Fifth Wall co-founder and CEO Brendan Wallace recently provided some helpful context. During the discussion, he offered insight into the present state of property technology investments. Info from Fifth Wall, which manages more than $3 billion of capital. It’s the world’s largest investment firm focused entirely on technology for the built environment. Wallace shared his positive outlook on the future, focusing on recent wins for the sector even with headwinds in climate-focused investments.
Wallace’s comments come on the heels of Fifth Wall’s initial public offerings raising approximately $625 million. The enthusiasm is understandable — shares shot up 42% when they first hit Nasdaq on Wednesday. This strong performance marks a potential inflection point for property tech investment. These investments have run into great obstacles in recent years.
Wallace highlighted some pretty thrilling progress. With new unicorns Juniper Square and Bilt billing themselves as property tech companies, there are plenty more unicorns in the property tech space. Bilt, which offers loyalty rewards for housing, just raised $250 million in funding, increasing its valuation to $10.75 billion. This funding round was led by General Catalyst and GID, with a strategic investment by United Wholesale Mortgage.
Not everything is working out so easily for the industry. Wallace emphasized that the majority of real estate owners are moving in the opposite direction from sustainability efforts. In fact, they are undercutting their own decarbonization efforts and ESG measures. Yet he was seeing a “tangible, adverse sentiment shift” that would affect investments in climate-positive prop tech.
“From my perspective, the real estate industry is still very much at fault for the current 40% carbon emissions. It’s still this industry that has shirked its responsibility for years, and it’s going to cost a lot to decarbonize,” said Wallace. “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.”
Wallace admitted that the past three years have been extremely hard on the industry. He stated, “I’d say we just lived through probably the most challenging three years that certainly I’ve ever experienced.” Our understanding of this vital period has been profoundly disrupted. Consequently, prop tech has experienced record-breaking levels of enterprise value destruction from 2022 to 2024. He continued with a very important counterpoint – incredible creation of enterprise value has occurred over the past year and a quarter.
Wallace remains hopeful with continued local government support improving climate resilience. He’s confident that despite shifting national sentiment against sustainability, local initiatives will continue to flourish. He imagines this federal support would go a long way in saving and improving the property tech scene.
Wallace highlighted the recent IPO of ServiceTitan. This acquisition of yet another cloud-based field service management software company is another encouraging sign for the booming space of property technology. This deal is the latest indicator that investors continue to look for technology solutions. These tools truly can solve for tangible, public-facing challenges in communities of all types and sizes.
Looking forward, Wallace is optimistic that capital will continue to flood into the property tech arena. Climate and resilience investors are beginning to acknowledge both the challenges and opportunities that the market is serving up. Fifth Wall’s mission is to deploy capital at real estate’s most urgent challenges, and they’re doing that as we speak. The corporation wants to be at the forefront of advancing sustainability practices and climate resilience.