Insights on technology and real estate.

New York City, N.Y. (October 10, 2017) — WiredScore, the world’s leading rating system for technological capacity in commercial buildings, today announced that an investment group led by Bessemer Venture Partners(‘Bessemer’) and Fifth Wall Ventures (‘Fifth Wall’) has acquired a majority share of the company and will fill Board and Board Observer seats, respectively. The investment group also included minority participation from SterlingVC, Joshua Kushner, and other angel investors.

WiredScore was founded in 2013 in partnership with Mayor Bloomberg and the City of New York with the mission of promoting best-in-class internet connectivity in commercial buildings.
The company has developed a widely respected standard that evaluates and distinguishes buildings with top-tier technological infrastructure, known as Wired Certification. The Wired Certification is a standard trusted by tenants internationally to verify that buildings have been independently evaluated and certified to provide the connectivity that businesses require to thrive.

Iconic landmarks including The Empire State Building, Chicago’s Willis Tower, and The Shard in London, along with innovative development projects like Duo Tours in Paris and Hudson Yards in New York City have achieved Wired Certification.

“Buildings are no longer just a protection against elements: they are a nexus of connectivity. WiredScore is the industry standard, providing the most dynamic measure for that essential technological capacity,” said Brendan Wallace, CEO and co-founder of Fifth Wall Ventures. “We’re excited to partner with their team to build a future where technology is seamlessly and more powerfully integrated into physical spaces.”

“Bessemer and Fifth Wall’s interest in WiredScore confirms the urgency of our mission to improve digital connectivity in offices and help businesses find the buildings that meet their needs. With Amazon recently prioritizing optimal connectivity requirements for their HQ2 location selection, and signing a lease at Brookfield Property’s Wired Certified Five Manhattan West project, the call of tenants for improved digital infrastructure is undeniable. Investors, developers and building owners who are here to compete are certainly taking note.” said WiredScore CEO Arie Barendrecht. “Together with Bessemer and Fifth Wall, WiredScore will continue expansion into new markets to work with commercial real estate owners and developers to improve connectivity infrastructure in their assets.”

WiredScore launched four years ago when Barendrecht and Jared Kushner founded the company in New York City. This new investment capitalizes WiredScore for continued rapid growth and completes Jared Kushner’s formal divestment of the company following his role as an advisor until he assumed a position in public office earlier this year.

About WiredScore
Wired Certification champions cutting-edge technology in commercial real estate by providing the only certification for rating the infrastructure, connectivity and technological capacity of commercial buildings. WiredScore launched Wired Certification in 2013 in partnership with Mayor Bloomberg and the City of New York. Since launch, more that 350MM square feet of commercial real estate in more than 1,000 buildings has been Wired Certified globally. International demand for the digital connectivity rating system has seen the company expand operations to the United Kingdom, France, Germany and soon, Canada.

In an increasingly tech-driven economy, connectivity is fast becoming the most critical factor for tenants when selecting office space. The widely recognized Wired Certification seal is a trusted symbol that identifies buildings that have been independently certified to provide the best-in-class connectivity infrastructure that businesses require to thrive. For more information on Wired Certification or to find Wired Certified buildings, visit: http://wiredscore.com/

About Fifth Wall Ventures
Fifth Wall Ventures is a venture capital firm focused on technology solutions for the Built World, redefining how the world interacts with its physical environment. Fifth Wall is connecting the world’s largest owners and operators of real estate with the entrepreneurs and innovators building revolutionary new companies at the intersection of real estate and technology. With $240M in assets under management, Fifth Wall identifies businesses from all sectors of the Built World, including retail, industrial, hospitality, multi-family, homebuilding, office, and brokerage to make physical spaces more accessible, affordable, efficient, personalized and intimate. For more information on Fifth Wall Ventures, its partners and portfolio, please visit: https://fifthwall.vc/
About Bessemer Venture Partners
Bessemer Venture Partners (BVP) is a $4B venture capital firm that funds consumer, enterprise and healthcare startups around the world, from seed stage to growth. BVP funded the early stages of Blue Apron, Pinterest, Skype and Twitch and helped build 117 IPOs including Twilio, Yelp, LinkedIn, Shopify, MindBody and Wix. Follow us @BessemerVP.

Eden is the first fully scalable, tech-enabled property management platform, and the first viable marketplace within the property management services sector. They have built the most promising communication infrastructure for property managers and landlords to meet the needs of their tenants — by providing direct visibility into tenant status.

If you’re an office manager, property manager, or even an owner with a small portfolio of offices, here are some things you probably already know:

• Communication breakdowns between tenants and property managers happen far more often than they should, leading (in serious or chronic cases) to increased turnover.

• Property managers’ and landlords’ time is not best spent dealing with routine issues, like cleaning or basic maintenance.

• Ticketing, as a system to triage the needs of individual tenants, is one of the clearest ways we know that real estate has failed to keep up with technological innovation.

And if you are a REIT or an owner/operator of a larger portfolio of real estate assets, you might also agree that some buildings in the portfolio are insufficiently serviced despite your most diligent attention and best intentions. Given our LPs are some of the largest office portfolios and servicers in the US, Fifth Wall began to explore solutions to these pressing problems rooted in tenant-landlord communication and responsivity, incidental underprovision of services, and outdated service delivery models. We found Eden exciting for a number of reasons:

• Existing customers were overwhelmingly enthusiastic about the service. Over the course of numerous conversations, we quickly understood how easy and automated the service was, especially with regard to the seamless user experience.

• Eden manages vendors with little operating leverage, without sacrificing safety. The platform leverages technological innovation through an online office/building services marketplace as opposed to a wage-intensive W2 model. While marketplace models — in ridesharing or other “gig economy” roles — may have some drawbacks, on balance they allow incredible organizational agility, make expansion and rollout into new markets fairly simple, and fundamentally democratize a fragmented industry at scale.
  Vendors benefit from improved marketing. Eden funnels demand to vendors, and vendors are able to increase their visibility and marketing channels.

• Property managers benefit from high tenant satisfaction, while helping PMs better allocate their time and resources. Even though tenants sit in the driver’s seat with Eden, this improvement in customer service carries over into the tenant-landlord relationship. Over time, this increases reputational equity, decreases turnover, and relieves pressure on PMs who needn’t manage the Eden-tenant relationship directly.

Because it’s so scalable, Eden helps large portfolio operators cover a full portfolio with equal quality and attention to detail, by offloading and outsourcing services no matter the desirability or holding period of the asset itself.

We’re thrilled to support Eden as they scale beyond nuclear offices and office managers to commercial real estate properties and property managers, and congratulate their team on a successful Series A! Read more about Eden in today’s TechCrunch story here, and listen to our podcast with founder Joe du Bey on the Fifth Wall podcast on iTunes.

Brad and Joe Du Bey, Co-Founder and CEO of Eden, discuss the future of work, innovation in the workplace as a service vertical, and dive further into the Eden & Fifth Wall partnership. About Eden: Eden's mission is to create a better place to work, for everyone. Founded in 2015, Eden is a marketplace that connects small businesses with office managers through an intuitive interface to make office management more effective, cooperative and transparent. For more information, please visit: www.eden.io/

As of last week, autonomous vehicles — once confined to the realm of visionary technologists, industry prognostications, and eventually corporate tech R&D — have been legitimized and codified through official government law and policy. With the imminent mass commercialization of these vehicles will come a radical and permanent structural change to the way we interact with real estate — transforming how we live, how we work, commute, shop, and travel. AVs will alter the location, the value, and the shape of all real estate asset classes — perhaps to an even greater extent than the first automobiles once affected the market and spatial design of urban planning, architecture and our modern streetscapes nearly a century ago. At that time, cars permitted and in fact facilitated a mass migration to the suburbs and necessitated unprecedented public investment in the construction of infrastructure, particularly freeways. Investors with prescience made a fortune. Others, clinging tightly to outmoded transportation models, were driven to bankruptcy.

The shift to driverless cars may represent a sea-change in consumer behavior, but it in some ways represents only a stepwise change in vehicle design. Yet small disruptions in the way we use vehicles — ride sharing, for instance — has incredible potential to cause change far and wide. While ridesharing services Uber and Lyft are not deploying AVs in meaningful ways, research shows that every ridesharing vehicle put into use takes nine to 13 cars off the street, despite a relatively low overall penetration — to date, only about 15 percent of all adults have used a ridesharing service.

How much change to the Built World might we expect from autonomous vehicles? It’s estimated that self-driving vehicles could eventually cut urban automobile numbers by up to 90 percent. By its very nature, this is certain to catalyze a complete repurposing of the existing real estate landscape. And change will happen everywhere.
Consider the effect on retail and the way we shop. Demand for parking lots in the United States, in one example, could be cut in half over the next thirty years as a result of widespread AV adoption. This change, in isolation, would free up 75 billion square feet of space — put in context, more than the combined area of all office, apartment, shopping mall, strip mall and warehouse area in the nation today. Mall owners like Macerich [MAC] or Simon [SPG], half of whose real estate is dedicated to parking, could consider using this space for distribution centers for home delivery — such that they provide e-commerce businesses solve the last mile of the supply chain with cheap, driverless autonomous trucks. This would also provide incredible opportunities for experiential and high-end retail concepts, like prestige malls with entertainment options; however, commodity retail — strip malls, convenience stores, or drugstores — will almost certainly face disruption, as consumers switch into quicker, more convenient delivery and cheaper, disruptive shipping rates.

Car ownership — an iconic staple of U.S. American lifestyle — may also see major change as it becomes largely outmoded. Presented with the opportunity to rent a seat in a moving vehicle that cheaply, automatically, reliably, and individually delivers you to your destination, drivers across all socioeconomic strata will certainly begin to question the value proposition of owning a car and the expenses it entails. Lower vehicle ownership means fewer cars on the road, which means a drastic reduction in parking needs. As surface lots and garages exit the parking business, land for redevelopment will become available, creating huge new real estate opportunities. How huge? Almost one-quarter of U.S. cities are currently devoted to parking. This newly repurposable commercial real estate will see multiple effects as a result.

The impacts and knock-on effects for commuting are equally as staggering: where the average American commuter now spends 73 minutes per day in traffic, autonomous vehicles are certain to increase travel efficiency, decrease traffic itself, and make trips between home and work safer and less stressful by driving faster, closer together, and automatically re-calibrating routes based on congestion. This may cut delays by 60% or more, such that riders can spend more time working, safely sipping their coffee, or even sleeping as the form factors of AVs begin to change as well.

For the residential real estate market — from which the pool of commuters is necessarily drawn — this has unprecedented implications. In every decade since the invention of the automobile, the rate of suburban population growth outpaced urban growth, a trend facilitated and in fact largely driven by the mobility provided by cars. In no small part due to the surfeit of automobiles and the misery of rush hour commutes that they caused, in 2011 suburban flight was upended, and this flow reversed. AVs could stem the recent acceleration of migration into urban cores, largely driven by Millennials, as the pain and tedium of commuting is eased, while suburbs, which have fallen out of favor among these younger generations, could see a revival, causing home prices in outlying suburban areas to buoy while bringing untenable home values in San Francisco back to some modicum of normalcy and affordability. As smooth AV commutes reduce dependency on public transportation, transit-oriented assets could see rents flatten by 50 percent or more.
Self-storage will change as home garages are repurposed to home storage, causing the industry to slow and freeing up construction space among the 2.5 billion square feet — three times the size of Manhattan — currently dedicated to self-storage rental. Even travel and leisure will see structural shifts: as travelers opt out of motels on long routes, drivers may sleep in their cars, while weekend vacation real estate rises in value from convenience gains and reduced hassle of the 2–3 hour Friday afternoon commute out of town.

Are we there yet? No. Full-scale commercial adoption of AVs is still nearly a generation away. But smart real estate investors are redrawing their maps now to succeed in the inevitable driverless world. With the all-in political and legal institutionalization of AVs, all bets are off. The wheel is turning and the real estate landscape is reshaping yet again. Investors who get out ahead will win. Those who don’t will almost certainly become roadkill.

In a landmark event, two of the nation’s leading owners of single-family rental homes announced a merger today. Starwood Waypoint Homes, formerly Colony Starwood Homes, is officially merging with Invitation Homes, creating the largest single-family rental platform in the world — by a wide margin — and sending a strong signal of the growing strength and stability of the single-family rental business. Until recently, this entire asset class was merely a cottage industry. So what happened to precipitate this unique moment in real estate history? In light of my role as a co-founder of Invitation Homes, this feels like an opportune time to rehash both the nexus and the rapid institutionalization of the broader single-family rental industry.
When the U.S. housing market crashed in 2008, it decimated the U.S. economy and sent shockwaves throughout the world. It was the single biggest economic implosion since the Great Depression. Financial markets were upended, the largest banks folded, entire governments teetered on the edge of bankruptcy, and the economic growth engine of the last decade seemed to be durably derailed with no end in sight. It took nearly eight years for the market to return to a ‘new normal’.
Comparatively, when the tech bubble of the late 1990s burst, the economy bounced back in a mere two years. While certainly devastating and equally as sudden, the bursting of the tech bubble didn’t shatter the U.S. economy. The banks didn’t fold, mass unemployment didn’t result, and there was no federal TARP program to rescue the fallen internet dot coms. This contrast in both recovery duration and public policy response underscores just how fundamental the residential housing market is to our entire national and indeed global economy.

Real estate capital markets are in fact the largest capital markets — larger than the stock market and debt markets themselves! — and the bedrock of any modern economy and financial system. As such, making real estate capital markets more efficient and transparent has potential to not only generate outsized returns for investors, but also to have a profound impact on our society, our collective financial well-being, and the stability and growth of the entire U.S. economy.

Bringing Down the House
Before co-founding Fifth Wall, I co-founded a single-family rental company called Invitation Homes (“IH”). What started as an idea in my mind and those of seven co-founders in 2011 quickly became arguably one of the largest seed round investments ever, with over $1 billion committed by Blackstone to launch our first market in April of 2012. We quickly amassed over 50,000 single-family homes for lease in 13 markets across the country, allocating billions of dollars of capital. This culminated in January 2017, when IH raised $1.5 billion in an initial public offering on the New York Stock Exchange, bringing our total market capitalization to nearly $7 billion.

Our success in no small way owes itself to the institutionalization of multi-family housing in the early 1990s. Prior to this time, the vast majority of apartment buildings in the U.S. were owned by “mom & pop” outfits. When the real estate market collapsed in 1989, institutional capital flooded the market, aggregating large pools of distressed apartment stock from the Resolution Trust Corporation, which the federal government had created to mop up the real estate mess left from the savings-and-loan debacle. With sophisticated and well-funded ownership groups, professionally managed apartment properties became ubiquitous, and one could secure 24-hour a day service and a superintendent at your door at the drop of a hat. Knowing full well that history tends to repeat itself, and in the throes of a similar real estate crisis, we were left asking ourselves: “why couldn’t we do that with single-family housing?”

In 2010, housing prices fell to all-time lows and investors began to ideate around how to deploy private capital to solve an intractable public sector challenge — that is, how to unleash and enable the economy to help the housing markets recover on its own. Despite the influx of outward government buttressing and targeted capital outlays, the housing market was persistently anemic even two years after the housing crash.

Betting Big on the U.S. Housing Market
Enter Invitation Homes. By aggressively investing capital in the purchase of foreclosed single-family homes, our team realized we could quickly identify, underwrite, buy, and fix up distressed assets, helping turn community eyesores and the blight they generated into aesthetically pleasing, investment-grade assets that would ultimately attract renters and bring a foregone vibrancy back to those neighborhoods. It also created a capital floor, giving homeowners the price buoyancy that helped them feel more comfortable selling their homes. In this instance, private markets were present and prepared to deliver economic assistance in ways that the government would not or could not in the height of crisis. IH was thusly born from this need and built on this new institutional business model, buying distressed single-family homes in partnership with our sole equity provider Blackstone, in expectation of returns to our investors and to the communities of which we are a part.

The Secret to Our Success
Warren Buffett was quoted saying: “If I had a way of buying a couple hundred thousand single-family homes and if I had a way of managing them…, I would load up on them” (Buffett, February 12, 2012). In hindsight, our idea seemed fairly straightforward — but like most contrarian bets, things hadn’t appeared quite as obvious back in 2010. We were met with extreme skepticism by the majority of investors we approached with our thesis, most of whom questioned our market timing, our ability to effectively acquire homes at scale, or how we could ever possibly manage a geographically dispersed portfolio efficiently. Even in situations where investors liked the idea, their willingness to act was muted based on a lack of proven ways to monetize their conviction.

So what convinced our capital partner and the handful of others to enter the space when their peers would not? In short, technology. We fundamentally believed we could use technology to enable a best-in-class team to identify, underwrite, purchase, renovate, and professionally lease/manage U.S. single-family rental homes across the country at scale.

This foresight turned out to be true as technology opened a window to capture this unique opportunity, execute on our ambitious strategy, birthed a multi-billion dollar industry, and forever changed the paradigm of how Americans access housing stock.

IH’s distinct tech stack allowed us to scale teams across markets exceptionally quickly, enabling us to responsibly purchase and effectively manage thousands of quality homes for rent. We innovated at each phase of a single-family rental home’s lifecycle, which became part of our clear competitive advantage. Some of these unique mobile enabled innovations include: underwriting & bidding software; contractor & vendor management tools; rehab budget tracking & inspection software; customized workflow management & communication tools across different business functions; intelligent maintenance routing; scheduling & reporting tools; easy online payment system; advanced BI analytics platform; and numerous API integrations, to name a few.

When Worlds Collide
In summary, we built a technology platform that didn’t just become a useful tool; rather, it became existential to the success of our business. Without it, our ability to grow beyond a certain scale would have been untenable. Furthermore, our success illustrated an even more important point: the collision of traditional real estate and technology is creating incredible opportunity that, when properly understood and utilized, can produce massive outcomes in a short amount of time. Our particular opportunity resulted in the purchase of over 50,000 homes in less than 36 months, allocating close to $10 billion of capital. (Of particular note: at our prime we were purchasing $150M of homes per week!)

Yet, as pioneering as it seemed at the time, I truly believe this is only the beginning and perhaps one of driving theses at the core of founding Fifth Wall. Where we saw so much untapped, unclaimed opportunity at the intersection of these two industries, we opted to create Fifth Wall as a platform to promote and support companies who were best positioned to take full advantage of shifting tectonics and fresh dynamism in the rapidly changing real estate landscape. Indeed, our initial set of investments are very much in line with this viewpoint: from the ever-expanding short-term rental economy, to on-demand self-storage, on-demand fitness, retail as a service, workplace as a service, or residential transaction marketplaces. The future, to us, is well underway and we’re excited to invest in the teams and technologies that will be responsible for redefining the next-generation of Built World companies.

Invitation Homes and the single-family rental market revolutionized home optionality and accessibility for a diverse array of demographics ranging from Millennials to retirees. This methodology — the application of technology to otherwise orthodox asset classes — will relentlessly democratize other industries and will certainly continue to mint entirely new asset classes. We’re all perhaps better for it, and at Fifth Wall, we stand prepared and wholeheartedly committed to embrace that ambitious charge and lead that ambitious change.

Brad and Chandra Dhandapani, Chief Digital & Technology Officer of CBRE, discuss applying her background and perspective to the real estate industry, applying new technology to the vertical, and exploring innovation migration to and from the United States. About CBRE: CBRE Group, Inc. (NYSE: CBG) is the world’s largest commercial real estate services and investment firm, offering a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services; and development services. For more information, please visit: www.cbre.com

In part 2 of Vibhu's interview, he and Brendan discuss the idea of the App Store for physical products, changes across the retail category and the secular growth of ecommerce. More on b8ta: b8ta, a software-powered retailer designed to make physical retail accessible for all, was founded in 2015 by Nest alums Vibhu Norby (CEO), William Mintun (COO), and Phillip Raub (CMO). b8ta helps people discover, try, and buy new tech products while empowering makers with a simple retail-as-a-service model that puts them in control. b8ta has locations in Palo Alto, Santa Monica, and Seattle. For more information: b8ta.com