Technology in CRE Series: “Smart” Commercial Real Estate

It’s hard to believe that just a decade ago, commercial real estate looked entirely different than it does today. Real estate purchases often meant flying across the country, a briefcase in hand, to discuss options and negotiations. Property management meant on-site employees were working around the clock to keep building systems operational. However, now, SMART commercial real estate entered the scene. Technology has infiltrated nearly every part of the CRE buying, selling, and management process. 

These technological advances make life easier for investors, owners, and property managers. Discover some of the SMART commercial real estate technology that is revolutionizing the market. Learn common smart tech phrases and how integrating them into business can help streamline every part of CRE ownership and property management.

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What is Smart Tech? 

The name “SMART” tech is an acronym for “Self-Monitoring Analysis and Reporting Technology.” Over time, though, the acronym has been ditched. Most real estate professionals use “smart tech” to refer to any technology that allows interaction with a system or device using the internet. It allows remote access to various systems and devices and enables those systems to “talk” to one another without the user’s direct input.

Some smart tech is voice-activated, allowing users to control many aspects of their home and office without lifting a finger.

The hope is to move towards entirely “smart cities,” where everything is controlled remotely: transportation, healthcare, energy, education, and infrastructure.

Smart Tech in CRE

In the real estate sector, smart tech has become increasingly popular in the past decade. In both the residential and commercial arenas, developers and builders are integrating technology designed for user convenience, energy efficiency, and better communication between landlord and tenant.

Smart tech is quickly changing. In just a few years, it’s revolutionized the way the world does business. Real estate brokers, property managers, developers, and tenants are all using technology in ways never dreamed of just a decade ago. The future is moving entirely towards “smart cities,” where everything is controlled remotely: transportation, healthcare, energy, education, and infrastructure. 

SMART Commercial Real Estate Terms to Know 

Below are some of the most popular terms for SMART commercial real estate: 

Artificial Intelligence 

Artificial intelligence, or AI, is a computer application that completes tasks as programmed and learns new behaviors. AI programs can mimic human behavior and predict future outcomes based on past data.

Automation 

Automation is any technology designed to complete specific tasks without human intervention. Unlike AI, automated programs cannot learn from past data and can only change operations if programmed by a person.

Building Operations 

For smart commercial real estate, building operations are anything associated with the management and oversight of the commercial real estate property. This includes monitoring and maintaining HVAC systems, plumbing, electrical, security systems, and other vital components of a building’s infrastructure.

Climate Control 

Climate control is any system that regulates the temperature, humidity, and airflow in a building. Typically, this includes the HVAC system or other heating and cooling components.

Internet of Things

Internet of Things

Nearly any device that can connect to WiFi and other devices is a part of the Internet of Things or IoT. Today, countless smart devices exist in homes, cars, workplaces, and shopping centers. 

Office Security

In terms of technology, office security means two things. First, it’s about using technology to protect the physical assets of your business: employee safety, equipment, and other valuable items. And second, it’s about protecting digital assets: intellectual property, internet security, and the like.

Property Value

A real estate property value is the present financial worth of the real estate holding. For commercial real estate, property value is determined by several factors: 

  • Current market value
  • Current economic trends
  • Occupancy rates

CRE property values rely more on the property’s potential to make a profit now and in the future.

Real Estate Technology

Real estate tech

Real estate technology, sometimes called property technology or “proptech,” is a broad term used to describe any technology related to real estate. It could be online apps or services used by builders, owners, sellers, or property managers. Real estate technology can also mean smart solutions inside a home or office. Anything that helps real estate professionals buy, sell, or manage real estate falls under the “real estate technology” umbrella.

Smart Buildings

In terms of smart commercial real estate, smart buildings are properties that use technology to control systems throughout the building. These technologies share information and data through the Internet of Things to optimize efficiency throughout the building. 

Many developers are integrating smart systems into their new-build properties. But many developers and property managers are retrofitting their spaces with smart tech to make their buildings more efficient.

Smart Tech in Commercial Real Estate  

Smart tech is making businesses in all sectors easier and more efficient. In commercial real estate, smart tech is helping investors and property managers oversee operations more effectively. Real estate technology now reaches every part of the CRE industry, from investing and purchasing to property management and tenant relations.

Brokers can utilize the technology for client relationship management, virtual tours, and data analysis software options. CRE property managers can integrate smart commercial real estate systems into office or multifamily residential properties, reducing costs and conserving energy – and everyone benefits from time-saving smart devices that make life easier.

Commercial real estate professionals can benefit significantly from incorporating smart tech into their businesses.

Internet of Things and CRE

The internet of things (IoT) stands as the interconnected network of smart-capable devices. But how does the Internet of Things help commercial real estate investors and property managers? 

In a word, the answer is efficiency. IOT & CRE

The more smart devices a property has, the better the building’s ability to maximize efficiency. The real genius of the IoT is the ability of smart devices to take sensory input – sounds, voices, lights, temperature – and turn that information into hard data. Using that data, IoT then responds accordingly. One device takes input, translates that input into data, and then connects with other smart devices to make necessary adjustments.

Smart buildings rely heavily on the Internet of Things to ensure all components work together. Sensors detect movement, turn on lights, and turn them off again when the movement stops. Smart thermostats detect climate changes to keep the offices or living spaces perfectly heated or cooled. Smart speakers – like Amazon’s Alexa or Google Home – allow users to lock or unlock doors, turn on appliances, and control other electronic devices remotely from a smartphone. 

Every device in a building can be linked to complimenting devices, creating a network that optimizes efficiency. 

The Internet of Things is helpful for nearly every CRE property type: 

Multifamily 

IoT-powered smart devices can help property managers identify potential maintenance issues before they arise. Sensors might detect a small leak by identifying an increase in water usage or a drop in water pressure. Other sensors might track air quality and alert staff to a decrease in clean air, indicating a problem with the HVAC system. 

Smart devices can also connect to ensure optimal temperatures in all units, alert to any fire or water emergencies, and keep residents more secure through automated security systems.

Office 

There are many applications for the IoT in an office setting. Automatic lighting and heating/cooling systems can work through the IoT, connecting movement sensors and HVAC or lighting systems. By minimizing energy waste, overall operation costs decrease. 

Retail 

The retail CRE sector is seeing some innovative approaches to IoT use. Automated systems work together to help business owners track supply shipments, manage inventory, speed up customer transactions, and even identify areas on the sales floor that prevent customer movement. 

IoT-supported systems maximize profits for retail businesses by using various technology applications. 

Industrial 

The industrial and manufacturing sectors have significantly benefited from real estate technology. The Internet of Things is so important in this industry that its applications are known as the “Industrial Internet of Things,” or IIoT.

The IIoT refers to any connected devices that automate, manage, or facilitate production. Networks of sensors, robots, computers, and other smart devices analyze every step of the manufacturing process, maximizing efficiency and reducing downtime. Because of this efficiency, manufacturers can make more products, with less labor, at a faster rate, ultimately saving money and maximizing profits.

Smart Office Security Systems 

Today’s office tenants want to know their valuable businesses are secure. Property managers and building owners can put tenants’ minds at ease by incorporating high-tech security solutions into their properties.

Smart office security encompasses two parts: physical and virtual security. 

Physical Security 

As more and more companies move towards technologically advanced spaces, more security options exist than ever. Moreover, these options allow users to watch over their homes and offices 24 hours a day, from anywhere they have internet access.

The Internet of Things keeps multiple systems connected, working together to protect offices. As such, security systems have evolved along with technology. Modern security systems work on a vast network of sensors, cameras, and other devices and can be accessed remotely by authorized users.

There is a multitude of options for commercial real estate security systems. New builds are more likely to have high-tech, integrated security features. But even older buildings can add smart security systems relatively inexpensively. 

Security upgrades typically fall to the owner to finance. Tenant laws in most states require at least basic security accommodations for tenants. But offering high-tech security options will make your building more attractive to higher-net-worth tenants.

While each building owner and property manager are different, several popular smart security options are commonplace:

  • The interior and exterior cameras with motion-activated sensors and cloud video storage. Cameras activate when they sense movement, and all activity is backed up to the cloud, eliminating the worry of running out of storage. Some products also feature searchable video footage to review incidents quickly. Also, many camera systems allow authorized users to remotely access cloud videos and live video feeds from a mobile device. Owners can keep an eye on their property 24/7, from anywhere. 
  • Smart locks on both primary building and office doors. Gone are the days of changing the locks with every new tenant. Now, tenants can access their offices with a mobile app. And when the tenant leaves, it’s easy to reprogram the system.
  • Biometric security uses fingerprints or facial recognition to unlock doors. This ensures that only authorized tenants and guests enter the facility and are less likely to be hacked.
  • Door and window sensors automatically activate a call to emergency services when triggered after hours.

Virtual Security and Cybersecurity

While smart systems and high-tech security features make life more convenient, they also present prime opportunities for hackers. As homes and businesses become more connected, tech companies scramble to keep virtual lives safe from attack. 

Property managers need to consider cybersecurity from two angles.  Cyber security in CRE

  1. First, be vigilant about online activity, and take measures to protect computer networks from attacks. Devices contain a treasure trove of information for hackers: financial information, personal data from tenants, email addresses and phone numbers, and so much more. Networkers can be protected by VPN, anti-virus software, and a secure firewall.
  2. Secondly, consider the tenant’s virtual security. If a hacker attacks integral smart infrastructure systems in the building, that could mean absolute chaos for tenants. And unsecured networks leave individual businesses open to attacks, too. 

It is important to create a cyber-attack prevention and reaction plan and have an experienced IT professional implement protective measures to combat possible future attacks. 

Vice-Activated SMART Tech  

Perhaps the most popular smart tech innovations are voice-activated smart devices, which are increasingly popular in homes across America. These devices, including Amazon’s Alexa and the Google Home hub, are known as “Virtual Personal Assistants” or VPAs. They help residents control many facets of their everyday lives.

How do VPAs impact property management? A recent survey found that half of the apartment renters own a VPA and therefore want their apartments and businesses to accommodate these devices. Younger renters (those under 35) are more likely to rent from a landlord who offers smart home services or a free smart home device.

Virtual personal assistant

Virtual Personal Assistants and Smart Devices  

Devices like Alexa or Google Home act as the central hub for other smart systems in an apartment, townhome, or office. For instance, if an apartment features smart lighting, a smart thermostat, and smart door locks, these systems can be controlled via the VPA (Alexa or Google Home). 

Because these systems are all connected – part of that Internet of Things – they can be controlled remotely from a phone or tablet. Users can activate them with voice commands (“Alexa, turn on the kitchen lights” or “Hey Google, turn the air conditioning to 72.”)

Because half of the new renters will be bringing a VPA, property managers would be wise to consider making their properties compatible with these devices. Give potential renters an incentive to lease with you by providing smart-enabled lighting, security, door locks, heating, and cooling, or other smart systems.

Smart Systems, VPAs, and CRE Property Management  

Not only will smart-enabled systems attract new renters, but these systems will also lower operating costs. Control vacant units from a centralized control panel, regulating temperatures and lights to keep utility costs down. And smart locks allow other staffers, potential tenants, and housekeeping staff to enter vacant units even if no one is available.

While valid security concerns are associated with smart devices and VPAs, they seem to be gaining in popularity. Providing smart-enabled living and workspaces for tenants will make the property more desirable, particularly for younger generations entering the workforce.

Not only will smart-enabled systems attract new renters, but these systems will also lower your operating costs.

Automation, Artificial Intelligence, and CRE Properties 

As mentioned in our definitions, automation is a technology that completes tasks without human intervention. Artificial Intelligence (AI) not only completes these tasks but uses input to learn and predict future outcomes accurately. AI technology seeks to create machines that act as humans do, learning behaviors and changing to react to those behaviors.

Automation and CRE 

Automation has many applications in commercial real estate investing and property management. Primarily, automated services replace many tedious tasks, freeing CRE professionals to pursue other things. For instance, some property managers use automated software to communicate with tenants, answer commonly asked questions, or take maintenance requests. Automation provides around-the-clock virtual assistants that can keep track of correspondence and connect with tenants in real-time.

Automated systems take care of many other repetitive office tasks, like invoicing tenants, sending out lease agreements and payment reminders, or reaching out to potential tenants. Using automated systems not only saves property management companies time but also reduces overhead costs.

Artificial Intelligence and CRE 

Artificial Intelligence (AI) takes automation one step further. These programs not only complete recurring tasks but also learn from the data to create new outcomes.

While this might sound like a science fiction novel, automation and AI are very much here in our present world.

In commercial real estate, artificial intelligence shows promise in several ways. For investors, AI programs can analyze data and predict which properties show the most income potential.

From a property management standpoint, CRE AI can scan potential tenant applications and determine which candidates are desirable renters.

These programs learn what works, and what doesn’t and then evolve to meet the changing demands of the business.

Automated CRE Systems: Heating, Cooling, Lights, and More 

Automation and AI help manage overall operating expenses for CRE owners and property managers by overseeing various building systems. Many automated systems, like heating and cooling, lighting, and security.

While Virtual Personal Assistants (VPAs, mentioned above) can control smart lighting and HVAC systems, plenty of other automated programs help control building systems. Depending on the property type, automation can handle everything from the building’s average temperature to water usage, energy consumption, and air quality. 

Automation and Client/Tenant Management 

Automation and client management

Automation has transformed property management for many CRE professionals. Computers can now complete redundant tasks, like billing tenants, sending out reminders or late notices, and processing lease renewals. Property management software keeps track of all tenants and automatically contacts each to keep payments and leases up to date.

Moreover, automated programs keep lines of communication open without needing a 24-hour assistant answering phone calls. Virtual assistants can take messages, answer common questions, and even schedule maintenance for tenants. This frees up time and budget to tend to more pressing matters and allows property managers to do less.

Automated CRE management software is a must for any real estate professional. Many high-quality management products help landlords and their staff track payments, communicate with clients and send lease renewal reminders. Many applications even collect and analyze tenant data, helping maximize profits.

Here are a few considerations/questions when choosing an automated property management software:

  • When choosing a property management automated system, it’s crucial to find one that is intuitive, mobile-friendly, and has all the tools needed to manage all properties successfully. What works for one CRE property management company may not work for the others. In large part, choosing an automated software depends on preference and productivity. Choose a program that minimizes your manual input, works with business needs, and gives the tools to maximize profits and increase occupancy.
  • Is the program intuitive and easy to navigate? Selecting a program that is cumbersome to use and hard to understand will likely cause more hassle than it’s worth.
  • Does the program integrate with other software programs in use? The automated system e should complement all other systems. 
  • Is the system reliable, and is the company behind it solvent?
  • Is the program mobile-friendly? CRE professionals are always on the go and need to have the ability to do business from wherever. The program should be easily accessible from a mobile device and have an app that tenants can download.
  • Speaking of tenants, they have to like the program, too – it’s important to receive tenant feedback. If it’s difficult for tenants to use, they won’t utilize the program. Instead, they’ll get in touch the old-fashioned way, calling and emailing when they need help. If that’s the case, no time or money is being saved. 
  • Does the program do what’s needed? Every property management team has different needs. Therefore, the software chosen needs to work with the team. Compare and contrast available software to find the one that will be the most effective for business needs.

How SMART Tech, Automation, and AI Help Everyone  

Smart tech is transforming the CRE industry for all areas of real estate: investors, owners, property managers, and tenants.

Smart Tech for Investors 

Technology plays a huge role in helping investors identify and purchase CRE properties. Data analysis tools, for instance, help investors better understand a property’s potential for returns. And artificial intelligence within those programs can analyze viewing and purchasing habits and therefore learn to recommend properties that meet an investor’s financial goals.

Investors can also consider the emergence of “smart cities” when investing. As cities become more connected, buildings that offer smart technology will appeal more to tenants. Therefore, investors can look for technology trends, find properties that already have technology integrated into their spaces, and make smart investment decisions for the future.

Smart Tech for Owners 

Smart tech helps owners track their property’s profitability from anywhere in the world. Data analytics programs and automated financial systems give owners virtual access to every property they own. From these applications, owners can see detailed reports about a building’s occupancy rates, annual returns, maintenance reports, and more. And best of all, most apps allow owners to access this data from a mobile phone or other handheld devices.

Smart Tech for Property Managers

Smart tech for property managers

As mentioned above, smart tech, automation, and AI have revolutionized the CRE property management industry. CRE property managers no longer have to sit behind a desk, taking maintenance requests and sending paper bills to tenants. Smart commercial real estate has completely changed the way property managers do business.

Now, automated programs handle every mundane task in property management. These programs bill tenants, process payments, and even send reminders about past-due payments and lease renewals. Automated assistants handle maintenance requests, alerting managers if there’s a pressing issue.

Smart tech, automation, and AI have revolutionized the CRE property management industry.

But smart tech, automation, and AI are also helping property managers identify and secure high-quality tenants with less legwork. Property managers can list available space online and create virtual walkthroughs for interested tenants. Plus, many programs can analyze applications, determining if the applicant would be a good fit for the space.

Smart Tech for Tenants 

Keeping tenants happy by making their lives easier is the core of what CRE professionals do. Integrating smart tech into buildings, operations, and management only aids in reaching this goal. 

No matter what property type, technology plays a huge role. Multifamily properties utilize technology in many different ways. Tenants can contact management about maintenance issues or other questions. Smart-enabled units allow tenants to hook up smart devices and remotely control HVAC systems, security, lights, and more. And advanced security systems keep everyone safe.

As technology changes, property managers and building owners must adapt to keep high-quality tenants happy where they are. Otherwise, they’ll move on to a more connected property, negatively impacting your property value.

Smart Tech and Property Values 

Smart tech plays a significant role in property values, especially as technology continues its rapid advancements. CRE property valuation varies depending on the method used, but many factors remain the same, including:

  • Building and lot size and location
  • Building age and condition
  • Number of units in the property
  • Average occupancy rate
  • Capitalization rate, the potential for earnings, and operating expenses

Investors want to purchase properties with the most profit potential. Owners want their properties to grow in value over time and want high-quality tenants to occupy the space. And property management professionals want to maintain high occupancy and keep tenants satisfied.

At the center of it all is the tenant. When the tenant is satisfied, everyone benefits. Smart tech is improving the lives of tenants and their customers, generating more significant profits for investors and property managers alike.

A CRE property’s value depends mainly on how many current tenants, how much those tenants pay in rent, and the operating costs for the building as a whole.

Keeping tenants happy is at the heart of what we do as CRE professionals.

How Technology Impacts Property Value 

Smart commercial real estate is valuable. The technology used – and offered to tenants – impacts property value in several ways. 

Attract Higher-End Tenants 

Investing in or constructing a smart building will appeal to high-quality tenants. When businesses see that a property offers many technological advances far superior to the competition, they’ll pay prime dollars to rent the space.

Furthermore, giving tenants easy access to security features, automated door locks, maintenance, and property management communication, and other technology will make a property more desirable. Outshining the competition means owners can demand higher rental rates, increasing the profit margin and property value.

Lower Overhead Costs 

Automation, including automated HVAC and electric systems, means owners and property managers will spend less on overhead costs. Automated management systems can take care of bookkeeping tasks, reducing labor costs. And smart security systems eliminate the need for overnight security staff.

Together, these add up to significant savings. Lower overhead and operating costs mean a higher property value.

Long-Term Tenants Mean Less Occupancy 

Once high-quality tenants are secured, owners want to hold on to them as long as possible.

Happy tenants are valuable tenants. When tenants are satisfied with the accommodations provided, they’re more likely to become long-term tenants. Providing cutting-edge technology for tenants will keep them happy.

Quick Turnaround of Units 

Automated management software can list available properties to multiple outlets managed from one central hub. This saves property managers time and effort to sort through multiple websites and look for leads.

Secondly, automation and AI can collect digital applications and highlight tenants best suited for the property.

Finally, smart tech can create virtual tours and 3D floorplans, allowing interested renters to see a property remotely. 

Low occupancy rates and fast turnarounds mean more revenue and higher property values.

Building Operations and Smart Tech 

Building operations require a tremendous amount of time, manpower, and cost. However, smart tech and commercial real estate are now changing building operations, trending towards automation. As more components of building operations become automated, owners and property managers see drastically reduced labor and operational costs. 

Building Automation Systems 

A building automation system (BAS) is a centralized component controlling a building’s major systems, including HVAC, lighting, security, fire safety, and more. The idea is to have one control panel for an entire building, with an automated system that minimizes cost.building automation system

Think of the programmable thermostat in a home. It can be programmed to adjust the thermostat temperature depending on the time of the day. Sensors then monitor the home’s climate, activating the heat or air conditioning based on programmed preferences.

A BAS operates much the same way but on a larger scale. Depending on the size of a building, owners and property managers may choose to have only a few systems on a BAS – HVAC and lighting are the most common – or multiple systems, including electricity, fire alarms, security systems, and more.

The system is automated to adjust these systems according to pre-set limits. For instance, a centralized system will turn off A/C on nights and weekends when tenants are out of the office. Or a BAS might automate lights based on activity or occupancy.

These systems can also integrate with other smart systems, like movement sensors throughout the building. This way, if a system detects no movement in one area, it will notify the BAS, which will then shut off lights and lower HVAC usage.

A BAS is ideal for large buildings because it drastically reduces energy usage, and overall operational costs. Data suggests businesses can save as much as 30% on energy costs by installing a BAS.

The idea is to have one control panel for an entire building, with an automated system that minimizes cost.

The system is automated to adjust these systems according to pre-set limits. For instance, a centralized system will turn off A/C on nights and weekends, when tenants are out of the office. Or a BAS might automate lights based on activity or occupancy.

These systems can also integrate with other smart systems, like movement sensors throughout the building. This way, if a system detects no movement in one particular area, it will notify the BAS, which will then shut off lights and lower HVAC usage in that area.

A BAS is ideal for large buildings because it drastically reduces energy usage, and therefore overall operational costs. Data suggests businesses can save as much as 30% on energy costs by installing a BAS.

Building Automation Systems and Air Quality  

Besides lowering costs and making life easier for owners and property managers, a BAS can also make life better for tenants. Large-scale building automation systems constantly monitor air quality and adjust the HVAC and filtration systems as necessary. This makes for a healthier environment for tenants and ensures compliance with state and local air quality standards.

Building Operations and Smart Tech Compatibility

A centralized, automated system isn’t just great for property managers. It makes life easier for tenants, too. Many of today’s building automation systems connect with other smart devices, working together on the Internet of Things. Together, these systems allow users to control everything remotely: lighting, heat, air, security systems and door locks.

When connected, individual tenants can control systems in their building section. Meanwhile, the property manager has access to the entire BAS in one centralized location. All of it can be accessed remotely by the tenant and the property manager. Smart commercial real estate is valuable for both owner and property manager.

SMART Tech and Building Operations Costs 

Integrating smart technology and building automation systems into your property can be expensive. But the long-term savings are worth the cost.

Adding a BAS and other smart tech can reduce energy costs by an average of 15%. That’s great news for owners and property managers trying to minimize operations costs and maximize their returns.

Let’s say there’s a major snowstorm in an area on a Tuesday, and most of the city shuts down come Wednesday morning. Many of the tenants and employees won’t be in the office. If that building is programmed to be 70 degrees during the workday, the building operations manager can remotely access the HVAC system and turn down the heat. In just one day, the energy savings can be substantial.

Likewise, when centralized systems turn off lights when no one is in a room, adjust temperatures depending on occupancy, and maximize other energy-saving actions, building operations costs are drastically reduced.

Finally, building automation systems and other smart tech can self-regulate, self-diagnose, and self-heal common infrastructure problems. As the system encounters an issue, it will run diagnostic software, identifying the glitch. Often, the system can correct the issue on its own. This represents considerable time and costs savings for the building operations team and property managers.

Yes, smart systems are an investment. But they pay for themselves in energy cost savings alone. Add to that tenant satisfaction and long-term leases as a result, and suddenly the investment seems like a wise choice.

Integrating smart technology and building automation systems into your property can be expensive. But the long-term savings are worth the cost.

Finally, building automation systems and other smart tech can self-regulate, self-diagnose, and self-heal common infrastructure problems. As the system encounters an issue, it will run diagnostic software, identifying the glitch. Often, the system can correct the issue on its own. This represents considerable time and costs savings for the building operations team and property managers.

Yes, smart systems are an investment. But they pay for themselves in energy cost savings alone. Add to that tenant satisfaction and long-term leases as a result, and suddenly the investment seems like a wise choice.

Smart Tech and Going Green 

Commercial real estate properties account for an estimated 40% of all energy consumption and 70% of electricity usage in the United States. In this age of climate crisis, more companies are looking towards conservation, zero-carbon emissions, and energy efficiency. Smart commercial real estate is the wave of the future.

Smart tech enables a limit on energy usage and conserves resources. And as more state and local governments pass legislation demanding more energy-efficient workplaces, developers, builders, and property managers look to technology to meet the challenge.

Current Commercial Real Estate Energy Usage  

Currently, buildings expend most of their energy on HVAC systems (35% of total building energy usage), 11% on lighting, and 18% on major appliances like water heaters, refrigerators, and dryers. Smart tech, including automated and AI systems, seek to reduce energy usage in these areas, transforming not only a building’s greenhouse gas emissions but also reducing building operations costs.

SMART Tech and CRE Energy Usage Reduction 

Businesses and residential properties are turning to smart tech to reduce energy consumption.

In private homes, devices like Amazon’s Alexa and Google Home help homeowners remotely control smart lighting, electronics, heating, and cooling. By programming a home’s vital systems and minimizing energy consumption, the monthly utility costs and impact climate are positively changed.

Smart tech helps multifamily complexes, retail centers, and office buildings control costs and lower energy emissions through centralized, remotely-controlled smart systems. Devices connected through the Internet of Things monitor occupancy, temperature, and other factors and adjust energy usage accordingly. Virtual personal assistants can turn off appliances or turn up the air conditioning, all with a voice command.

Sensors can detect whether or not someone is in the main lobby, for instance, and lower the lights if the area is empty. Tenants can turn down the heat on warmer Spring days from a cell phone or lock the door to an office from the comfort of their home. 

These may seem like small steps. But together, smart tech adds up to big, sweeping energy savings. 

Smart Cities and Smart Buildings

Smart cities

For home and office buildings, smart tech is just the beginning. Developers, city planners, and city governments are looking toward “smart cities” as the wave of the future. 

Smart technology would infiltrate every part of a city’s infrastructure, from traffic lights, public transportation, WiFi capabilities, and even sensor-lined trash cans. These systems would work with real-time data to determine optimal energy usage, transit patterns, and public works routes.

While smart cities might sound like something out of a science fiction movie, many cities worldwide are already integrating these technologies. Cities in North America and Europe will account for about half of the smart cities worldwide within the next ten years. 

To this end, developers, investors, and property owners should consider the smart city future when deciding which improvements to make. It’s likely that as we move towards smarter cities, smart buildings will have an advantage, as their systems can seamlessly connect to those offered by local municipalities.

Many developers are integrating world-class technology and energy efficiency into their construction. Keeping the future in mind is essential in this fast-paced world. Construction and renovation look towards smart tech to prepare for the future.

Legislation, Construction, and SMART Tech 

More state and local governments are passing legislation limiting energy usage in both commercial and residential properties. California now requires single-family and multifamily buildings up to three stories to have a solar panel beginning this year.  A 2019 New York City law requires any building 25,000 square feet or larger to reduce its greenhouse emissions by 40% by 2030 and 80% by 2050. Washington State enacted a law requiring commercial buildings to meet state-specified energy reduction targets by 2029. 

Many other states and local municipalities have also passed legislation to reduce energy usage and promote renewable energy sources.

As such, developers, investors, and property managers are searching for ways to reduce energy usage and create sustainable energy solutions. 

Smart Commercial Real Estate: FAQs  

What is SMART Tech? 

“Smart tech” is a general term referring to any technology humans can interact and manipulate. Automation, artificial intelligence, virtual personal assistants (like Amazon’s Alexa or Google Home), or large-scale building automation systems all fall under the umbrella of smart tech.

In real estate, smart tech can help control various systems, like lighting, HVAC, security, and more. Typically, smart systems can be accessed remotely, often from a smartphone or other handheld device.

What is the “INTERNET OF THINGS”? 

The “Internet of Things,” or IoT, refers to the network of WiFi-enabled devices that can communicate with one another. Anything with WiFi capability and the ability to connect with other smart devices is part of the IoT.

How does SMART tech fit into commercial real estate? 

Smart tech has nearly unlimited applications for CRE. Investors can use smart tech – automated systems and artificial intelligence – to quickly identify properties and projects that meet their specifications and needs. These programs can weed out investment opportunities that don’t match investors’ requirements, leaving opportunities that fit well within their investment aspirations. 

Developers, builders, and contractors can integrate smart tech into their buildings, giving tenants and property managers easy access to various high-tech tools. Enhanced internet capabilities, smart-enabled lighting and HVAC systems, and centralized building automation systems are a few areas that benefit from the implementation. 

Property managers can use smart tech to control building systems remotely, automated software programs to contact tenants, screen potential tenants, receive and schedule maintenance requests, and more.

Lastly, CRE tenants can use smart tech in their buildings to adjust lights and temperature or even access their personalized security system. They can also access the property manager’s automated system via smartphone apps, making inquiries or maintenance requests remotely.

Should developers and builders keep SMART tech in mind? 

Yes! Technology is the future. Smart buildings are just the beginning. More and more “smart cities” are emerging worldwide, with many larger American cities integrating smart systems into their infrastructure. Soon, we’ll have free WiFi as we walk down the sidewalk; buses and trams that operate based on real-time traffic data; trash cans that alert public service workers when they’re full. 

By adding smart-enabled features to a building now, developers can ensure they are keeping up with demand in the future.

What SMART solutions should an owner or property manager offer their tenants? 

Every building and tenant is different, so there’s no one-size-fits-all solution. However, studies show some commonalities, like most residential tenants (multifamily or single-family rentals) want access to high-speed internet, excellent cell phone coverage, and energy-efficient homes. 

Smart-enabled lighting, heating/cooling, security systems, and keyless entry technology generally make a property more attractive to renters.

How does SMART tech help property management companies? 

There are multiple options for property managers. First, smart tech helps property managers by first helping the tenants. Tenant communication – and all the mundane tasks that come along with tenant management – can be time-consuming. Automated systems can help property managers manage these tasks electronically. Tenants can connect with virtual assistants, who can answer commonly asked questions. These programs also take care of billing, bookkeeping, and lease reminders, among other tasks.

Secondly, smart tech can help property managers by minimizing the overall operating costs. Automated management systems and automated building systems can lower both labor and utility expenses, increasing profitability.

Will my property value increase if I add SMART tech?  

Yes, this is highly likely. Several factors determine a property’s value, with occupancy rates being an essential consideration in commercial real estate valuation. Long-term tenants and high-value tenants reflect a direct increase in property value.

Reports show that updating the technology in a building makes it more attractive to high-end tenants. Renters will see the value of a building with updated technology over the competition, causing faster leasing for a higher rate and longer-term lease agreements.

Plus, overall operating expenses factor in the property value. Lowering business operation cost help increase the property value, and with automation owners can keep energy costs down in the building infrastructure, which lowers building operations costs. 

Should I invest in my property’s building automation system (BAS)? 

A building automation system is a good investment for most businesses, however, the owners must factor in the space, needs, and budget. Some only choose to automate a few systems due to the budget, like lighting and HVAC, or multiple systems, including security, water, and other infrastructure.

When considering whether to invest in a BAS, consider the cost savings. Over time, automated systems can save owners up to 40% on their energy costs. That’s a huge savings year over year. 

Also, saving time and having peace of mind as the BAS monitors all the building’s connected systems is a bonus. 

Is SMART tech worth the cost? 

Overall, most property owners find investing in SMART tech worth it. Of course, each building owner and manager must consider the costs and benefits. But smart tech can minimize energy usage, saving up to 40% on building utilities every year. Also, upgrading building technology will attract new, high-quality tenants who are more likely to sign long-term leases. 

Can my building handle an automated system? 

Depending on the building’s age and location, communications wiring and infrastructure might be upgraded to support the automated system. 

How can I install SMART tech in my building or units? 

It is best to contact an IT professional to discuss options, receive an accurate cost estimate, and install any smart tech the building needs. 

At Lumicre, our team of expert professionals are skilled in helping our clients and partners successfully learn more about smart commercial real estate and the benefits that updated technology may add to their property(ies). Also, we specialize in helping clients find the perfect property to match their portfolio needs. Contact Lumicre today to connect with one of our expert professionals today. 

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