By Alicia Mynarska, Withum
The commercial office real estate market has been undergoing an unprecedented number of disruptions and monumental transformations. Consequently, owners, investors, managers, and operators of office spaces might consider new strategies and innovative solutions, such as smart building technologies.
According to real estate executives responding to a 2023 Deloitte Outlook Survey, approximately only 9% of their portfolio is currently comprised of smart building investments. Therefore, implementing smart office building solutions may offer substantial advantages over competitors and be a key differentiating factor. Technology may also bring various benefits to tenants by augmenting occupants’ experiences, wellness, and health. In turn, this greater tenant satisfaction could translate into higher occupancies and rent rates, tenant retention, and renewal of leases.
While smart office buildings are not rigorously defined, generally, smart buildings may involve things such as artificial intelligence, algorithms, Internet of Things (“IoT”) (where sensors continuously provide data through the Internet), advanced digitalization, digital twins, dashboards, data analytics, and enhanced reporting software. Historically, advances in smart building technologies evolved from task-specific automations and, for example, the implementation of smart lighting, elevator, or HVAC systems. However, these distinctive automated components and processes lacked centralized monitoring and control, as well as interconnections amongst themselves without universal data sharing. In contrast, today, smart office buildings tend to include a central networking of numerous integrated systems communicating together that work to jointly to optimize their performances. Additionally, this enables end-users to obtain information and control in real-time using any convenient electronic device.
The benefits of a smart building can be tailored to specific priorities and needs of a real estate entity and may include, among others, more efficient operations of the facility, various cost savings, reduction of energy consumption, and better utilization of other resources. From a sustainability perspective, smart technology may help to achieve Environmental, Social, and Governance (ESG) goals and meet regulatory requirements. The new generation of building management systems would deploy artificial intelligence to analyze various aspects of operational tasks and organizational functions, eliminate inefficiencies, and identify emerging opportunities. Technological smart innovations may save time and labor by reducing human intervention and automatically recognizing and resolving issues that arise. For instance, smart maintenance systems would play a role in preventing accidents and system failures by detecting equipment malfunction or water leaks early before they become critical. Certain services like cleaning would be based on the actual needs of the space in real-time. Smart surveillance and security systems, biometric verification and facial recognition, and contactless visitor check-in would ensure safety and allow only authorized access. Modern technology also enables effectiveness in lease portfolio management and provides metrics, analytics, insights and trends regarding the property or the entire portfolio.
To provide optimal comfort and well-being to occupants, the smart office infrastructure will monitor and automatically adjust the lighting, temperature, ventilation, air quality, and humidity levels in common areas, individual workplaces, conference rooms, and more. Adjustments are based on factors such as real-time existing conditions or occupancy, crowd size, traffic, or other distinctive needs. On the other hand, to optimize resource usage, smart technology will switch off devices when no presence of people is detected. Digital transformation gives tenants more control over the utilization and rationalization of their spaces through smart parking, room or workstation reservations, or requesting special services, all accessible from a smartphone. Embracing these innovations improves the tenant experience and engagement and provides a comfortable and pleasant working environment. The owners, managers, investors, and developers of commercial real estate properties should be aware of technological trends and smart building innovations and consider incorporating them into future projects.
Alicia Mynarska is a senior manager at Withum.
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