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The commercial real estate industry is ripe for innovation. Firms are beginning to explore investing in digital technology, and real estate giants are being driven to begin a digital transformation if they wish to stay competitive during the next wave of innovation. One of these newer ideas has been “space as a service.” Under this model, tenants replace traditional, large footprint office spaces with shared spaces, short-term leases, trendy decor, and up-to-date technology.

Commercial Building in Smart City Blog Post on IoT Economist about Internet of Things.
Companies like WeWork have adopted this model and attracted the attention of smaller companies, freelancers, and even large enterprises. Backed by global powerhouse SoftBank group, WeWork has a current valuation of $20B, and is continuing to expand across the commercial real estate market. Professional real estate demand is expected to decline as more of the workforce transitions to flexible hours and work-from-home policies.

Curating User Experiences (UX)

Office providers that focus on curating individual user experiences rather than leasing physical space will be more equipped to survive the transition. WeWork is also using technology to make its spaces more efficient. The office provider uses technology such as 3D mapping, sensors, and the Internet of Things to monitor energy use, office space workflows, and ongoing projects within its built environments. Beyond coworking, real estate firms are implementing more technology-based solutions to improve tenant retention and satisfaction, manage energy usage and get better control over their built environments. A perceived obstacle to digital adoption is price.

What is the property owners’ worry?

While many property owners worry about the upfront cost to implement these systems, the initial investment in technology comes back in the form of preventing equipment failures and costly system replacements, responding to emergency events, and automating routine workflows. In the near future, smart building technology could save lives in the case of security lockdowns, building fires, and medical emergencies. In Toronto, Tridel Condominiums has begun its own digital transition. The property owner implemented proprietary smart building technology, called “Tridel Connect,” in a 69-story community at Ten York. The aim is to improve tenant satisfaction and make workflows within the building more convenient. The platform allows tenants to set and control environmental conditions in their apartments remotely, while also monitoring the safety of their homes.

Throughout the building, residents can use their smartphone as a pass to access the common areas and amenities. Oxford Properties implemented smart building technology at the EY Tower, which recently underwent a transformation that encased its 1920s Art Deco facade under a 21st-century glass curtain. Inside, the building is equipped with smart HVAC monitoring and temperature controls, and Oxford has already seen returns in the form of energy usage reduction and automating and orchestrating workflows between tenants and building management. With companies such as Google co-founding Sidewalk Labs Toronto and Schneider Electric funding the opening of Ryerson University’s Smart Building Lab, it is clear the smart building race has begun and is scaling up to include communities and even cities.

While many owners are hesitant to fully transform their properties into smart buildings, there are several small steps they can take. One solution is to embrace IoT software. Emerging IoT fields such as Operations Performance Management, for example, emphasize a “people-first” approach that drives real results compared to device-centric data analytics, which fails to provide the context required to unlock real outcomes. Companies that choose to invest in this type of technology now will be rewarded for their efforts with tenant retention and increased return on investment.

Who are the likely winners?

Now is the time to pave the way for the future of the commercial real estate. It is always better to be the early adopter than the company that is left behind.

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