Jade Francine, co-founder and COO of WeMaintain, looks at IoT’s potential in commercial real estate.
As asset owners and managers in commercial real estate look for new ways to guarantee profitably, the viability of IoT is going from strength to strength. The intelligence IoT offers through data collection and analysis, made all the better by the speed and reliability afforded by 5G adoption, can lead to cost-saving and revenue generation.
The pandemic has transformed many sectors and commercial real estate is no different. A trend towards “hotelification”, which prioritises customer experience over functionality and a fundamental reconsideration of the purpose of buildings has quickened, and there is still uncertainty surrounding the shape the sector will take in the future.
In the short and medium-term, asset owners, conscious of the way the landscape is changing, will be searching for ways not just to guarantee the profitability of their properties, but to diversify their income streams and make them more profitable. This demands an understanding of those properties that have not traditionally been part of the sector’s way of operating.
The Internet of Things (IoT) is one of the principal means by which asset owners can learn more about their properties. Physical devices, such as sensors detecting footfall, motion, temperature, air quality and the wear and tear of critical equipment, to name just a few examples, can sweep up an enormous volume of data and make it available to the building owner or manager in real-time. Using this data, made intelligible by analytics tools and, in some cases, dedicated data specialists, the asset manager or owner can make informed decisions about how the building is used and how the building’s occupants behave.
All these innovations, though relatively small, represent lucrative new revenue streams for the asset owner over time.
This is an enormous potential driver of profitability because if those responsible for managing buildings have this kind of intelligence, they can offer a wealth of new services. For instance, a building owner might offer bike rental or storage if a critical number of occupants or tenants travel to the property by bicycle. They might offer a wider range of coffees in a coffee shop if occupants are leaving the building to buy hot drinks. They could also invest in better community managers, tasked with improving the quality and variety of amenities available on an ongoing basis. All these innovations, though relatively small, represent lucrative new revenue streams for the asset owner over time.
But owners and managers can also improve their profitability by spending their money more intelligently. IoT might reveal that lights or heating are overused in one part of the building where there is very little occupant traffic, or that a certain lift is liable to deteriorate quickly, meaning a timely maintenance intervention by a maintenance team will save them from having to buy new parts.
This kind of predictive maintenance signals a fundamental culture change in CapEx spending, from a replacement model to a data-driven maintenance model. Even in the medium term, that will make commercial real estate more profitable.
“The rollout of 5G, the reliability of the data available and the speed at which it reaches the asset owner or manager will increase, allowing for yet more responsiveness”
Of course, the more data you have at your disposal, and the better the means by which you interpret that data (namely analytics tools), the more that opportunities for cost-saving and revenue-generation will make themselves known.
The cost of bookable meeting rooms could fluctuate according to demand like house and hotel rental. Smart fridges could even show the popularity of certain items in communal eating and drinking spaces, making sure that there is always some available, and creating space for price increases.
With the rollout of 5G, the reliability of the data available and the speed at which it reaches the asset owner or manager will increase, allowing for yet more responsiveness, increasingly sophisticated modelling around building use over time, and a seamless occupant experience, which will provoke a corresponding rise in the value of the space itself.
But it is also worth noting that just as businesses in certain industries flock together in certain locations, there may be demand for buildings that are less flexible and have a strong sense of identity, catering primarily to people who belong to a specific group. We may see creative or finance professionals having their own buildings, the layout and design of which may correspond to the tastes, needs and wants of that group.
What this illustrates is that although we cannot be certain what exact shape commercial real estate will take in the future, we can be sure that through IoT and other technologies, asset owners can become infinitely more knowledgeable, and this gives them freedom. Converting that knowledge into intelligence and wisdom, and doors will open to ever-more possibilities for revenue generation.