Brendan Wallace is the co-founder and managing partner of Fifth Wall. We spoke to him recently to get his take on where the property technology industry is today, and where it could headed. Fifth Wall, a venture capital fund managing over $3 billion, stands as the largest investment firm focused on technology for the built environment. Treading a delicate national and territorial landscape, Wallace rings notes of both optimism and caution about the moment we’re in.
Fifth Wall, meanwhile, raised approximately $625 million in its IPO. It had quite the debut on the Nasdaq, with shares surging 42% on their first day. This encouraging news comes as evidence continues to build that investment in property technology is at an all-time high. Homegrown new unicorns—like Juniper Square and Bilt—are at the forefront. Bilt recently completed a $250 million round in July, at a stratospheric valuation of $10.75 billion. The success of that endeavor highlights the remarkable opportunity to innovate within the sector.
Even with these encouraging signs, Wallace noted the serious obstacles that have developed over the past few years. He noted that many real estate owners appear to be deprioritizing sustainability, decarbonization, and environmental, social, and governance (ESG) standards.
“Many climate funds are struggling to raise. Many real estate owners are deprioritizing sustainability, decarbonization and ESG, and there is a palpable, negative sentiment shift that has set on climate-related prop tech,” – Brendan Wallace.
Wallace is concerned that if this trend continues, it could stall momentum for carbon-reduction initiatives within the built environment. Yet, as he notes, this sector is to blame for 40% of all emissions. He added that the industry has a long history of abdicating its duty on this point.
“My view is the real estate industry is still responsible for 40% of carbon emissions. It’s still this industry that has shirked its responsibility for years, and it’s going to cost a lot to decarbonize. It’s a lot of money, and capital is going to flow into that space … which is one of the reasons why we’re still deploying capital, because we’re the only ones,” – Brendan Wallace.
The property technology sector has, in recent months, suffered some huge blows recently. Wallace points out that the years 2022 through 2024 have been particularly brutal. And he was right to stress how much enterprise value has been destroyed in this period—that truly has never been done at this level. But, as I said, he’s very bullish on a return of the property tech investment boom.
“The amount of enterprise value destruction that happened to prop tech was unprecedented from 2022 to 2024, but the amount of enterprise value creation that has just happened in the last 15 months has also been unprecedented,” – Brendan Wallace.
Wallace drew attention to the IPO of ServiceTitan, a cloud-based field service management software company. He views it all as good news indeed, a sign of better times returning to the industry. He believes that despite national policy shifts regarding climate, local governments continue to support sustainability and climate resilience initiatives.
Fifth Wall has continued to push money into property technology companies amid widespread skepticism across the industry. Wallace acknowledged that they are moving quickly to deploy capital when other people might not because of the bad market mood around climate-related investments.