Brendan Wallace’s ambitions are starting to seem almost limitless. His LA-based venture, launched by Wallace and co-founder Brad Greiwe less than seven years after him, already manages his $3.2 billion in assets. But Fifth Wall, the company that claims there are huge financial gains at the intersection of real estate and technology, isn’t worried about burning that capital. Hard-hit investors like CBRE, Starwood and Arbor Realty Trust don’t seem worried either.
Just last month, Fifth Wall closed its largest-ever venture fund focused on real estate tech startups with $866 million in capital, and announced plans to open a $500 million fund aimed at decarbonizing the real estate industry in early 2022. Don’t worry it’s closed toFifth wall on top of these two efforts Also entered Europe last February with an office in London and raised €140 million in funding. (There’s also a large office in New York, an office in Singapore, and a hub in Madrid.) Especially for the fact that office buildings have been shocked by a combination of layoffs, work-from-home policies, and rising interest rates, Wallace said. is an opportunity.
In addition, Wallace has already expanded around infrastructure, including the purchase and construction of “utility-scale solar, microgrid and wind farms,” which the Fifth Wall plans to both invest and invest in, including Asia. I see many opportunities he wants to pursue, including. he provides the funds.
Especially for companies that currently have 80 employees, they include home flip company OpenDoor, property and casualty insurer Hippo Insurance, and SmartRent, which sells smart home technology to apartment owners and developers. Nothing has been spared by public market shareholders. Still, when you talk to Wallace and see the world he paints, it’s easy to see why investors keep pouring money into his team.
We spoke with him today in a chat edited for length.
TC: Why are so many real estate investment partners investing so much in you at such a difficult time for real estate, especially office buildings?
BW: It’s the same thesis when we were founded. That means the US has her two biggest industries, real estate and technology, which are worth 13% of US GDP, and they are colliding.Explosion of economic value [as] We’ve seen this kind of supercycle of proptech companies growing up. Now this additional layer is being unearthed around climate tech. The biggest opportunity for climate technology is actually the built environment. While real estate accounts for his 40% of his CO2 emissions, the venture climate tech venture capital ecosystem has historically put about 6% of climate change VC funding into real estate industry technology. rice field.
How do you designate which of the major proptech funds or climate funds will fund a particular startup?
The way we define proptech is a technology that can be used in real estate construction or the hospitality industry, so it has to be a ready-to-use technology. There are many different things to this. We have leasing, wealth management software, fintech, mortgages, operating systems, keyless entry, etc., but they are not necessarily decarbonizing the real estate industry. This can be a secondary benefit, but it’s not the central focus. The central focus is that this industry, which has been very slow to adopt technology, is now starting to do so. Already, he has six investee companies listed on the stock exchange, and he has been in business for six years.
[As just one example], do you know how many multi-dwelling units have smart devices inside today? 1% of all multi-dwelling units in the US have a single smart I have a device. A major migration is underway right now, making everything smart in the building. And we are at that dawn now.
But I believe the opportunity for climate technology is a multiple of that, simply because the costs involved in decarbonizing the real estate industry are so high.Decarbonizing the US commercial real estate industry cost is estimated at $18 trillion. That’s just the US commercial real estate industry. To put it into perspective, with a US GDP of around $22-23 trillion, we need to decarbonise the real estate industry over the next 20 years. GDP over the next 20 years just by decarbonizing our physical assets.
What are the main spending areas you are focusing on?
I’ll give you one very specific example that is literally concrete. If Concrete were a country, he would be the third largest CO2 emitter on earth, after the United States and China. 7.5% of her CO2 emissions in the world come from manufacturing concrete. After water, it is the most used substance on earth. This raw material is the input to all our infrastructure — all our cities, all the homes we live in, all the buildings we operate in — and his CO2 emissions in the world. 7.5% of Therefore, there is now a race to identify opportunities to make cements that are carbon neutral or carbon negative. Along with Bill Gates and Jeff Bezos, he actually invested in a company called Brimstone, which he says is one of the major spending categories where his $18 trillion needed to decarbonize real estate. Because they see opportunities.Then you can go further down [list]glass, steel, cross-laminated materials, etc., all materials used in building construction.
Immediately, this is a question of space reclamation, but what do you think will happen to the underutilized office space in this country in the next 18-24 months? When I think about it, I recognize it’s particularly extreme in San Francisco.
You can’t draw much conclusions from San Francisco alone. San Francisco is probably the most affected city. I don’t see San Francisco as the canary in the coal mine for the US office industry. But with that said, I think we’re in a moment where the pendulum is clearly swinging in the direction of hybrid work and companies shrinking their physical footprint. And some employees actually want to go back to the office, and the CEO said, “We’re going to teach, build a culture, and drive the kind of operational efficiency that we used to have in a fully remote office.” is difficult,” he says. So I think he’s probably a couple of years away before the pendulum swings back again to companies cutting staff to physical offices. We think sentiment and demand for offices are artificially low.