Legacy commercial real estate firms that spent decades focusing their investment on physical properties have begun launching venture funds to invest in technology companies, aiming to solve problems in their portfolio and bring in big returns.
Most of those companies focus on commercial office and retail properties and invest in tech companies that solve problems in those sectors, but one of the nation's largest affordable housing developers is now getting into the space.
Enterprise Community Partners Vice President of Innovation Matt Hoffman tells Bisnow the nonprofit plans to launch a fund next year to invest in early stage technology companies addressing housing affordability.
“We would like to see the housing sector get exposed to a disruptive technology platform much like Uber was to the taxi industry or Airbnb to the hotel industry.” New York-based Rudin Management Co., a 93-year-old real estate firm with roughly 15M SF of office and residential properties under management, in 2015 launched a venture fund to invest in real estate-related technology companies.
Gilbert, who also serves as chief technology officer, said the first thing Rudin looks for in a potential investment is the problem it solves.
The majority of the well-funded PropTech companies focus on the commercial office sector rather than residential, Hoffman said, and the investment in multifamily-focused technologies isn't addressing the issue that Enterprise sees as its primary mission: housing affordability.
The financial returns startup tech companies have the potential to generate can be as attractive to commercial real estate companies as the underlying problems they solve.
Strategic Property Partners is doing that with its $3B Water Street Tampa project, a 50-acre development planned to include 9M SF of commercial, residential, hospitality, retail and other space.
SPP Senior Vice President of Digital Innovation and Technology Steven Fifita said the developer is planning to utilize a variety of technologies at the development. "I think it is an evolution we're seeing in many industries, especially in commercial real estate, where it's an industry that's comfortable with investment to begin with and the notion of risk," Fifita said.