Intelligence: harnessing data, analytics, and new technology in real estate

The fourth of our six trends driving sustainability in commercial real estate is intelligence – harnessing data, analytics, and new technology. The rapid growth of operational, financial, and environmental data for commercial buildings will likely reshape the way that owners analyze and manage the performance of their assets. According to some estimates, by 2021, commercial buildings will incorporate over 3.6 billion connected devices. These devices could come in many forms: lighting sensors that personalize control of individual fixtures, occupancy and temperature sensors, access controls, etc. This trend is also driving huge growth in building-performance software, which is already a US$12 billion-dollar industry and expected to grow to over US$18 billion by 2020.

Connected devices, aka the Internet of things (IoT), are technology’s next frontier, and every tech company is trying to stake out their positions in this market. The Intel IoT Solutions Alliance and the DELL IoT Solutions Partner Program are initiatives to bring solutions-providers together to use brand-specific technology products. They essentially function like membership programs to encourage use of the Intel or DELL systems as the backbone of IoT infrastructures.

The move towards building intelligence is driving a shift toward personalization of the built environment. And that’s shifting how and who operates buildings, adding complexities to the landlord-tenant relationship. These technologies create new questions for landlords and tenants: who purchases, controls, or maintains these connected devices. For example, with smart windows that can alter the amount of lighting in a space to improve comfort and reduce operating costs, who controls the balance between comfort and cost? With this technology, you have to negotiate new rules between tenants and landlords on who controls the software, who decides how much light to let in, etc. In response to some of these types of issues, one manufacturer is considering a service model where the tenant pays a subscription to activate and use glass purchased by the building landlord.

This new intelligence applies to multiple system layers in the urban environment. For instance, buildings are talking to the energy grid. Extrapolate this further and you have energy grids, driverless vehicles, renewable technologies, tenant spaces, smart cities, and intelligent buildings – all generating tons of new data that may lead to industry disruption, new services, and new business models. However, new technology brings new challenges: cybersecurity, safety, business continuity, and more.

Big data isn’t just for technical operations; there are also new initiatives to share and make sense of financial and performance data. For example, the Green Building Information Gateway is the premier search engine for green building data. Arc, a new U.S. Green Building Certification Inc. platform, allows buildings to apply for many green building certifications. The U.S. Department of Energy’s Better Buildings Alliance is developing a commercial real estate data lab, where information would be collected from building owners and made available for research. And, academic groups like the University of North Carolina and other centers for real estate are working to gain access to major real estate data sources and allowing researchers to use that data.

The real estate industry is awash in data, and this new information brings both challenges and opportunities for investment managers. In particular, owners, operators, and tenants need to convert data to insight. Having thousands of data points within a building provides no value if the data is not being used to make informed operational and business decisions. In the coming years, the industry will need to work towards turning this new data into intelligence, making it digestible, actionable, and useful.


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