bring innovation and change to the industry is when the startups band together and can compete at the scale of the larger platforms. VTS is a great example. Early in their growth they merged and they’ve become the market leader in their sector. So we expect a lot more consolidation and merging to create startups, but startups with very significant scale.”

While Berman doesn’t expect exponential growth in the number of startups that actually implement AI, compared to those that claim it in their pitch deck, he does see practical implementation slowly growing.

“More importantly, the customer is taking notice,” he said. “So, in real estate tech, I think the biggest opportunity is for the customers to drive the change, and we see it as a cultural shift.”

Rather than point to real estate sectors such as construction in predicting the need for digital growth, Berman described his firm’s view as being focused on workflows.

Likewise, Frank Spadafora, real estate industry principal at Intapp DealCloud, a Palo Alto, Calif.-based real estate deal and relationship management platform, sees a specific through-line for technology in real estate in 2025.

“From our lens, one of the areas that’s getting the most focus is risk management and portfolio modeling,” said Spadafora. “The drivers for that are some of the macro drivers we’ve seen happening in the industry. We’ve also seen a move towards vertical integration, where they’re moving things like construction and development oversight and asset management in-house. They’re accomplishing that through acquisition, by acquiring operating partners, and then also in sourcing and building asset management teams in-house.”

The result is more active management of assets and data, he said. 

“How do I actually manage the data that comes all the way downstream from property management?” Spadafora said. “I think that’s been a trend we’ve seen. We see our clients still solving that in a number of different ways. Some of our most sophisticated clients are sourcing this with their own data and analytics teams and they’re leveraging infrastructure like Snowflake [a cross-industry data management platform] or in a data warehouse approach. But they’re also partnering with other vendors that can help them get all of that property management data, because a lot of that is not controlled. You’re outsourcing it to every brokerage.”

The macro trend of collapsing a company’s tech stack, generally into one platform, is aspirational at best. The trend is nevertheless still moving the industry away from a point solution ecosystem, said Spadafora.

“So on the DealCloud side, what we’re seeing is our clients are asking us to cover investor relations fundraising from the time that they start raising capital, collect all of the asset and financial data as they bring it through a deal process, and then cover their asset management teams, which are protecting the investment balance sheet level of that data,” he said.

Another macro proptech trend in 2025 will be its ability to deliver return on investment (ROI) for owners, said Dan Wenhold, partner in the software services investment team at venture capital firm Fifth Wall.

“It’s back to basics, and we’re starting to see this already,” said Wenhold. “I think capital has been hard to come by for many startups, but the ones where we’ve seen successful fundraising ability — and, more importantly for the actual large owners and operators, a willingness to partner — is where there’s real ROI. Effectively, the companies that will be successful in `25 are the ones that have a direct impact on a property level net operating income [NOI], either by revenue expansion or generation, or operations and expense management. We’ve seen this in multifamily, in commercial [office], and I think there’s going to be a real refocusing and sharpening of the pencil around companies that are serving this. It doesn’t necessarily mean that it’s going to be only software that will do this, or only fintech. I think there’s actually gonna be a combination in a lot of cases of software, plus some tech-enabled services.”

Wenhold also predicts more mergers and acquisitions (M&A) — for good and bad reasons.

“I think 2025 is going to be a big year for M&A within proptech,” he said. “It’ll be two types: the one plus one equals three, and the ‘Hey, we can’t raise capital. Who wants to acquire our tech, and we’ll send a couple of our engineers or the founder to go along with that tech?’”

He also sees AI contributing more than ever to sourcing tenants in the multifamily and office sectors.

“We’re still in an environment where owners and property managers are very hungry for tenant acquisition and need help acquiring users of space,” said Wenhold. “Owners hunger to find solutions that are able to help them acquire tenants. AI is really awesome for those things. Obviously, using AI is going to continue to accelerate the number of solutions that are available and help automate what previously might be outsourced but can now be done entirely through some type of software. And I think commercial is the same thing, as it’s well known that commercial occupancy is down.”

Other experts emphasized AI’s growing impact in 2025 and beyond.

“AI, AI, AI,” Kat Lau, CEO and co-founder of Stuf, a remote storage services firm, said in an email. “It’s widely known as the biggest thing since the internet, and it has already emerged as an essential tool in commercial real estate. From my experience working with owners and operators, I’ve seen the more forward-thinking groups using AI to handle one or two specific tasks, and it’s saved them hundreds of hours of time.

“However, 2025 will be the year proptech AI evolves on a platform level — capable of managing multiple jobs and handling end-to-end processes, rather than solving isolated problems. We’ll see a stronger emphasis on AI-driven solutions that go beyond data analysis to fully automate operations across various real estate sectors. AI will enable real estate owners and operators to achieve unprecedented levels of efficiency and speed if they dare to try.”

Christopher Yip, a partner at RET Ventures, a multifamily-focused venture capital firm based in Park City, Utah, also banged the drum for AI in 2025.

“AI will dominate almost every corner of real estate technology,” Yip said. “AI is now the dominant tech trend in real estate, which is surprising because of all the obstacles it has faced. Many AI technologies are just a year or two old, and the real estate data it analyzes is often not well structured. Despite this, AI is already making a significant impact on real estate operations — from handling resident interactions to predicting maintenance needs to optimizing construction schedules — and we can expect its impact to continue growing this year.”

However, as Chris Snyder, vice president of engineering at San Diego-based property management rent platform Zego, points out, AI’s impact could remain uneven for a while longer. 

“AI development in property management relating to the ongoing RealPage lawsuit is expected to slow advancements in AI for rental pricing as the industry awaits the legal outcome,” Snyder said in an email. “But innovation in other areas such as utilities, resident experiences and marketing will continue to thrive. AI presents significant opportunities for property management, but resistance to adoption will likely grow until the regulatory landscape becomes clearer.

“Additionally, AI and predictive machine learning models are set to expand within the fraud prevention space. As fraud risk and attempted attacks increase — driven primarily by bots and other high-volume methods — more sophisticated solutions will be required to counter these threats effectively.”

A trend that will also continue to grow in proptech in 2025 is sustainability, said Matt Ellis, CEO of Measurabl, a San Diego-based real estate platform for ESG.

“Sustainability will continue to redefine investment and insurance strategies across the real estate industry,” Ellis said in an email. “Stricter regulations like New York City’s Local Law 97, rising energy costs, escalating climate risks, and ESG-aligned capital flows — projected to surpass $40 trillion by 2030 — will continue to drive a sharper focus on compliance and decarbonization.

“In prioritizing decarbonization, the industry stands to benefit from reduced energy costs, NOI improvement, superior attraction of discriminating credit tenants, and greater access to capital (due to lower perceived risk). But these outcomes will only be achievable with a strong data foundation. Technology makes the business case for sustainability stronger by delivering the data, benchmarking and insights needed to adapt, measure impact, and maintain control in the face of evolving market dynamics. In a reality where sustainability is directly tied to capital markets and asset performance, technology is not just a tool — it’s the engine driving value, adaptability and growth in 2025.”

In his response, Colm Nee, CTO at Enlighted, a Sunnyvale, Calif.-based internet of things (IoT) platform, wrote that he sees the connection between AI and sustainability growing.

“I predict that in 2025, more buildings will use AI to optimize space and spending on energy, the single largest operating expense in commercial office buildings,” said Nee. “AI-enabled IoT sensors installed in buildings can generate, continuously and passively, data on room temperature, energy use, and the movement of employees and assets. AI and machine learning algorithms analyze this data to gain deep insight into how energy and spaces are used, by how many people and at which times.”

Of course, funding for proptech companies is always a major topic, and 2025 will be no different, said Mike Sroka, CEO and co-founder of Dealpath, a San Francisco-based investment deal management platform.

“Venture capital, growth capital, and private equity are active, and there are many companies that want or need additional capital to support their growth plans,” Sroka said in a statement. “With transactions starting to come back, so too have budgets and needs to support investment programs. Software and data solutions enabled with AI for more effective and efficient deal matching, screening, underwriting and execution will be in the spotlight.

“However, proptech is in a consolidation phase and the total number of startups is likely flat to down. 2024 was a year of separation in proptech, with companies creating the solutions that bring real client value in the spotlight and experiencing efficient growth. Those that aren’t are fading away. This separation has established clear winners and losers in the space, which enables the industry to truly benefit from all the technological innovation taking place today.”

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