Brendan Wallace’s Post

OpenAI is valued at $150 billion. While it's difficult to predict if that huge number will continue to go higher, it's a near certainty that demand for computational power will explode. Data centers are the perfect example of a real estate business masquerading as a technology business, and I think the artificial intelligence revolution is going to beget a massive real estate industry underneath it, very much like the Internet did. The Internet catalyzed a boom in digital infrastructure and computational real estate. Data centers exist today as an industry because of the Internet. (The Internet feels like this amorphous thing...the "cloud." But it actually literally exists on physical servers that need to be cooled, powered, and housed. It's real estate.) We're at the beginning of a super-cycle: As AI expands, no matter what the landscape of AI companies looks like or what valuations are, there's going to be an explosion in demand for computational power. I think when talking about AI, it's not always obvious to see that underneath all of the hype and excitement in technology is the physical stuff that makes the technology possible...which is the real estate industry. I think the smartest people in the real estate industry will see the AI revolution and the digital real estate business as one in the same. #realestate #ai

Next week, the Fifth Wall team heads to Blueprint to host our second-annual Climate Summit. In-person events like these are important opportunities to get our 110+ strategic partners, who are some of the largest owners and operators of real estate globally, in the same room with our portfolio companies, real estate technology startups whose end user is the real estate industry. We bring them together twice per year...at our AGM and Climate Summit. Our AGM is closed to the public, but our Climate Summit is a chance for us to bring the Fifth Wall ecosystem together with other sustainability thought-leaders and integral policymakers to discuss the intersection of real estate, tech, and energy. Last year was fantastic, and I'm looking forward to doing it again. Thank you to Martin Kelly and Blueprint: The Future of Real Estate for hosting us. Hope to see you there!

Did you know Waymo is doing 100,000 rides a week in California as of August? One of our Fifth Wall team members in Los Angeles sent me this photo, since we've been going back-and-forth about autonomous vehicles' impact on real estate... The conversation got started in a video I recorded the other month with Brad Hargreaves from Thesis Driven -- credit to him for getting me thinking in this non-obvious direction about the future of real estate. Brad thinks people aren't taking the trend seriously enough, because of the fake hype-cycle around autonomous driving in the mid-2010s. But when the technology is fully realized, which is a reality, it will significantly impact the real estate market by eliminating the need for car ownership and parking spaces or garages. New asset classes will also emerge to serve these vehicles. Down the line I could also see people willing to commute or take weekend trips much longer distances, if car travel anywhere (level 5 autonomy) becomes as mindless and hands-free as going by train. Then yesterday morning I was reading Nat Bullard's newsletter, and he had a very interesting section about Waymo's ascent in California. After a summer in San Francisco, he found self-driving cars to be a superior experience to human drivers, and he shared some alarming data about Waymo's ascent in California: • 12,617 paid trips in August 2023 • 143,621 paid trips in May 2024 • 400,000 paid trips in August 2024 The real estate industry best be paying attention... #realestate #autonomousvehicles

Fifth Wall wants to invest in more new real estate businesses. The total addressable market of these businesses is much larger than the tech opportunities serving them. However, there's a fundamental problem that constrains the growth of new real estate businesses. They need two very distinct sources of capital: 1. Operating capital 2. Hard asset capital The former is suitable for venture capital funding. The latter is not. These pools of capital barely commingle, and that impairs the birth of new real estate businesses. There's a missing hybrid in our market. I'd really like to see venture pools of capital investing in fast-growing, next generation operating companies paired with the necessary hard asset capital new real estate businesses require. It's typically referred to as "PropCo-OpCo" ... but I strongly dislike that term, because it implies the very balkanization of capital that is the problem. You want those two sources of capital to be aligned, but that doesn't really exist...yet. I believe future funds could synthesize these two sources of capital, which will allow these companies to be successful. We've been thinking a lot about breaking this cycle at Fifth Wall, because it's something that has to change in our industry. #proptech #realestate

You can't tell proptech's story without Zach Aarons and MetaProp. His career story is an excellent example of making a career out of your unique edge as an individual, which is one of the best pieces of early-stage career advice I can give. He started his career in investment banking and with a walking tour startup, and then he found his way to working in the early days of social media and content marketing for his father's real estate firm. So you've got real estate. And you've got technology. This introduction of the real estate business made him want to learn all about the business, from leasing to facilities management. Like many involved in proptech today, he became obsessed with the idea of using technology to make the real estate industry more modern and efficient. He got his MBA at Columbia Business School, and combined his passion for the New York startup scene with the real estate industry in a class taught by General Partners from RRE Ventures, Stuart Ellman and Will Porteous. They encouraged him to write about real estate technology in 2012, and he wrote about young real estate tech companies like VTS, Hightower, and CompStak. Zach went on to co-found MetaProp, which is one of the preeminent proptech firms. We're proud to know them at Fifth Wall. #proptech #realestate

Congestion might have cost the US more than $70 billion in 2023. New Yorkers lose 101 hours per year to congestion. Chicagoans lose 96. Los Angelenos lose 89. Bostonians lose 88. These are pretty staggering numbers from INRIX 2023 Global Traffic Scorecard... And also pretty interesting from this report, in the wake of shifting working habits, morning and evening rush hour traffic has flattened out and traffic in the middle of the day has gotten worse, as people commute in later and go home earlier. Given the estimated $70 billion in losses due to congestion, it seems so intuitive and obvious to me that we should have some kind of congestion pricing for busy, slow central business districts. I think this efficiency would add so much to an economy, but Governor Hochul squashed New York City's plans for congestion pricing, 25 days before implementation, because of concerns about upsetting suburban drivers and potential negative impacts on Democrats in the election. The city had been planning to implement this for 15 years. It would have charged drivers $15 to enter Lower Manhattan, similar to successful programs in London and Stockholm. Will we see an attempt to bring this back in 5-10 years? I hope so, for the sake of livable cities... Full report: https://lnkd.in/eeCtaHAk #realestate

Excited to speak with Lineage's Kevin Marchetti on the Blueprint Main Stage in less than two weeks. We're proud to have Lineage as a Fifth Wall LP. Their story shows the tremendous amount of value that can be created when an analog real estate business reinvents itself with data and technology. I hope you see you there. Let me know what questions you have for Kevin in the comments. #realestate #proptech Blueprint: The Future of Real Estate

The network effects of Fifth Wall: 1. With our LPs Our 110+ strategic LPs across 20+ countries share their ideas and learnings about adopting technology with us and with each other 2. With our portfolio companies Our portfolio companies are solving similar problems and we're able to share best practices that can improve their chances of success 3. Intellectual economies of scale We look at specific opportunities for technology within the real estate industry (i.e. digital infrastructure, access control, solar) but these problems aren't totally unique to any one specific LP. So we're able to share these learnings across many different spaces within proptech across our LP network. One might not typically think of a venture capital fund as having network effects, but we do -- because of our unique consortium model. (Another reason why I'm such a fan of an intense sector focus in venture capital.) #proptech #venturecapital

3 things most real estate and proptech CEOs aren't thinking about, but should be... 1. Venture markets could worsen due to the public markets not being receptive to new IPOs and limited partners (LPs) not investing in new funds because they believe they are overweight in venture capital, but in reality are not, because VCs have not marked down their portfolios to their true value 2. There is a significant amount of pre-seed and Series A capital available, but a lack of Series B and growth capital, which will make it difficult for companies to secure funding in later stages, but also lead to some interesting M&A opportunities in the next few years 3. The potential impact of decarbonization regulations as well as rising insurance and construction costs on their assets. Great conversation here on the state of real estate venture capital and more with Brad Hargreaves of Thesis Driven. #realestate #proptech