Investment in smart building technology has made major inroads in commercial real estate around the world. While companies worldwide spent $6.3 billion on smart buildings in 2014, that number pales in comparison to the $17.4 billion expenditure projected by 2019.
Should the 22.6% CAGR surprise anyone? Hopefully not because CRE owners have bought into the value of real-time data and analytics. The shifting trend has become commonplace.
Let’s examine why CRE have placed a heavy emphasis and investment into smart buildings.
Why the Smart Money has Bet on Smart Technology
The emphasis of the Internet of Things (IoT) on Operational Technology (OT) has accelerated the trend. The smart money has focused on solving real problems that impact the bottom line. Clearly, the motivation has gone far beyond the notion of technology for technology sake.
The premise seems surprisingly simple. Real-time data and analytics facilitated by smart building technology provides a sound basis for better, more informed decision making. Optimizing facility operations using real-time data and analytics will provide significant improvements in system performance with the inevitable benefit of cost-savings. No one questions the value of data; questions only arise around cost.
Cloud technology has made investment in smart buildings more affordable. Previously, commercial building owners and operators relied on building automation system (BAS) manufacturers to modify or augment the sensor data infrastructure. The prohibitive costs of such an exercise understandably chilled the early enthusiasm.
Cloud-based IoT solutions bring the option of inexpensive wireless retrofits. Unobtrusive, same-day wireless installations will not disturb tenants. Thus, commercial building owners and operators have seen increased opportunities to leverage inexpensive solutions to achieve increased efficiency and cost-savings. Smart building solutions have freed them from the old cost regime.
The initial cost of converting an existing building into a smart building can often be recouped within one to three years. Increased energy savings and maintenance efficiencies can produce outsized benefits.
Cloud technology makes smart buildings even more financially feasible by providing a centralized management system. Facilities professionals can easily access information from multiple properties in real-time from anywhere at any time. The consolidation of previously disparate systems will streamline the management process considerably.
Smart Buildings = Big Benefits
Many additional benefits exist beyond energy savings and streamlined facilities management. Investing in smart technology represents a wise choice for a variety of reasons. Here are just a few to consider:
- Increasing numbers of tenants find smart buildings attractive, which translates into higher than average rents, lower vacancy rates, and improved tenant satisfaction overall. For example, Indoor Air Quality (IAQ) Has Become a New Digital Reality in CRE.
- Smart buildings deliver vast benefits using utility sub-metering. Granular attribution of utility costs using sub-metering can provide key insights on tenant consumption, HVAC system performance, LED retrofit benefits, and more. You need to know more than the total utility expenditure in a given month.
- Real-time monitoring allows facilities managers an up-to-the-minute understanding of asset operation and building performance. When problems arise, they can be dealt with quickly, saving both time and money. Moreover, the real-time data provides insights to predictive maintenance. For example, cloud-based IoT solutions can connect you to your critical HVAC assets.
- Smart buildings can leverage Artificial Intelligence (AI) to optimize a building’s BAS. Cloud-based AI provides an opportunity to optimize the building using automated intelligent controls.
- By measuring even minute changes in any essential system, early detection of maintenance issues allows facilities professionals to handle problems before they spiral out of control. This predictive maintenance reduces overall equipment costs by significantly lengthening the lifespan of critical building infrastructure.
Where to Start
Investment in smart technology represents a process for an existing property. Often, a first course of action includes benchmarking the building’s current performance. These benchmarks can focus on initial measures such as energy usage, water consumption, and IAQ. An organization can develop a comprehensive plan once problem areas have been identified. This provides a sound basis for a continuous commissioning process.
Alternatively, smart building technology can be used in a targeted and surgical way. Most buildings have known problem areas. These chronic issues can be resolved through the selective use of IoT retrofits that can bring visibility where previously none existed. Often times, merely providing cloud visibility will largely solve the problem.
With a wide variety of technologies available, you can find something to fit your budget, while still optimizing the performance of your property.
Editor's Note: This post was originally published in November 2015 and has been completely revamped and updated for accuracy and comprehensiveness.