Early Adoption For Real Estate

‍Fifth Wall Newsletter: https://mailchi.mp/fifthwall/can-real-estate-be-an-early-adopter 

Real estate owners and operators aren't typically early adopters of tech. But with corporate carbon disclosure laws rolling out on the state and federal level and public pledges to be net zero—that's starting to shift. 

• What’s surprising, given the macroeconomic challenges in 2023, is that venture capital and private equity dollars have increased, Fifth Wall’s Climate Tech co-lead, Greg Smithies, recently told an audience a Fifth Wall’s Climate Summit.
• “Most investment is down significantly, but climate venture capital is up roughly 2.5 to 3 times year-over-year,” he said.

Private dollars follow public dollars—that is helping technology scale and make an impact on the real estate industry. Because private investment won't be enough.

• "When I say climate venture dollars increased 2.5 to 3x, that is $70 billion. That’s not a lot of money when it’s going to take $200 trillion to decarbonize the planet. We’re a couple of orders of magnitude off.”

The Inflation Reduction Act (IRA) kickstarted a wave of federal funding for decarbonizing real estate, manufacturing, supply chains. But there's more, recently announced: 

• 15 projects advancing next-gen grid technology get $42 million in federal funding.
• 7 projects get $275 million in federal funding to strengthen domestic clean energy supply chains.
• 150 construction projects using low-embodied carbon materials receive $2 billion investment from the U.S. General Services Administration (GSA).

Bottom line: Climate regulation is pushing real estate to decarbonize (we covered this in a previous newsletter here). The good news is that the public and private sectors are accelerating the development and scaling of necessary technology. So, it makes financial sense to be an early adopter—otherwise the upfront costs and the fines from being out of compliance will hit all at once.