Investment in smart building technology is making major inroads in commercial real estate around the world. While companies worldwide spent $5.5 billion on smart buildings in 2012, that number pales in comparison to the $18.1 billion expenditure projected by 2017, according to a report by IDC Energy Insights. So, why are commercial real estate owners investing so heavily in smart buildings?
Why Smart Money Is on Smart Technology
Smart buildings successfully combine building management and IT systems, simplifying facility operations and providing significant improvements in system performance overall.
As Cloud technology makes investment in smart buildings more affordable, commercial building owners are seeing opportunities for increased efficiency and cost-savings that simply did not exist in previous decades.
The application of smart building technology in commercial real estate makes good sense for many reasons. For commercial building owners, adopting new technologies is, first and foremost, a balance of expenditure versus benefit. To be desirable, smart buildings must pay for themselves within a reasonable time frame. Do they?
The answer to that is “yes.” While many commercial real estate owners may balk at the initial cost of converting an existing building into a smart building, on average, those initial expenditures can be recouped within one to three years, through increased energy savings and maintenance efficiencies.
Cloud technology makes smart buildings even more financially feasible by providing a centralized management system where facilities professionals can access information from multiple properties in real time, thereby consolidating previously disparate systems and streamlining the management process considerably.
Smart Buildings = Big Benefits
Other than energy savings and streamlined facilities management, there are many additional benefits that make investing in smart technology the wise choice. Here are just a few to consider:
- Increasing numbers of tenants find smart buildings to be attractive, which translates into higher than average rents, lower vacancy rates, and improved tenant satisfaction overall.
- Smart buildings using energy metering allow for sub-metering, giving tenants a certain amount of control over their energy expenditures and helping to modify tenant behaviors toward energy consumption.
- Real-time monitoring allows facilities managers an up-to-the-minute understanding of building performance. When problems arise, they can be dealt with quickly, saving both time and money.
- Security systems may be integrated with building management systems, thereby providing more safety and security for building tenants and the property as a whole.
- Smart buildings, though not always completely “green”, are more eco-friendly than their counterparts.
- Smart buildings can generate more income for owners by providing wired and wireless high-speed internet and VOIP services to tenants for nominal fees.
Metrics That Matter
Smart building technology enables management of energy, water, and air quality. In addition, HVAC and lighting operations can be monitored and adjusted, as needed, to optimize overall system performance. By measuring even minute changes in any essential systems, early detection of maintenance issues allows facilities professionals to handle problems before they spiral out of control. This responsive maintenance reduces overall equipment costs by significantly lengthening the lifespan of necessary building infrastructure.
Where to Start
When considering investment in smart technology for an existing investment property, it is wise to benchmark your building’s current performance in terms of energy usage, water consumption, and air quality.
Once problem areas are identified, a comprehensive plan can be developed to address your specific issues. A cost analysis is essential, as you will need a solid projection of ROI for your smart technology.
With a wide variety of technologies available, you can likely find something to fit your budget while still optimizing the performance of your property. If you would like some guidance about the process, please feel free to contact us. We help commercial real estate owners every day to find smart solutions that work.