by Dan Rafter
Sensors. Integrated building systems. Data analytics. Robotics. These technologies are all poised to change the way facilities managers, tenants and owners communicate with their commercial buildings. And according to the 2017 Global Market Outlook by Ernst & Young, commercial buildings will only get smarter, meaning that they will consume less energy and become more affordable to maintain, in the future.
Midwest Real Estate News recently spoke with Serena Wolfe, central market segment leader with Ernst & Young, about this trend. Her takeaway? The era of smart buildings is only beginning, and it promises to be a boon to building owners who want to spend less on their real estate.
Midwest Real Estate News: How common is smart technology – sensors and controls that let building owners and facilities managers better monitor and control their commercial real estate’s heating and cooling systems – becoming in commercial buildings today?
Serena Wolfe: It is certainly a very hot topic today. We hear a lot about smart cities, smart cars and, of course, smart buildings. We at Ernst & Young have been looking a lot at the potential of smart buildings. If you look just at Chicago, we have seen a change in the makeup of the workforce and the companies that are moving into downtown. We see a lot of tech companies such as Google, Groupon and LinkedIn in Chicago. These are high-tech companies, and more are coming. The Millennial generation also wants more tech in their offices. This changes the workplace of the future. Office space no longer works in the way a traditional accounting firm once did. Basically, the availability of data is changing the way we think about using buildings.
MREN: Do people understand what it really means to have a smart building?
Wolfe: Many think the concept of smart buildings is making sure that the HVAC and electrical systems all talk to each other. But it’s more than that. At the guts, a smart building is about collecting and analyzing data, and then using that data to make better decisions about operating that building. It’s amazing how much data buildings put off every day. Historically, we’ve ignored that data and operated a building how we always have. We’ll set up maintenance schedules, for instance, and follow them, not paying attention to what the buildings are telling us. Now we have the ability to capture the data that buildings generate, analyze it and figure out how we can change the way we operate buildings. That not only reduces costs, but we can also improve the consumer and office occupant experience.
MREN: What are some of the practical uses of smart technology in buildings?
Wolfe: Think about cost reduction. Clearly, if you have a smart building with sensors you can analyze adjust your energy management. You can look at when a building is most occupied and when it is least occupied. You can then adapt. If there is a certain time of day when there are fewer people in your building, you can reduce the cooling or heating during that time. It sounds simple, but we have not tapped into that information historically. We didn’t have the ability to see how people flowed through different buildings. Now we can keep a better eye on traffic throughout a building. We can better understand how tenants are using a building, and adjust the building’s systems as a result. It’s about getting access to the data, which we couldn’t get in the past.
MREN: Smart technology plays a big role in facilities management, too, right?
Wolfe: Managers can use the data captured by this technology to make better decisions on how to maintain a building to reduce costs. Historically, everyone managed a building very traditionally. Now with sensors and data, we can be smarter. Instead of fixing an elevator because it is broken or routinely doing elevator maintenance every six months, we can look at the data to determine when it makes the most sense to perform maintenance on an elevator to make sure that it doesn’t break down. Or we can use data to best determine when to change out a filter. Maybe we changed a filter every three to six months. But by studying the data, we might find out that a filter doesn’t have to be replaced as often. Or maybe we’ll find out they should be replaced earlier. It’s about using data to make better decisions. We have always had this data available, but it has not been captured and analyzed in the past. Now, I am seeing office owners embrace the data. I am seeing them implementing many of these changes we have talked about in an effort to be more efficient with their costs and energy.
MREN: Does this matter to the tenants who are going to be filling this space?
Wolfe: Office owners understand that they need to deliver more than just space to their tenants. To ensure that they are able to retain their tenants, they have tovoffer them more. Is there a way that office owners can help companies better understand how their employees use their space? By studying the data, owners can help tenants determine if they need as much space as they currently have. They can help companies determine if their top-performing employees get more out of working in an open or collaborative space. That way, when companies design space in the future, they might decide they need more of one kind of space and less of another. They might look for a bigger shared reception area or a larger conference space.
MREN: Are smart building systems something that will attract tenants to a building, if all other factors are more or less equal?
Wolfe: For certain types of tenants it might make a difference. A tech-focused tenant would be much more attracted to a smart building versus a traditional office space. This is a real opportunity, say, for Chicago real estate owners. There isn’t just an influx of tech companies coming into Chicago. There are also companies moving from the suburbs into downtown Chicago. Relying on smart technology gives owners an opportunity to incorporate these smart building concepts to attract outside tenants.
MREN: What about the owners of buildings other than offices? How can they use smart-building technology to make a difference?
Wolfe: Retailers are certainly using smart technology to enhance the consumer experience. The owners of shopping centers can access what their shoppers are doing by analyzing their WiFi data. They can use this information to understand patterns. If they see that a large number of their shoppers always go from the Nordstrom to the Starbucks, they can make decisions on whether that Starbucks is close enough to the Nordstrom. Are they potentially losing customers because the Starbucks isn’t close enough to the Nordstrom? Smart-building tech gives retail owners the ability to better understand the habits of their consumers.
As another example, some retail malls have developed apps that allow customers to find out where there is available parking in their parking lots before you get there. You can then go straight to that area instead of circling the lot to find a parking spot. That enhances the customer experience. That customer is now more likely to come back to that mall. It’s a more pleasant experience. Retail owners have a lot of opportunity if they embrace some of these tech ideas.
MREN: What else can retailers do?
Wolfe: A lot of them are using apps now to get feedback from their shoppers. Maybe mall owners are thinking about putting up a play area for kids. They can set up a virtual play area on their apps or on the information boards throughout the mall. They can use these to ask shoppers for their input about the play area. Will should they put it? What should the play area include? Consumers like that. It’s great for the retail owner, too, who can lessen the chance of building something that the consumers don’t want. Consumers feel they are involved. That creates more loyalty from shoppers.