Investing in smart buildings — is it smart?

Commercial Real Estate managers are investing in technology to measure and report building data — otherwise coined as deploying a ‘smart building’ program. But, what the industry is failing to acknowledge as a rapidly pressing issue, is that measurement of such metrics is only half of the story. To date, there are few building managers who are able to articulate how they will achieve targets (e.g. reduced operational carbon emissions), rendering investment into measurement and storage of data worthless.

For example, spurred by commercial and regulatory pressure, building and portfolio managers have adopted Science Based Target (SBT) and developed Environmental, Social and Governance (ESG) strategies, inevitably with help from management consultants. Often these strategies lack creativity, pigeon-holing a healthy workplace as maintaining a certain level of indoor air quality and temperature, having a couple of plants on the desks and increasing female representation in leadership, all while achieving Net Zero Carbon by 2030. But, the fascinating thing is that very few of these strategies articulate how they will deliver on such ‘ambitious’ targets or how they necessarily provide a healthier workplace. Arguably, not very ‘smart’ after all.

To add further complexity, targets may often contradict each other. Take the above mentioned SBT and indoor environment targets as an example. As the climate becomes increasingly volatile (London heatwaves, New York’s air pollution), building operators will need to up cooling systems to meet standards. Yet increasing the air conditioning will, in turn, increase the carbon intensity of the building, forcing them to evaluate tradeoffs between employee and planetary wellbeing. Ultimately, there will have to be a balance, with some businesses calling on employees to bring a jumper to work in winter in the name of reduced carbon emissions.

This is not to say that measurement of these metrics is useless. The age-old argument is that you can’t change what you don’t measure. However, with industry commitment comes the responsibility to deliver. As part of this, there is an increasing need for skill sets that can take large datasets, identify issues (e.g. where data indicates not on track for net zero or ESG target), ideate system-based solutions, make an intervention and monitor the impact of these decisions.

This is where the exciting prospect of Artificial Intelligence (AI) comes in, which could implement such interventions at a pace and scale larger than any individual team. At present, while AI can analyse building data, we have not yet managed to database the complexity of a healthy building to artificially generate efficiency-improving building system interventions. However, big players such as CBRE have begun investment that focuses on AI integration alongside building data analytics software partners such as Skyspark. Put another way, this is industry collecting data, and then using AI to tell them what interventions to make to meet set targets. Similarly, giants such as JLL and Hines are launching multimillion venture funds focused on technology in the built environment. This, to me, says that industry players are putting their money where their mouth is when they say we can innovate our way to net zero. Scientists do warn us, however, that technological bias can be a hinderance to emissions reduction without behavioural change. In this case, techniques like energy gamification could come in to incentivise energy saving behaviours in the workplace.

Whether through the use of AI or human interpretation, building investors who are embracing insights to justify data driven actions and monitor results are already reaping the benefits. For example, emergence of the ‘destination office’ combines multiple ESG factors to encourage employee return to the workplace, improving productivity, and in some cases, better employee mental health. Similarly, operators who have invested in technical delivery of smart building programs have realised operational cost and carbon reductions of up to 20%.

So, the industry adoption of smart building programs is well grounded, if those investing in the technology to measure and report data are thinking ahead to how it will be used. With improved data quality and availability, targeted interventions can be monitored for success. Ultimately, this will save costs (reduced utilities), drive revenue (improved individual performance, lengthened tenancy agreements) and contribute towards a lower carbon future. Sounds pretty smart to me.