Emerging Technologies, or I Just Got Used to What I Have, Now What?

Apr 29, 2018

Written by: Consolato Gattuso, Zeller Realty Group

This article was written in April 2018 for the 2018 Quarter Two Newsletter.

Real Estate has, and always will be, a lagging indicator of what is current in technology, and with good reason. Changing out a building system takes capital, planning, coordination, and a certain intestinal fortitude. A system or concept needs to be tested before implementation. The ongoing real estate mantra is, let the other guy try first. Unfortunately, implementing the latest technology will never be as easy as purchasing the latest iPhone. 

The last 50 years has seen building automation go from a ballroom full of switches, dials, and bells to a control in the palm of your hand. With each iteration, there is always something in common - more data. The data now comes in real time. In fact, so much data that acting on it, is at times, impossible. Data gathering from devices will only continue and accelerate in the future. 

Three terms to become familiar with, Internet of Things (IoT), the Cloud, and Smart Building. The IoT is defined as a network of physical objects, devices, vehicles, and other items which are embedded with electronics, software, sensors, and connectivity enabling these objects to collect and exchange data. You ask, how does this effect real estate? It's estimated by 2030, 500 billion devices and objects will be connected to the internet. Network devices are becoming "Happy Meal" cheap. Most every chiller, air handler, and light fixture currently specified, has a network device built in or as an option. 

One definition of the Cloud is an information technology paradigm that enables access to shared pools of resources and higher-level services that can be rapidly provisioned, often over the Internet. Now combine IoT with the Cloud, this combination has the capacity to change everything. Think about the Snickers bar you buy and pay for with a credit card. That data is stored and helps make sure that it's in stock for your personal consumption. Or take social media - all of your likes and preferences are compiled to create a digital profile of you. This profile is then used for target advertising. Not only to sway purchasing decisions, but to sway your decision on events around you. This Orwellian vision is happening now and is having a polarizing effect on society. You need look no further than current headlines. 

Let's get back to real estate. Picture all devices in a building connected, with their million bits of information communicating via the internet, to the Cloud. The mere act of gathering the data has no impact. It's what can be done with the data that has true value. The data becomes actionable. Decisions can be made in real time; enter Smart Buildings. 

A Smart Building is a building that provides the owner, operator, and occupant with an environment which is efficient, productive, comfortable and secure throughout the use of technology, integrated building systems, communications, and advanced controls (CABA Smart Building Roadmap). 

It's the combination of these three phenomenons that will set the stage for the future of buildings and possibly real estate itself. The Edge in Amsterdam, is arguably the most connected building to date. This link takes you to a short video highlighting some of its attributes. Take a moment and watch: (https://www.youtube.com/watch?v=JSzko-K7dzo). This integrated approach, powered by the IoT, creates an energy efficient, interactive, comfortable environment. 

The current driving force paying for these innovations is energy savings; however, there is a growing body of knowledge attributing workplace strategy to a host of positive outcomes that translate to the bottom line. Allowing occupants more individual control leads to 10-25% reduction in absenteeism, 16% increase in productivity and a 25-40% increase in employee satisfaction (BOMA/Johnson Controls/Seelcase study). This approach will drive tenants to your site as there is a clear benefit to the occupants. 

Now you're asking yourself, that's great for a building designed from scratch, but what about me? 

311 South Wacker Drive located in Chicago, Illinois, is a Zeller Realty Group (ZRG) owned and managed property. It's a 65-story, 1.4 million square-foot building. Although finished in 1990, it has a pneumatic controls system, state of the art in the 1960s. 

ZRG completed an energy/financial analysis of the site and implemented a smart building strategy approximately two and a half years ago. This consisted of replacing all 940 pneumatic thermostats to wireless network thermostats. All data harvested from the thermostats is then fed to the Cloud. In the Cloud, algorithms run every major piece of building HVAC equipment. This resulted in a 30% decrease in HVAC costs and a 20% increase in our Kingsley score for building comfort. The payback was a little under two years. 

Embrace this technology wave, it's not going away. For better or worse, IoT, the Cloud, and Smart Buildings will affect most, if not all your aspects of your life. It's only a matter of time that technology is embedded in all things real estate. 

Category: Industry Insights

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