Riggs Kubiak, speaking on a panel entitled, "Innovation is Reshaping Design, Construction, Development and Creating Smarter Buildings: Practical and Strategic Insights That Can Be Applied to Your Projects and Your Assets" defines smart buildings differently than you might expect. Moderated by Giselle Gagnon of Bentall Kennedy, he was joined by Thanos Lambrinos of QuadReal Property Group, Nick Cameron from Perkins + Will, and Casey Witkowicz of RYCOM Corporation.
What is the Definition of a Smart Building?
The panel opened with the question, “what is the definition of a smart building?” Based upon your perspective there are multiple considerations, e.g., energy efficiency, those providing amenities and unique tenant experiences, buildings where different systems integrate for numerous outcomes, automation, AI, and machine learning.
The general consensus was, “when it all comes down to it, we are all trying to rent real estate. And we’re trying to do that better using tech and data.”
So, Technology Makes Buildings Smart?
Riggs offered a slightly different perspective; more than structures relying upon automation and digital integrations, the smartest buildings are run by smart owners. “Smart” is not exclusive to new builds with shiny new algorithms and 5G. Some of the smartest buildings are vintage, industrial, or retrofits. Technology should be focused on making owners, not just the buildings, smarter, able to meet the needs of their tenants while creating value for investors. We all know that the heart of value creation remains in the planning and execution of projects - development, capital, TI, etc. Technology that enables owners to more intelligently deploy their capital across these projects inevitably makes the owners (and buildings) smarter.
Smart Owners Deploy Capital Efficiently
Caring about your own capital, and that of your investors depends upon building a smart technology stack. This ensures that owners are thoughtful, making use of data from within the asset portfolio as well as the market, feeding into how projects and plans operate.
Who Owns the Data, and are there Ethical Issues?
Landlords and technology providers generally agree that landlords own the data for activities occurring within their asset. In any “smart” environment where data analytics are warehoused, the security of that business intelligence is paramount. Holders have an ethical obligation, particularly if they own personally identifiable information, to find appropriate systems and controls to keep sensitive data secure.
Ethical responsibility extends to the data that they own. Landlords and others must be sure they have a plan in place in case their data is breached. Data holders may feel pressure to restrict outside access to their data, but this responsibility need not be cause for concern. Sharing the data securely and responsibly provides greater opportunity for all interested parties.
Let’s Look at this Differently
Again, Riggs’ perspective is unique. Take a step back from focusing exclusively on the real estate industry, and think about any other, every other industry - finance, stocks, bonds, etc. Years ago they did two things:
- They shifted their daily workflow tools away from generalized systems like Excel into highly specialized systems built for their needs.
- Those specialized workflow tools enabled entirely new data streams, allowing the vast majority of industry professionals to access some sort of market-wide database in which users could access insights that simply didn’t exist previously. Users were now able to make more robustly informed decisions based on those insights.
Originally, Michael Bloomberg developed and built a proprietary computer system to provide live market data, calculations, and analytics to Wall Street. (see Step 1 above).
Bloomberg, LP now describes itself as “connect[ing] decision makers to a dynamic network of data, people and ideas – accurately delivering business and financial information, news and insights to customers around the world.” (Step 2)
(Listen as Riggs highlights lessons Commercial Real Estate can learn from
Bloomberg and the world of Finance)
But Back to Owners and Buildings
Bringing this back to the real estate market, it’s essentially a market of buyers and sellers. Owners act as sellers in the leasing of space to tenants. However, on the construction and project side, owners buy goods and services. Access to more, better data almost always benefits the buyers. Isn’t it time owners had more insights and resources purpose-built for their buying needs?
Having access to a real estate marketplace tool almost always benefits the entire market of owners, providing them leverage over general contractors and other vendors. In order to create that marketplace, owners must be comfortable releasing the data they own to be responsibly shared with others, in at least some form.
Real estate has been a brick and mortar business for generations. Why has there been so much investment directly from real estate owners into PropTech in recent years?
— By nature, owners are opportunistic, entrepreneurial, and succeed by finding ways to create greater value through their assets. — They recognize the communication and skills gap between different arms of their business. Project managers are not generally expected to analyze BIM models, and asset managers do are not presumed to have the skills to quickly turn data from individual projects into portfolio-wide strategic levers.
Technology enables each group to benefit from shared sets of data, minus data aggregation, analysis, and administrative time to ensure information is accurate and up-to-date.
— The smartest owners don’t consider PropTech investments as costs, but rather a new way to create value. Technology becomes a new asset in their portfolio.
Besides technology being an asset, read how tech ensures fiduciary compliance
PropTech Benefits Owners
In KPMG’s annual Global PropTech Survey entitled “The Road to Opportunity,” 93% of respondents agreed that engaging with PropTech is something they should be doing. However, only 1 in 3 participants have any kind of strategy in place.
Early adopters of PropTech, Chief Operating and Chief Technology Officer of Rudin Management Company, John Gilbert recently said,
We used to be a real estate company that dabbled in technology, now we're a technology company that dabbles in real estate.
After four generations and nearly a century in commercial real estate, they do not address current challenges with analog answers where digital solutions exist. This approach represents a meaningful shift. The innovators among our industry understand that technologists and owners must collaborate to move the industry forward.
That’s the smartest thing possible.
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