Buildings Get Smart
Property owners and managers throughout the real estate world are tuning in ever more closely to smart building trends. The term #smartbuilding is loosely tossed around a lot, but it generally refers to network-enabled building management systems that help automate building operations.
Facing pressure to manage costs, risks and energy consumption, building owners and investors are exploring how smart building technologies can help people, planet, and profits.
According to a report by Jones Lang LaSalle there five key major trends and opportunities within the field:
Rapid return on investment (ROI).
Smart building technology investments typically pay for themselves within one or two years by delivering energy savings and other operational efficiencies. Also driving the fast payback is the low cost of automated building technology, which has fallen as adaptation has increased.
Operating-expense (op-ex) advantage.
Relative to other energy-related building upgrades, smart building technology requires little upfront capital expenditure (cap-ex), while delivering significantly reduced operational expenditures (op-ex). Using automated systems, smart buildings generally cost less to operate than buildings operating solely on legacy systems, therefore offering a long-term op-ex advantage.
Numerous studies and surveys have demonstrated that tenants and their advisors increasingly expect smart building features such as zoned HVAC, sophisticated equipment maintenance alert systems, advanced security systems, and “green” buildings. Like a new lobby or elevator bank, an improvement in sustainability makes an office building more desirable to tenants.
Smart building technology can generate energy savings of 10-20 percent annually almost immediately after deployment, with the potential for incremental improvements over time. A report estimates that $289 billion in building efficiency investment would produce savings of more than $1 trillion in the U.S. alone, with every dollar invested in energy efficiency producing three dollars of operational savings.
Improved Corporate Social Responsibility (CSR) profile.
Redirecting energy spend on building efficiency has allowed some corporate decision-makers to gain the reputational advantages of doing the right thing by the environment while also gaining significant performance and productivity improvements. Another benefit is a smart building system’s ability to measure and report greenhouse gas emissions.
These trends align well with my view on the development of smart buildings. Apart from the very concrete values of saving money and improving the environment and indoor climate, one of the key opportunities the property technology development is finding new business models within a quite conservative business.
Initiatives within the European Union
Heating and cooling in buildings and industry account for half of the EU’s energy consumption. Moreover, 84% of heating and cooling is still generated from fossil fuels, while only 16% is generated from renewable energy [EU stat].
In 2016 the Commission proposed an update to the Energy Efficiency Directive, including a new 30% energy efficiency target for 2030, and measures to update the Directive to make sure the new target is met.
What is interesting to see is the lack of initiatives to make buildings smart. What EU is focusing on is:
- Usage of advanced construction and design techniques
- Providing better information
- Using “intelligent thermostats” to switch off and on heating
- Upgrading heating equipment such as boilers
These measures are of course driving the development in the right direction – but way too slow and expensive.
It’s time to speed up building smartness
I believe that it’s vital to modernize the building industry to take advantage of new and modern digital solutions that optimize energy use and introduce new and smart business models that minimize capital expenditure.
This will truly drive smartness into buildings much faster than the current direction assisting us to reach the challenging energy efficiency targets set out by the Commission.