The Global Competitiveness Report released last spring by the World Economic Forum showed that the U.S. had fallen from first place to sixth place in terms of “global competitiveness.” Countries such as Switzerland, Denmark and Singapore have surpassed the U.S. as the most competitive countries in the world. So what does this mean for the commercial real estate industry? Some of the criteria used to determine the competitiveness index include technological readiness, business sophistication and innovation. Based on some of these criteria, where would the commercial real estate industry fall in terms of global competitiveness, and how do we begin to compete again?
Many people may feel that advances and events taking place around the world have very little to do with how we manage and operate our buildings – but they are wrong. While real estate is overwhelmingly influenced by local market conditions, the type of real estate we build and operate here in the U.S. is subject to market pressure internationally. I joined the Realcomm Asia Tour last spring, visiting some of the most technologically advanced buildings in the world. It was an eye-opening trip, as I was able to see first-hand some of the best practices for incorporating technology into the design, development and operation of office buildings. And what was even more interesting was that U.S. companies were among the major tenants moving into these “next generation” buildings abroad.
In the U.S., investors and owners tend to be heavily focused on ROI first, understandably, but the overriding theme in Asia was client “comfort and convenience.” Technologies were embedded into the base building design to ensure that the occupants of the property, whether commercial or residential, were able to receive the maximum tenant experience with the most efficient use of their time and space. At one facility, we witnessed Web-based controls for each individual office so that each tenant could control their lighting, air temperature and even window blinds from their PC. Another property had automated lighting control that calculated the amount of natural light coming in the windows and adjusted the internal lighting (at the individual ballast level) accordingly. Not only did this technology provide ultimate customer comfort, but also the highest amount of energy efficiency and reduced energy consumption.
Remember the first time you saw a motion activated water faucet or paper towel dispenser? What was your initial thought? Innovative technology? Customer convenience? Or how much water and paper was being saved? Maybe all of the above? Technology, convenience and financial benefits can all work hand in hand to meet the objectives of both the owner and tenants. In Asia, we even saw a motion-activated escalator, which only ran when someone approached.
In major cities in both Asia and the Middle East, building automation is becoming the norm. Building operations are state-of-the-art command centers with multiple high-resolution wide-screen displays, monitoring systems and security in real-time – all through Web-based software programs. Elevators, chillers, water, electricity and lighting are all tied into the building IP network—yes, I said the building IP Network—to allow the most efficient monitoring and maintenance of all building systems. The use of computers to monitor and control these properties means that building engineers are more likely to have a computer science degree than a mechanical engineering background.
Energy efficiency and green building technology is gaining a tremendous amount of popularity and acceptance, due largely to the successful promotional and educational efforts of green building proponents. But beyond the environmental benefits, green building technologies, such as energy efficient lighting, green roofing, gray rain water collection and building automation, are also major cost saving initiatives. Adobe recently invested $650,000 for energy and environmental retrofits for their headquarters in San Jose, Calif., and four years later have recognized savings of more than $728,000 – a 115 percent ROI. A big part of Adobe’s fantastic ROI is that they successfully blended low-cost energy efficient strategies with some of the more expensive retrofits and green building improvements, allowing them to see a more robust ROI sooner than might be expected.
Energy saving technologies were everywhere in Asia. From card-key master control switches in our hotel rooms (when you left the room and took your card key, all the lights went out), to motion-sensor controlled escalators, lighting, faucets and toilets. Everything was designed with the most efficient use of energy. One of the most advanced examples of efficiency in building systems were elevators that had no buttons on the inside. Floor selection was done on a key pad in the elevator lobby (not in the elevator itself), and an LCD screen immediately showed which elevator cab was dispatched to the call. The benefits are two-fold, improving customer convenience and a more efficient use of the elevators. And while we are beginning to see these technologies in U.S. buildings (the Marriott Marquis in New York City, headquarters hotel for the BOMA International 2007 Convention, uses a similar keypad elevator system), the upfront investment is still holding many U.S. companies back.
Digital signage is another example. You see it in some U.S. buildings, but it’s everywhere in Asia. Tenant directories with interactive touch screen displays provided much more than tenant listings. Maps of the area, information about vendors or retail space in the building, nearby restaurants, local weather and traffic, advertising and much more could be accessed through the display. Every lobby lit up with plasma screens streaming local or national news, stock quotes, building announcements, traffic or local weather. One of the most fascinating examples of digital signage was the Aurora building in Shanghai, where at night half of the façade of the building turns into the largest digital sign in the world The huge display is used for display advertisements, announcements, or even art, and is a major source of revenue for the property.
Of course, wireless was everywhere. Every building we toured had multiple cellular carriers and WiFi antennas on every floor, including the penthouse, elevator lobbies, underground levels and parking garages. Wireless communications and commerce are so embedded into the Asian culture, that the thought of not having wireless coverage in buildings is almost unheard of. It won’t be long before cell phones or other wireless devices will be used for building access control, security, payment of parking fees and more.
Last, but certainly not least, paperless parking and automated garages. If I can use my toll pass to drive from Virginia to Boston without having to punch a ticket or pull out a single dollar bill, why is it that our buildings still require paper tickets and paper payments? Many of the parking garages in Asia and the Middle East have a parking reader system that allows for wireless scanning of cars and automatic billing of parking fees. In addition, many properties have installed motion sensors in each space to show a red or green light to indicate which spaces are available and which are full, an innovative parking feature I first witnessed at BWI Airport in Baltimore, Maryland. One of the more advanced properties in Asia even had a scanner that read the license plate numbers as cars drove in, allowing access for VIPs to park on a private level and access a secure elevator lift.
We were inspired by the innovation and implementation of technology we saw in the major cities we visited in Asia and the Middle East. The next step is to educate and inform our developers, owners and managers on what technologies are available and how buildings can benefit. We also have to make it all jive with the bottom line. That may seem like the hard part, but as more and more case studies of successful intelligent building technologies are published and distributed, investors and owners may finally have the ROI models they need to clearly show the benefits of implementing these technologies in U.S. buildings.
Top 10 Tips for Going High Tech
- Learn about new technologies and solutions. Keeping up to date on the latest technologies is critical in determining what features to implement into your business. You can’t make an educated decision if you don’t know what solutions are available.
- Ask the right questions. Talk to other owners who have installed wireless systems, plasma screens, or automated parking systems, or hire a consultant who has experience with successful intelligent building projects before attempting to do it yourself.
- Do your homework and research different providers and options. The more you can compare different solutions, the more you will learn about the pros and cons of each product.
- Get to know your IT Manager. Solicit his or her input on how to better utilize software and automation into your building. With the inevitable merger of IT with building management and operations, they will soon become one of your biggest assets.
- Find case studies of intelligent buildings. Visit them and see for yourself. It’s one thing to hear about solutions, but nothing compares with first-hand knowledge and experience.
- Budget for research and development. A critical part of every successful project is research and planning, so you need to budget accordingly.
- Upgrade communications. Convert to voice over IP, go wireless, equip your staff with all-in-one communications devices. Get rid of those plastic directory strips and install plasma screens with streaming video. Set up a building web site with on-line tenant service requests.
- Automate and streamline business processes. Use less paper and save time and money by conducting business transactions on-line. Offer tenants the option of paying rent through electronic funds transfer instead of by check.
- Put together a plan. Commit to a timeline for incorporating technology into your business and into your property.
- Break the Box. Competition drives innovation, and innovation is what will define the leading real estate companies in the years to come.
