The traditional ways of doing real estate are quickly becoming dated and cumbersome. Change is brewing around the industry and transformation is being driven by several intertwined trends.
Commercial real estate used to thrive off the old slogan “Location, location, location!” But now the focus is less and less on a building’s location and more on what’s actually inside the building.
What we’re really talking about is connectivity. As the world slowing adopts and integrates the Internet into daily activities, connectivity is becoming essential for industries and businesses to compete and survive. The real estate industry is no different. Connectivity is bringing a wave of change, enabled by the recent proliferation of the Internet of Things (IoT).
Deloitte expects IoT sensor deployment in the commercial real estate market to grow at a rate of 80% through 2020. At that point there would ultimately be 1.3 billion sensors across the entire industry.
It’s no secret that technology is advancing at a rapid pace. With the world effectively at our fingertips, it’s only natural for the spaces where we work, live and play to reflect that trend as well.
What is the Internet of Things?
On a simplistic level, the Internet of Things is a network of ‘things’ that are Internet-connected and exchange data back and forth.
‘Things’ can include physical devices, computers, automobiles, appliances, etc. These ‘things’ are embedded with sensors and software to connect to the Internet in order to send and receive data. Each device in the IoT network is unique and able to interoperate with the Internet’s infrastructure.
So what does this practically mean?
Using sensors to connect these devices, the IoT can turn any object into a valuable source of information and data about the object and/or its environment. Once the data is sent from sensors and gateways to the Internet, it’s presented in a dashboard or application to provide users with insights and intelligence.
For example, consider these smart-thermostats that are gaining popularity among households. Building connectivity into the thermostat gives the resident insight into the home’s temperature, humidity and overall climate. Depending on the resident’s preferences, they can adjust the thermostat settings in real-time if the climate is too hot, cold, etc.
Consumer IoT devices dominate the headlines, but the enterprise application will make the biggest financial impact on the real estate industry. The IoT is leading the way with innovative office building management systems. Property managers are able to introduce new efficiencies and streamline building performance or warehouse space, while using the data to improve end-user experiences as well.
Innovating Commercial Real Estate with IoT
The bottom-line value for commercial real estate is not the data, but rather how that data translates into actionable insights and strategies for real estate property managers and investors.
IoT is the enabler: it enables information to be collected, analyzed, and presented in a manner that gives managers and investors better visibility into the performance of their properties.
Forbes makes the note: “Whatever business you are operating inside a commercial building, if you aren’t collecting, storing, using, and learning from data, then you are not doing your job. That is the sentiment in today’s intelligent buildings market.”
What they’re basically saying is, if you can’t leverage technology and data within your commercial real estate properties, you’re failing to optimize your resources and risk losing market share in a highly competitive real estate market.
What does IoT bring to the table for managers and owners?
IoT enables property managers, property management companies and owners to have more control over the various operations within their building. Property managers and owners can leverage the insights into their assets and performance to more effectively manage operating costs.
A smart-thermostat and IoT- enabled lighting system can give managers more granular control over energy costs in their commercial real estate property. They can analyze times of high and low usage throughout the building to determine the appropriate times to regulate the temperature and have lights switched on.
IoT sensors can bring connectivity to devices and equipment and give managers a holistic view of location and condition. Any building-owned handheld devices can be tracked to ensure they don’t go lost or stolen.
More costly equipment like washers, dryers or HVAC systems can be monitored on various conditional metrics. Using key performance indicators as benchmarks, managers can be notified in real-time when conditions are suboptimal. On top of that, predictive maintenance schedules can be developed to reduce downtime of essential assets around the building. This could prevent costly repairs for property owners and keep things running smoothly for residential tenants.
This shift toward using IoT-enabled devices to generate data is a transformation for commercial real estate companies. These interconnected systems are helping managers and owners discover new efficiencies and generate increased returns on their properties.
What does IoT bring to the table for tenants?
IoT enables tenants to take control of similar operations in their various units. To some degree this represents a potential cost savings as it’s easier to monitor and cut down on energy usage.
However, the larger trend taking place among tenants is the younger generations pushing for more technology and connectivity in their living spaces. With Generation Z coming into the workforce, and therefore looking for housing, the real estate market is beginning to incorporate technology in new ways to attract a new wave of tenants.
Generation Z is primarily focused on connectivity and community. They are a diverse bunch that’s had technology in their life from a young age. They are looking for smart-buildings that create a sense of culture and community, often cultivated through social media and other technological platforms.
Integrating technology to serve tenants can help attract new residents and build relations among current ones. Tenants get a heightened sense of community and properties get a stable and reliable residency.
The Internet of Things is bringing a revolution to the real estate industry. Networks of connected devices are enabling buildings to become massive sources of data. IoT technology is translating that data into actionable insights at the enterprise level.
Smart-buildings are equipping property managers and owners with the tools necessary to optimize operations and bring connectivity to the living space, leading to cost savings and enhanced returns.
Before technology was a major player in real estate decisions, properties were primarily differentiated by location and design… but now it encompasses much more than that. By bringing technology and the Internet of Things into the fold, property owners and managers can get a leg up in the sink-or-swim real estate industry and drive home their value propositions.