What ' s a Smart Building ?
A smart building uses advanced technologies to connect , analyze , and boost building performance and efficiency , including heating , lighting , energy consumption , air ventilation , fire safety , and security .
They often use the Internet of Things ( IoT ), which enables various connected devices , such as IoT occupancy sensors and building management systems ( BMS ), to communicate , typically through Wi-Fi and the Internet .
Smart buildings pump out a ton of data collected from the sensors so facilities managers can better understand a building ' s performance . And where there ' s data , there ' s an opportunity for artificial intelligence ( AI ). For example , AI-driven smart lighting systems adjust lighting levels based on available natural light and occupancy . AI can also learn user preferences and modify temperature based on specific tenants .
What ' s Driving Smart Technology ?
Building owners / operators want to improve energy efficiency and lower operational costs , meet environmental regulations and ESG goals , enhance occupant safety / comfort , and provide digital amenities to draw tenants . All this makes a building more attractive to occupants and investors and boosts property value .
" I think smart buildings are the future of office and commercial real estate in general ," says Galvan .
" There are so many aspects of intelligent infrastructure ," says Timothy Churchwell , CCIM , Vice President of TEC Holdings , LLC . " A fire breaks out , and the elevator immediately shuts down , so safety issues exist . There are economic issues . There are energy efficiency issues ." He says smart building technology is a must-have , especially in new construction .
According to a recent Precedence Research report , the smart building technology market is booming and anticipated to expand at a CAGR of 10.9 %, reaching $ 256.18 billion by 2033 .
Finances , Sustainability Go Hand in Hand
" You ' re going to have a higher net operating income on your property if you have a sustainable building ," says Marika Erdely , MBA , CEA , LEED AP BD + C , Fitwel Ambassador and founder / CEO of Green Econome .
" It ' s going to be worth more money , therefore , now you ' ve got an increase in the asset value ," she notes . " Understanding where that energy efficiency or consumption lands and what you can do to make your building more energy efficient is all driven by money ."
But that ' s not all . By optimizing energy usage and predicting equipment failures , smart buildings can significantly reduce their carbon footprints . " Companies and investors are concerned about ESG strategy ," says Erdely . " That means you must have efficient buildings , and you ' re reporting on your buildings and their emissions ."
Jeffrey Gould , CCIM , Principal / Founder of Lineage Asset Advisors , Inc ., notes that many companies , institutions , and REITS consider ESG a benefit of operational excellence .
" When you have a designation or certification like LEED , there ' s the conversation around tenant retention , attraction , and satisfaction ," Gould explains . " Some of these technologies around operations prove the correlation that implementing these technologies and having operational excellence allows you to attract the cream-of-the-crop tenants in certain submarkets ."
Gould says studies show that LEED-certified buildings are achieving rent premiums . Many tenants want sustainable offices and the convenience of advanced building amenities , including smart parking , personalized controls , and touchless entry .
Convincing Owners It ' s Worth the Cost
Building new smart buildings is expensive , and retrofitting existing buildings with smart technologies is also very costly . You must show owners that making these upgrades is economically feasible .
" Making the business case is probably the hardest part , and we have to swim upstream to start to get owners to see the business model and ROI and start implementing these tools and technologies ," explains Gould .
Churchwell agrees . " You have to get into the cost analysis to retrofit systems . You have to find out if it ' s going to be economically feasible and what your return is ," he notes .
For example , it will save me X percent on my utilities and cost me this much to install , Churchwell continues . " It becomes a matter of return on your investment . ' OK . We ' ll recuperate all our costs in the first four years , and then after that , we ' re free and clear .' Economic vitality is key ."
ENERGY STAR ® is a Good Tool
ENERGY STAR benchmarking compares a building ' s energy , water , and trash to similar buildings and past consumption .
" Say you add solar or do energy efficiency retrofits ; you can see the metrics change in your building ," says Erdely . " It ' s a good measurement and verification that your actions made sense ."
Erdely also says smart building upgrades don ' t have to break the bank . Her firm works with an office building owner seeking to cut energy use . One of the technologies she ' s recommending is software that costs $ 8,200 a year , but she ' s projecting a payback in two or three months .
" That ' s because we can identify when they ' re going to hit their peak demand , and they ' re going to make adjustments to their HVAC , so they don ' t hit the peak , and they ' ll save money ," Erdely explains .
Utility companies often charge higher rates during peak electricity usage times .
" When you ' re paying $ 26,000 a month in utility bills , $ 8,200 a year isn ' t that much ," says Erdely .
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