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The 3 Trends Pushing CRE Toward Smart Building Enlightenment


The commercial real estate industry is disillusioned with smart buildings, and for good reason. Marketers of smart building tech have been forecasting a futuristic workplace that feels straight out of "The Jetsons". But so far, it hasn’t materialized.

Instead, CRE building owners have 1.5 billion internet-connected sensors and not enough to do with them. 

But this is all a misunderstanding — CRE professionals are unclear on what the “Internet of Things” is actually built to accomplish. IoT is a technology that is available now to help building owners reduce their costs and hold on to tenants by making them more comfortable. IoT isn’t a promise of space-age workspaces; it’s a clever investment that owners can make for the future.

Here are three trends that will transform IoT from a hyped-up technology to a shrewd investment in 2019:

Lessons Learned From Other Industries

Commercial real estate is hardly the first industry to implement IoT. Manufacturers, oil and gas companies and healthcare systems have all made huge strides in extracting data from their built environments in order to cut costs and inform new strategies.

But because IoT for commercial real estate is still in its nascent stages, building owners are making mistakes that could be avoided by learning from other industries.

“Instead of looking at the progress that other industries have made, commercial real estate owners have been trying to figure IoT out for themselves,” ThoughtWire Chief Commercial Officer Franco Castaldini said. “There are technical kinks that other industries have worked out. And until CRE owners look to those industries, they’re doomed to make the same mistakes as well.”

The single biggest challenge of implementing IoT is data integration: how to extract data from many sources and present it all on a single pane of glass. Castaldini said early IoT ventures sought to extract as much information as possible and place it all into a single “data lake." But in these data lakes, important data was indistinguishable from unimportant data, and most companies never found a use for all the information they collected.

In manufacturing, data lakes have been supplanted by strategies that compartmentalize important information to ease decision-making. But CRE companies experimenting with IoT are still using data lake strategies.

“It’s been known for years that data lake strategies don’t provide the insights needed for effective IoT, but CRE owners are still implementing them,” Castaldini said. “As IoT matures, there has to be a certain amount of hand-holding. CRE owners need a partner in IoT strategy that can show them the best way. They shouldn’t try to figure it out for themselves.”

The Digital Twin: Outcome-Driven Exploration

Very few CRE owners feel confident enough to invest fully in IoT for their buildings — they are dipping their toes in, Castaldini said. Owners tend to place internet-connected sensors in places where there were already sensors: HVAC units, lighting systems and utility meters. This strategy rarely drives return on investment, Castaldini said.

Instead, he explained, CRE owners need to consider the lived experiences of their tenants and then reverse-engineer IoT solutions. This strategy is known as outcome-driven exploration.

“Think about getting pizza delivered to your office,” Castaldini said. “Wouldn’t it be nice to have a system where you could let the delivery person into the building via your phone? Even better, what if we gave the delivery person a wayfinding map on their phone, so they could navigate right to your office and drop off the pizza? That would be a lot better than all those pizzas getting cold sitting unclaimed at the security desk.” 

The same technologies can help maintenance workers and service providers as well as business partners and guests visiting the office building. 

These kinds of applications are all possible with digital twin technology. A digital twin is a real-time digital model of everything happening in a building; it knows where occupants are and what systems are in use at all times. As these digital twins become more detailed, building owners can provide more services to keep tenants happy.

“Outcome-driven exploration is what will actually create great office spaces,” Castaldini said. “We’re thinking about use cases like integrations with on-demand services, automated parking and environmental controls. Digital twins are opening up a huge range of possibilities to give tenants a better experience.”

Daily Engagement With Tenants

IoT can certainly cut costs for building owners by optimizing heating, lighting and utility system usage. But the long-term benefit of an IoT solution — the reason it’s a smart investment — is tenant retention. To get tenants to buy into smart buildings, Castaldini thinks, tenants need to engage with their building on a daily basis.

“It’s not enough for tenants to know that they work in a ‘smart building,’” Castaldini said. “The IoT system should be what tenants use to interface with the workspace around them.”

He said tenants should be using an IoT interface through their devices to book conference rooms, alter lighting preferences and change the temperature. The point, Castaldini said, is for tenants to feel that they are in control of their space, to see that the building knows and responds to their needs.

In an emergency, tenants should be able to look to IoT systems through their phones for wayfinding maps or announcements from the building. Castaldini said that a walk-through of a fire drill with IoT technology makes tenants feel safe and gives them a feeling of assurance in those times when they may not know what to do.

By encouraging tenants to adjust lighting and heat to their comfort levels and sending building announcements through their IoT interface, Oxford Properties in Toronto drove weekly tenant engagement from zero to 65%.

“When the same technology that lets you book a conference room every Monday also can help you if there’s ever a lockdown or a fire, that’s when you have an IoT system that tenants trust and that they want to engage with,” Castaldini said. “And once they trust your system, then they love your building.”

This feature was produced in collaboration between Bisnow Branded Content and ThoughtWire. Bisnow news staff was not involved in the production of this content.