TRANSITION TOOLS
Sustainable Proptech Gaining Momentum By Barbara Carss CANADA’S STEADILY expanding roster of tech companies aligned with the sustainable and smart buildings market reflects growing demand from end-users and draws capital from increasingly enthusiastic investors. The recently released 2024 Sustainable Proptech Report lists 131 Canadians enterprises with some quotient of institutional backing that provide sustainability-related technologies to real estate or construction. That’s climbed from 68 companies in 2021 when the venture capital fund, Venturon, inaugurated the report. This year’s edition primarily highlights companies at the early and growth stages, along with a smaller number that predate 2014. Collectively, they operate in four sub-sectors — asset management; analytics/research; sustainable construction; and a broader envelope labelled, smart cities, which includes energy transition, infrastructure and mobility services — and are headquartered in seven different Canadian provinces. “The map reflects almost $3.5 billion in funding since inception of these companies to date,” Joanna Creed, Director of Operations and General Counsel at Venturon, told attendees of an October event to mark the report’s release. “Since 2023, notwithstanding that the past 12 months haven’t been the best economic environment, we’ve seen almost $823 6 Winter 2024/2025 | Canadian Property Management
million in new funding flow into these entities.” About $495 million of that has been channelled into companies operating in the smart cities niche, partly attributable to what Creed typified as a few “outsized” capital raises. The smart cities and asset management categories each account for roughly a quarter of the companies on the list, with a smaller share (about 14%) tagged as analytics/research specialists. More than 36% offer sustainable construction products or services, including a significant subset of 15 companies focused on some aspect of modular construction and offsite mass fabrication of building components. Climate volatility, regulatory pressure and construction labour shortages are cited among the key drivers of end-user demand, while the opportunity for lucrative returns and requirements to comply with their own ESG mandates are seen to be luring investors. Creed and Venturon’s Founder and Managing Partner, Deena Pantalone, touched on those themes, with contributing insights from other real estate industry insiders. “As proptech demonstrates its value, it’s likely to become a standardized practice across the real estate industry. We’re no longer going to see little pilot projects here and there, but more of a widespread adoption,” Pantalone maintained. “But, innovation is difficult. It’s not a linear path.”
CLIMATE-RELATED RISKS This year’s report was released during the brief interval between Hurricanes Helene and Milton bringing death and destruction to the Caribbean, Mexico and the United States. Braiden Goodchild, who leads PwC Canada’s advisory services for mergers and acquisitions and ESG real estate deals, noted the rising concern about the risks that severe and volatile weather poses for the built environment. Many owners/managers are now assessing the vulnerability of their portfolios and, in turn, making decisions about resilience upgrades or the sell-off of assets. Regardless of whether they’re actively responding to physical climate risks, owners/managers are also likely to encounter climate-related costs and consequences in their insurance products and can reasonably expect that lenders will soon be making similar demands. For example, Deutsche Bank is among major global financial institutions now requiring borrowers to meet climate risk criteria. Goodchild shared some findings about sentiment in the Canadian commercial real estate industry gleaned from preparation of this year’s report on emerging trends, which PwC produces in partnership with the Urban Land Institute. That work involves interviews with about 200 senior executives. “Climate tech convergence with the built environment was massively thematic in the