Dive Brief:
- Commercial real estate management startups VTS and Hightower announced this week that they will merge, creating a $300 million company, The Wall Street Journal reported.
- Soon to have 5.5 billion square feet of commercial space under management in the U.S. and U.K., the new firm, which will retain the name VTS, will be one of the largest tech companies in the commercial real estate sector. The companies offer real estate owners with tenant tracking and management tools that they can access via a smartphone dashboard.
- The two firms were corporate rivals for about 10 years. VTS CEO Nick Romito, who will also lead the merged company, said the merger will allow the new tech firm to focus on advanced features for its platform. The new company will have approximately 275 employees.
Dive Insight:
In May of this year, VTS announced that it had secured $55 million in new investments, bringing its total grab to $84 million. According to TechCrunch, VTS is among the most well-funded in the commercial real estate tech industry, and Romito said VTS was doubling in size each year. Romito also highlighted the fact that most landlords and building owners still manage their properties manually, which means the sector has significant growth potential.
Also earlier this year, CIT Group's 2016 Commercial Real Estate Outlook survey of real estate executives revealed that a majority (55%) of respondents believed technology is "revolutionizing" the industry, but only 11% felt that they were on the "leading edge" of that wave. CIT reported that technology, along with green building, was a major trend in the industry.
Startups and technology platforms have garnered major investor interest recently in both the construction and real estate spaces. Late last year, New York City real estate and construction giant Daniel Tishman became chairman of California-based Ecorithm, a California-based software company that monitors and regulates a building's heating, electricity, and ventilation to maximize energy efficiency.
