Brendan Wallace, the co-founder and CEO of Fifth Wall, recently addressed the state of the property technology sector, emphasizing its resilience despite significant challenges. Fifth Wall, the largest investment firm in the world dedicated to technology for the built environment, has more than $3 billion in capital under management. As the industry deals with the fallout of climate, Wallace is hopeful new climate tech investments will be directed toward the property tech sector.
Wallace’s insights are a breath of fresh air, especially as the real estate industry has recently come under fire for its environmental injustices and contributions to climate change. He stressed that the sector was the leading cause of global carbon emissions. This statistic is a reminder of how urgent our work for innovation and sustainable technology solutions deployment is.
I’m of the belief that the real estate industry is up to blame 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,” said Wallace. He noted that significant investment will be required to address these challenges, stating, “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.”
It’s no secret that the last few years have been a shaky period for the property technology industry, reflecting the plight of the larger real estate ecosystem. According to Wallace, “I’d say we just lived through probably the most challenging three years that certainly I’ve ever experienced.” For starters, most of the climate funds are still struggling to raise capital at this point in time. At the same time, real estate owners are taking their eye off of sustainability and ESG-related programs.
Many climate funds are struggling to raise. Too many real estate owners are focusing sustainability, decarbonization, and ESG initiatives at the back of the stove. As a result, we’re experiencing an unmistakable and unfortunate turn against the climate-related prop tech. Wallace remarked.
Even with these obstacles, Wallace was hopeful about the future of property tech investing. Among them, he cited unicorn births like Juniper Square and Bilt. Together, these companies show strong momentum and a bright future for the sector. Bilt, an industry disrupter that allows consumers to earn housing-based loyalty rewards wherever they rent or buy, raised $250 million in July at a $10.75 billion valuation. ServiceTitan, a cloud-based field service management software company, has been on a recent IPO hot streak. Shares of the company skyrocketed immediately after its Nasdaq debut, closing up a remarkable 42% after raising about $625 million.
“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 been unprecedented,” Wallace stated. This exceptional reversal reflects a property technology renaissance fueled by innovative solutions and solid investment opportunities.
Wallace emphasized the importance of local governments as leaders in advancing sustainability and climate resilience initiatives. In particular, he stated that federal political support for sustainability projects is under threat during the administration of President Joe Biden. On the ground, local leaders are more committed than ever to solving their climate challenges.
The large infusion of public funding from the Biden administration accelerated the already growing movement to decarbonize real estate. Tens of billions of dollars are driving this effort. This funding underscores the importance of industry leading, sustainable practices in property development and management.
New York City provides a case example of the real estate industry’s outsized contribution to carbon emissions. With its compact urban form and deep building stock, the city has a particularly heavy lift to achieve net zero.