Intelligent building technologies and the as-a-service model

The white paper I recently co-wrote with Social Energy Partners has been well received. For those with an interest in the subject matter but a lack of time to really dive in, here’s a short form version of the key points.

(Note: you can download the white paper here.)

The internet of things in buildings will enable increasingly low cost sensors and more powerful cloud data processing to collect and analyze new information about our physical spaces. The real-time, always on nature of these technologies will provide a clearer picture of how we use our space, how we can optimize it, and what is breaking (or may break in the future).

Applying these technology enablers to real estate broadly, it is clear that a number of trends will drive technology adoption. Offices are becoming talent attractors and innovation enablers, with technology taking a leading role. The cost per square foot of space is significant and many offices are under occupied. It’s hard to have a clear picture of true utilization without data. And, the continued demand for green, energy-efficient buildings will require technology to monitor and optimize resource consumption.

The white paper describes intelligent building technologies (IBTs) as “rapidly progressing and networked hardware and software solutions that can optimize buildings’ operational efficiency, improve environmental and energy performance, enhance human comfort, health and productivity and elevate building safety and security for the benefit of building owners, operators and occupants.“

The technology enablers and key real estate trends dovetail with the IBT opportunity. But, technology risks, budget risks due to large capital expenditures, financial risks due to uncertain or unquantifiable return on investment, and user adoption risks rising from organizational resistance to embrace and utilize the technologies all dampen adoption. Intelligent building technology is capital-intensive, rapidly maturing, and can be challenging to integrate and operate effectively. An “as-a-service” model eliminates the upfront capital cost, minimizes users’ technology performance and investment return risk, reduces the likelihood of technology obsolescence, and is outcome-driven to ensure the solution delivers the expected value.

When viewed broadly, intelligent building technologies can increase net operating income, occupancy and property value. These technologies also improve productivity of their occupants and attract better tenants. Additionally, they enable proactive, condition-based maintenance. There is reliable research to back up all these points, which we cite in our white paper.

Longer term, these technologies also will enable new real estate business models and extremely high space utilization. They also may enable a transactive energy model: where the buildings can be both consumers and suppliers of energy.

An unprecedented number of intelligent building technologies, or IBTs, have now been commercialized and countless more are being developed. The IBTs, when installed and adopted, are poised to dramatically increase building energy efficiency, operating efficiency, occupant comfort and productivity, and safety and security. JLL’s “3–30–300” rule of thumb in the real estate market — the cost of energy ($3), rent ($30) and personnel cost ($300) per square foot per year — suggests that there are enormous operational, energy and productivity savings and benefits to be realized by adopting IBTs.