Tech-driven services like ride-sharing, scooter sharing, food delivery apps, and co-working have quickly infiltrated the daily lives of city dwellers.
But it’s not just consumers using these new urban amenities who have latched onto the trend.
Venture capitalists have been pouring record amounts of investment into the sector, dubbed urban tech.
Global investment in urban tech totaled more than $75 billion between 2016 and 2018, more than what was spent on traditional sectors like biopharma, according to C.B. Insights. In the U.S., 45 percent of all venture capital went to urban tech-related companies in the three year period, the data shows.
With global populations flooding into urban centers during a technology boom, the pace is unlikely to relent anytime soon.
“It makes sense that urban technology is commanding so much interest from investors,” says Vinay Goel, JLL’s Chief Digital Product Officer. “Where are people moving? Into the cities. We’re seeing major population increases in urban areas around the world. It’s natural for money to flow into places where people are.”
A world of city dwellers
For the majority of people on the planet, cities have become home. In North America, a staggering 82 percent of the population now lives in cities—the highest rate in the world. The worldwide average stands at 55 percent, and is only expected to continue rising.
Meanwhile, technology is reshaping urban real estate, from construction technology – known as ConTech – to food delivery to co-working. The innovations are changing the way real estate is both used and built – from reducing construction costs to eliminating the need for parking spaces.
Mobility solutions are the hottest area of major investment, accounting for 61 percent of urban-tech investment. Ride-sharing platforms like Uber and Lyft; bike and electric-scooter sharing startups; and delivery service apps could eventually transform the urban street grid, eliminating the need for vast parking garages and freeing up more road space for public parks and other spaces. This could have even more of an impact as the advent of driverless cars takes off.
Co-living and co-working are another investor hit, coming in third after food delivery services for capturing the most investor interest.
“Workspace and work habits are changing,” says Goel. “We’ve already seen that you don’t need all your people to be in one central office to be productive, especially in urban areas with congested traffic.”
The construction tech sector is also attracting major investor interest—for good reason. Cloud-based collaboration software, for example, is making construction teams more efficient, which can ultimately drive down personnel costs and speed up project timelines. Improving construction visibility and coordination is especially important as the industry grapples with rising costs. It is likely to ease burdens in bustling urban construction markets, too, such as Oklahoma City, Oklahoma, where the construction pipeline is expected to grow by a full 17 percent in 2018.
“New technologies like 3D walk-through and collaboration tools are already boosting productivity, and reducing the time and cost of construction,” says Todd Burns, President of Project and Development Services, JLL. “These and other innovations can disrupt the way cities are built for the better, by making it faster, easier, and less expensive to build more livable communities.”
More potential for funding and collaboration
Investment is also coming in from the public sector, with many local and federal governments investing in public service technology like WiFi.
“The benefits of more connected, tech-centric cities can extend both ways across private and public partnership, if coordinated with care,” says Goel.
“For example, if a private real estate firm can understand the movement of people flowing in and out of buildings, we can share this data with the public sector to manage demand and supply for public transportation, and with ride-sharing services to ensure vehicles are in the area.”