How Smart Buildings are Transforming Commercial Real Estate

The available data from smart buildings eases demands on asset management because information is power.

 

This article was originally published on CIRE Magazine, Spring 2022 Issue

Smart buildings are changing the nature of commercial leasing and commercial real estate industrywide. Enhanced technological features of buildings play an increasing role in CRE transactions, which then influences the overall market. For instance, the smarter buildings are, the more data they generate, which in turn streamlines asset management.

The smart building market could reach $265.4 billion by 2028, according to a Fortune Business Insights report, up from $57.3 billion in 2020. This immense growth forecast is a result of the market stability that is expected to follow the global COVID-19 pandemic. Investments in sustainability and smart building technologies are being made now with this future in mind.

Smart buildings are specially designed or updated to incorporate technological components, including hardware and software systems that manage operations, collect cogent data, provide high-tech security, and make amenities more accessible for tenants. These buildings are often integrated with a setup of microchips, actuators, and sensors that are tied to a building’s heating and cooling, lighting, and electrical systems.

Tenant experience is directly affected by elements of the smart building. Better security, ease of access, and a healthier environment are just a few benefits.

 

Most aspects of smart buildings can be remotely controlled, thanks to the Internet of Things (IoT). IoT makes it possible to control building temperature or manage security and maintenance through mobile devices, because all the smart features and devices are connected to a network. Building automation technology, or at least the potential for it, has existed for many years. With the advent of IoT, remote connectivity is now available reality, facilitating a streamlined information system.

Smart buildings are also often mentioned in connection to property technology, or proptech. Proptech in commercial real estate is a growing sector, but it provides resources for managing building assets, rather than features of a building itself. While the two can overlap, they provide different benefits in different contexts.

Here are five examples of intelligent building design, illustrating its influence as a globally expanding phenomenon:

• The Edge Building in Amsterdam. The British rating agency Building Research Establishment Environmental Assessment Methodology (BREEAM) rated The Edge Building as the most intelligent building in the world after it was completed in 2014. It has car identification technology, parking assistance, schedule and calendar integration, and devices to record user food and beverage preferences.

 

• Oakland City Center in Oakland, Calif. Developed by Siemens, the building contains a host of dynamic and AI-powered systems. One of its noteworthy features is the advanced air volume system that can put the entire building into green mode, a setting which uses aggregate data to optimize humidity, air pressure, and temperature. It also has a decontamination mode that raises the temperature to accelerate the decay of airborne virus particulates.

 

The Oakland City Center is one of the smartest buildings in the Bay Area, thanks to an AI-powered management system that reduces energy use and improves air quality.

• Cisco Systems Canada Headquarters in Toronto. This was the first building in Toronto to be rated as a Leadership in Energy and Environmental Design (LEED) Core and Shell Platinum Building. It links up to Cisco’s business operations and facilitates Cisco’s Internet of Everything (IoE), while also streamlining all building data into a single network.

 

• AXA Belgium in Brussels. Winner of the New Corporate Headquarters category in the 2020 Verdantix Smart Building Innovation Awards, this building exemplifies space optimization. Using 1,850 sensors, the building management team gathered a robust dataset that informed a utilization project. In time, this data resulted in practices that reduced desk-to-employee ratios to 0.6.

 

• Mitie in London. Perhaps the most striking example of IoT in smart buildings, the Mitie building uses automated alarms, remote equipment management, machine learning, and data analytics to achieve a 95 percent accuracy rate for predictive maintenance calls and a 3 percent improvement of energy use by clients.

 

In addition to BREEAM and LEED, some additional assessment frameworks have been developed that are classifying buildings as intelligent and offering ratings or certifications. These include the BOMA Canada’s Best Smart Buildings Certification Program’s Pilot Project — which is the Canadian branch of the global BOMA network, including BOMA Houston — and the SPIRE™ Smart Building Program that was developed by the Telecommunications Industry Association.

Uses of smart technology are incredibly varied, but here are 10 popular applications:

1. Sensors that monitor air ventilation and air quality.
2. Voice control or voice-activated services and technology.
3. Touchless technologies, such as fobs, motion sensors, and digital key cards.
4. Smart parking, which provides open space notification or digital reservation processes.
5. Contactless amenities, such as food ordering or supply reordering.
6. Hyperconnectivity to internet providers.
7. Certified network control, which ensures the highest level of security for connected devices.
8. Clean energy or renewable energy features with smart appliances or systems to reduce overhead and support sustainability.
9. Maintenance monitoring and alerts, activated by sensors, cameras, and automated software systems.
10. Utilities optimization through monitoring of peak utility usage and smart thermostats that can optimize comfort while reducing energy spend.

 

Smart buildings provide a key benefit to business owners because smart features provide powerful data that makes asset tracking more precise, makes asset management easier, and not to mention improves a company’s corporate social responsibility.

So, what’s the ROI on smart building upgrades or construction? Part of that equation includes enhanced marketability. Tenant experience is directly affected by elements of the smart building. Better security, ease of access, and a healthier environment are just a few benefits. A building management system (BMS) ensures 24/7 tenant support.

Building owners, landlords, and business owners all benefit when tenants are content. The World Building Council conducted a study that found cleaner indoor air and enhanced lighting conditions increased worker productivity by 11 percent and 23 percent, respectively. The same study also cited cost savings due to less turnover or absenteeism and improved (self-reported) attitudes about employee health and well-being.

Intelligent buildings are making a far-reaching impact on the commercial real estate industry. CRE professionals are equipped to better manage portfolio risk and assets, while creating differentiation in the market. Providing service innovation to tenants can be an advantage in a steeply competitive landscape, because intelligent buildings lower operating costs and represent a broader ecosystem of connectivity. The future is one of opportunity in sustainability, savings, and increasing the value of a property. Smart building technology is here — and here to stay.