The commercial real estate (CRE) market is rich with opportunities for smart buildings to improve property management top- and bottom-line performance through expense reduction, increased property values and better workplace experiences for tenants. Today, amid the flurry of smart homes, self-driving cars and smart wearable devices, only about 15% of commercial buildings are “smart,” with connected building automation systems in place. But, that’s about to change BIG TIME. In fact, the CRE market is projected to have the fastest and largest growth in connected devices between 2016 and 2021, surpassing even smart homes, according to the Smart Building Research firm Memoori.
Legacy building controls systems are overbuilt and expensive for most commercial building owners and operators. Those systems are being displaced by new, born-digital solutions.
Smart Buildings can save upto 50% on HVAC and Lighting Energy Costs
Fuelled by the proliferation of affordable sensors and cloud computing, this new breed of building intelligence solutions is changing-up the economics of the real estate investment world. Now, it’s more affordable and easier than ever to realize net gains from the affordable, yet sophisticated, building automation systems (BAS) that combine the Internet of Things (IoT), wireless communications, big data and cloud-based algorithms to make your buildings smarter, more efficient and more attractive for both current and potential tenants.
These new systems offer several ways to both reduce expenses and improve property values, netting positive for all real estate stakeholders – investors, owners, asset managers, brokers, property managers and, of course, tenants – the ultimate customers.
When you factor utility incentives for energy-efficient systems, or just the annual operational savings, building automation systems are becoming a smarter choice for property CAM, TI and upgrades on financial merits alone, before factoring the many workplace benefits.
Perhaps the greatest value in smart buildings is in the improved workplace experience, with comfortable, healthy, productive and easily-managed indoor environments for tenants. An intelligent building system can play a key role in attracting, retaining and delighting tenants, offering lower energy bills, eco-friendly offices, and creating great places to work with healthy indoor air quality and unique occupant experiences (OX).
The CRE market is projected to have the fastest and largest growth in connected devices between 2016 and 2021, surpassing even smart homes, according to the Smart Building Research firm Memoori.
EXPENSES GOING DOWN
- OpEx Reduction Reduce operating expenses across building systems, including HVAC and lighting maintenance.
- Energy Savings A Smart Building system can save 30- 50% of HVAC energy consumption, plus reduce LED and other lighting energy – conservatively $.20-.50 PSF.
- Rebates Utility-driven efficiency incentives can reduce total cost of acquisition and speed ROI timeframe.
- Reduced HVAC Equipment Higher efficiency means fewer or downsized equipment, or even eliminating traditional fixtures.
- Extend Equipment Life Retrofit controls to equipment; smart monitoring and predictive maintenance can add years to your equipment lifecycle.
- No IT Hardware Costs No need to invest in workstations and software updates; cloud based software enhancements pushed wirelessly
- Lower Installation Costs Get 5x faster installation of wireless system, eliminate temperature controls specialists and custom programming.
- Remote Multi-site Management Web and mobile monitoring and adjustments without site visits; reducing travel expenses and team disruption.
- Optimization Through Insights Further efficiencies can be driven by data insights, patterns understanding demand and supply / performance.
VALUE GOING UP
- Higher Rates per Square Smart building systems can lift property value by at least $.10/sf, increasing as much as 11.8%, adding to your top line.
- Long term Hold Assets 10+ year plans; internal rate of return.
- Differentiation Only 15% of commercial buildings are smart. Yet, progressive tenants seek and value the benefits and controls of smart, connected properties.
- Staged for the Market A smart automation system shows well. A quick retrofit to your current and vacant properties provide a fast enhancement. When showing, use a Google calendar feed or geo-fencing based pre-conditioning to make that first visit comfortable and inviting.
- Attract + Retain Tenants Smart systems, and applications that empower the users, are becoming a means to get interest from prospective tenants and to stay sticky with existing clients.
- Creating the “Occupant Experience” is a huge opportunity for landlords to give management remote insights, save energy, improve workplace IAQ and comfort, plus empower employees with control over their zones.
- Higher Return TI Investment Adding more-lasting and differentiated value than fresh paint and carpet.
- Higher Return CAM Investments Can offer uncommon value for common areas and budget management.
- Green Value in Sustainability Green buildings have ever increasing attention and value in the market, supporting corporate citizenship and triple-bottom line performance for profit, people and the planet too.
The U.S. Green Building Council cites that buildings consume 70% of the U.S. electricity and account for 39% of U.S. CO2 emissions. The U.S. Department of Energy (DOE) indicates that commercial buildings waste 30% of the energy they consume. This is a major opportunity for smart buildings efficiency to save significant energy expenses and reduce environmental impact; yet, that’s just the start of the savings.
STARTING TODAY, SMART SOLUTIONS CAN CUT ENERGY BY 25%
One of the greatest and most immediate opportunities to reduce property operational costs is in energy reduction, particularly in more efficient management of heating, venting and air conditioning (HVAC) and lighting. In the average commercial building, HVAC and lighting makes up about 50% of energy use⁵; so, the potential of 30-50% energy savings from smart HVAC could translate to 25% of total energy use. That alone is worth the investment, often with payback in less than 3 years, sometimes less than a year. And that’s just the start of savings. Smart building technologies can reduce costs and add value to your TI packages, while boosting returns for owners and tenants alike.
EFFICIENCY INCENTIVES PAY GREEN FOR GREEN EFFORTS
Utility-driven rebates, low- or no-rate financing and tax incentives for energy efficient systems help cover costs and reduce payback timing, leading to net gains even sooner. A quick, no-cost site survey and estimated projection of energy savings can help to cost-justify the building automation system investment and define the payback timeframe, from only an energy savings perspective.
LEED CREDITS INCREASE SAVINGS (AND INCREASE PROPERTY VALUE)
The US Green Building Council’s LEED program recognizes Leadership in Energy and Environmental Design, with different levels of reward: LEED certified buildings (40-49 credits), silver (50-59 credits), gold (60- 79 credits) and platinum (80+ credits). LEED buildings have faster lease-up rates, may qualify for a host of incentives like tax rebates and zoning allowances, and retain higher property values⁶.
For example, 75F intelligent building solutions can contribute to up to 38 different LEED v4.0 points, up to 11 credits. This provides even further capability for you to demonstrate sustainability and good corporate citizenship, in addition to eligibility for financial incentives, such as tax credits. And, new measurement tools such as USGB’s Arc Score can help you assess your ongoing building performance benchmarked against others, whether you’re a LEED building or not. The Arc score offers dynamic measures for Energy, Water, Waste, Transportation and Human Experience.