The real estate industry is stepping into uncharted territory as the tech world’s hunger for data centers grows. With the rise of artificial intelligence and cloud computing, the need for massive server farms is pushing energy demands to new heights. But here’s the twist: local power grids can’t always keep up. This has real estate firms considering a surprising pivot—becoming energy developers.

Brendan Wallace, co-founder of Fifth Wall Ventures, a proptech firm managing $3.2 billion, sees this as a golden opportunity. “Data centers are the hottest asset class in real estate right now,” he says. But there’s a catch. “You can’t just plug these energy-hungry facilities into the grid. Utilities won’t allow it.” This has led to a growing realization: if real estate companies want to stay in the data center game, they’ll need to produce their own power.

The solution? Renewable energy, particularly solar. Wallace explains, “We’re investing in solutions to accelerate solar development alongside our real estate partners. It’s not just about building data centers anymore—it’s about powering them sustainably.” This shift could redefine the role of real estate firms, turning them into key players in the energy sector.

The push for energy independence comes as the proptech industry rebounds from a challenging few years. Office vacancies remain high, and companies like WeWork have struggled. But Wallace remains optimistic. “The companies that survived the downturn are stronger now,” he says. “And the demand for tech-driven real estate solutions, especially around data centers, is only growing.”

Wallace also highlights the broader implications of this trend. “The AI revolution depends on data centers, and data centers depend on energy. It’s a domino effect that’s reshaping industries.” As real estate firms dive into energy development, they’re not just building infrastructure—they’re powering the future of technology.

For now, the focus is on practical, near-term solutions. “Fusion is exciting, but we need energy now,” Wallace adds. “Solar is the obvious choice, and it’s where we’re putting our efforts.” As the lines between real estate and energy blur, one thing is clear: the industry is evolving faster than ever.