Fifth Wall: Rethinking Technology and Real Estate

“I skate to where the puck is going to be, not where it has been.” Wayne Gretzky

The quote above, while perhaps overused, comes to mind when I think about how Fifth Wall Ventures is approaching their fund. We were lucky to have Co-founder and Managing Partner Brad Greiwe join us recently for a small client event.

Fifth Wall has received investments from CBRE, Prologis, Hines, Macerich and others to deploy capital into built world tech. When you consider the overall value of the real estate market, including office, industrial, retail, and residential, the numbers are staggering. It clearly makes sense to invest in this space.

What I think is unique about Fifth Wall is their approach to finding companies in which to invest. They ask their partners about their pain points and then try to find technology companies that can cure that pain. They find companies that their partners will want to do business with, and help them scale. If one of their investors sees value in implementing a certain piece of technology, it’s very likely that the broader market will see similar value.

Some of the key takeaways from our Q&A were the following:

-          Autonomous cars will be the biggest disruption to real estate since the invention of the car. When Brad said this, I felt like jumping out of my chair and screaming, “I told you so!” That said, Brad has a unique perspective regarding the first implementation. While most think it will be in trucking, Brad sees construction vehicles as the first to be deployed in a driverless fashion.

-          Technology is no longer a standalone industry. It’s too big. It touches everything and the pace of disruption in our industry will pick up steam as the big players adopt new technology both encouraging and forcing the smaller players to follow suit.

-          Europe is much more willing to experiment with new tech than we are here in the United States, but they look to us for innovation.

-          Malls were always intended to be community centers but lost their way when they became homogenized and offering the same 30 tenants. Malls have the opportunity to go back to their roots by catering to the communities that they serve. With e-commerce growing, large malls, because they are typically well located, will become more focused on experience/lifestyle tenancy and dining than just traditional retail. That shift is already well articulated in many APAC countries where e-commerce makes 20%+ of the retail spending (compared with approximately 9% here), but retail vacancy hasn’t been impacted.

-          If I ever need self-storage, I am calling Clutter. Their model is based on the premise that technology can make for a more efficient, pleasant, and cost-effective model. Rather than having facilities that are close to their target customers, they can lease less-expensive space that’s not divided on a personal basis, and pick up and catalogue things that people want to store. Those items can them be stored in a more efficient manner. For example, mattresses can be stored and stacked together.

-          Blockchain is coming, but it’s not here yet.

-          The technology already exists for someone to walk up to order and pay for breakfast at their favorite coffee shop, enter their building, proceed through a security turnstile, enter the elevator, proceed to their floor without pushing a button, and have their lights turned on in their office all through their cell phone, which doesn’t have to leave their pocket. It simply hasn’t been deployed yet on a mass basis, but it’s coming.

The biggest takeaway for me is that we are clearly at the very beginning of a massive change. All facets of real estate will look very different ten years from now and the catalyst of that change is technology. If you want a peak into where we are headed, watch the press for Fifth Wall and the companies in which they are investing.

They are skating to where the puck is headed…and skating fast!