Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
Issue link: http://cire.epubxp.com/i/306204
38 May | June | 2014 Commercial Investment Real Estate will produce signif cant ROI and generate data that a smart build- ing management system can use to optimize building performance. Cloud computing is another advancement that makes smart build- ing management systems f nancially feasible to a degree not previously possible. A smart building management system can transmit data gen- erated from hundreds of buildings to a single command center where facilities professionals use complex automated algorithms to monitor equipment performance. With today's af ordable high-capacity com- puting, a company can use one smart building management service to monitor and control hundreds of facilities around the world. Smart Buildings = Smart Marketing T e competitive advantage of buildings operated with smart sys- tems is becoming increasingly evident. Smart buildings are not only more energy ef cient and cheaper to operate than facilities with legacy systems, but they are also ideal for supporting today's mobile workforce and f exible of ce layouts, according to JLL's Op-Ex Advantage report. In the not-too-distant future, one can expect smart building technology and building operating systems to become a standard item in broker-landlord discussions, as they maximize occupant comfort and energy ef ciency. Numerous studies and surveys have demonstrated that tenants and their advisers increasingly expect smart building features such as zoned heating, ventilation, and air-conditioning systems; sophis- ticated equipment maintenance alert systems; advanced security systems; and green buildings; according to JLL's 2012 Global Sustain- ability Perspective. Like a new lobby or elevator bank, an improve- ment in sustainability makes an of ce building more desirable to tenants. T ese benef ts can justify collecting higher rent, and can increase the property's competitive advantage and occupancy rates. LEED buildings, for example, command rents that are 17 percent higher and sales prices that are 8.5 to 25.0 percent higher than legacy buildings, according to the U.S. Green Building Council. Similarly, the premium for Energy Star labeled buildings is approximately 13 percent, according to a 2011 study by Eichholtz, Kok, and Quigley. Smart Buildings in Action Af er committing to the departmental goal of reducing energy usage by 20 percent by 2020, P&G;'s Global Business Services looked to every aspect of its operations for ef ciency improvements. Work- ing as P&G;'s outsourced real estate services provider, JLL proposed that P&G; become the f rst company to pilot JLL's new smart build- ing management platform, IntelliCommand. T e premise was that IntelliCommand's combination of cloud-based, smart building management technology and JLL's team of facilities management professionals would provide P&G; with around-the-clock, real-time facilities management. P&G; deployed IntelliCommand across 12 buildings totaling 3.2 million square feet of space in diverse facilities. T e pilot sites included P&G;'s global headquarters campus in Cincinnati; its global healthcare headquarters facilities, including numerous laboratories; a key technical center; and a major mixed-use complex including of ces and research and development operations. With IntelliCommand, building managers were able to identify problems that manual inspections could not detect. For example, IntelliCommand's data analytics f agged a temperature anomaly indicating that a heater was operating when not needed. Another anomaly revealed room-to-room temperature dif erences that indicated malfunctioning dampers, triggering unnecessary air conditioning, and, elsewhere, thermostat default settings that needed adjustment. As P&G; learned, one advantage of today's smart building manage- ment technology is that its ability to f ne-tune building performance exceeds human capabilities. Even in a facility spanning more than 1 million square feet across eight wings, IntelliCommand pinpointed miscues. Even small changes made an impact: T rough IntelliCom- mand P&G; achieved 8 percent savings simply by reducing HVAC activity on nights, weekends, and holidays. At a P&G; technical facility, IntelliCommand's fault detection function enabled staf to identify and repair several recurring problems. Using these f nd- ings, the facilities team analyzed comparable data across the entire 12-building pilot portfolio and made strategic adjustments across all properties. Within a year, P&G; reduced the pilot facilities' energy costs by 8 percent to 13 percent, eliminating 4.4 million kilowatts of energy usage simply by optimizing building processes. P&G; isn't the only company using smart building technology in sec- ondary markets. In Redmond, Wash., Microsof created its own smart building management platform to manage its sprawling campus head- quarters. T e system, which manages the property's 2 million bits of operational data, initially compressed f ve years of budgeted upgrades into one year using net savings of $1 million. T is was possible primar- ily because the system detected errors that human eyes missed. In addition, a large, global f nancial services f rm recognized that its branch bank facilities, numbering in the thousands in primary and secondary U.S. markets, generally had very few building automa- tion systems and could not be remotely monitored and controlled. T e f rm began by installing low-cost wireless sensors and control- lers to enable remote monitoring and control of HVAC and lighting systems. T e resulting energy savings have averaged 13 percent annu- ally; while savings from fewer maintenance technician visits have added another 5 percent in overall operating expense savings over two years. T is initial success has led to a much broader and deeper global roll out for both large and small buildings within the bank's corporate real estate portfolio. What's Next? Long-term market changes for smart buildings are already in play. T e business environment is ripe for the arrival of consistent, wide- spread regulatory policies addressing energy ef ciency. Financing mechanisms already exist that can be scaled up for wider smart build- ing technology deployment for property owners seeking energy ret- rof ts. Moreover, electricity markets and tenant expectations will con- tinue to shif in favor of smart building deployment and ownership. T e market evidence suggests that the profound opportunities for savings will, against a backdrop of energy-ef ciency imperatives and emerging technology, make smart buildings an agile and powerful asset class that is strategically aligned with shif ing business priorities. Dan Probst is chairman of energy and sustainability services for JLL in Chicago. Contact him at Dan.Probst@am.jll.com. 3 6 - 3 8 F - S m a r t B u i l d i n g s - P r o b s t . i n d d 3 8 36-38 F-Smart Buildings-Probst.indd 38 4 / 2 9 / 1 4 3 : 0 7 P M 4/29/14 3:07 PM