At first, real estate companies were implementing new technologies — especially those related to conserving energy — because it was the right thing to do to save the planet. Then, it became the practical thing to do as they sought ever more ways to save money. Now, however, conserving energy and resources is becoming the required thing to do.
“The Inflation Reduction Act was the most game-changing for climate change in history,” said Simon Brandler, vice president of policy at Brimstone, a climate tech firm focused on decarbonization, at the Fifth Wall Climate Summit held in conjunction with BluePrint 2024, a proptech conference held in September in Las Vegas. The benefits transcended politics, especially given that Republican states benefited from the infrastructure spending it authorized, he added.
Unlike earlier in this decade, when proptech’s potential was more theoretical and venture capital flowed freely, investors and users today want results. It’s no longer enough to be “cool”. Brad Pilgrim, co-founder of HVAC optimizing service Parity noted that pragmatism is now the key. For example, it took 10 years for LEED to really take hold, he said in an interview at Blueprint.
And for users, it’s about marketing the programs so that they’re appealing.
“Sustainability is the broccoli in the pasta sauce,” said Arie Barendrecht, chairman and founder of Wiredscore. “It’s good it’s there, but we really care about the pasta sauce.”
“People want to live in a LEED-certified building, but they don’t care what level of LEED it is,” said Nick Durst, senior analyst at The Durst Organization, at the Fifth Wall summit. “A few products out there are sustainability related, but they are also a tenant service. That’s where you find the demand. “It’s about [offering} things that are sustainable but also have that user delight.”
Smart thermostats save energy, but they can also keep multifamily units more comfortable, Durst observed.
“People buy Teslas because they’re better cars — and they’re good for the climate,” said Lee Hoffman of Runwise.
Many jurisdictions are now implementing laws to require conservation, with New York City’s Local Law 97 perhaps the ultimate example, Hoffman said added. “But in the vast majority of cases, this is what we should have been doing all along,” he noted.
The opportunity is there, Hoffman continued, especially in old cities like New York, which has stock built for a very different era. Many buildings boast windows that can remain open because they were designed for the last pandemic, but waste energy now.
One problem: “They regulated solutions, but not the outcomes,” said Robert Bernard, chief sustainability officer of CBRE. Since the passage of Local Law 97, tenants and landlord have been debating who is responsible for implementing the necessary changes and technologies for compliance, he said, with CBRE trying to broker between the two.
Increasingly, municipalities are legislating conservation, with cities including Baltimore, Boston, Denver, and Washington D.C. having strong programs in place, Parity’s Pilgrim added at an interview during the conference.
“People aren’t talking about tech as much,” he said. “They’re talking about costs.”
To do that, the hotel sector is focused on renewable energy. The conference’s location was a prime example of using tech to conserve both funds and resources, said Henry Shields, vice president of research and analytics for MGM Resorts International. Nevada received only 1.8% of the water allocated to the seven states that share the Coloado Rriver, and uses just 62% of the amount it is allocated.
“It comes down to a relatively straightforward concept — operate your resorts differently and do more with less,” said Shields. Already operating vast solar arrays to reduce energy, the company plans to cut greenhouse gas emissions 50% from 2019 levels by 2030. “Because we operate on such a large scale, we’ve been able to make material impacts to the local system here.”
Not all technology discussed at Blueprint was focused on the environment. Others focused on creating greater connections and understanding of existing data. During the conference, Measurabl announced ESGx Benchmarks, a free new report that provides real estate owners, operators, investors and lenders global insight into sustainability performance based on data from 110,000 properties in 93 countries (see story this issue).
“One of the most important things we can have is a ‘green’ comp,” said Matt Ellis, Measurabl CEO.
And COVID-19 pushed the need for data.
“COVID was fortuitous for our business,” acknowledged Jonas Bordo, CEO and co-founder of Dwellsy, a comprehensive database of rental homes that allows renters to conduct customized searches without pay-to-play listings and provides managers the ability to list their vacant units for free. The data it compiles can be invaluable for researchers and others needing valid comparables on amenities and rents. “It created an opportunity for property managers, who were concerned about data and market.”
Creating more affordable housing, with a dash of sustainability, is the basis for Backflip, a real estate and fintech platform for fix-and-flip investors that CEO and Co-founder Josh Ernst calls a cross between Zillow and Shopify. The platform uses advanced algorithms to provide investors with the data they need to value a property as-is, and then after it is repaired.
Most housing was built in the 1950s and 1960s and has become obsolete. Bringing them to current standards would go a long way toward fixing a severe housing shortage that has driven prices in many markets beyond affordability.
“It all starts and ends with what the customer needs,” Ernst said. “And we need to take what’s already there.”
