The Essential Role of IoT in Commercial Real Estate
February 24, 2020
The Internet of Things (also known as the IoT) is getting increasingly popular across all industries and disciplines. One of such industries is commercial real estate. But before we dive into IoT’s role and potential in CRE, it’s important that you understand how IoT functions in general and in different use cases. Let’s take a look.
How Does IoT Work?
The IoT is a system of interrelated computing devices, mechanical and digital machines that have the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction. In commercial real estate, IoT-connected sensors might work behind the scenes to improve operating efficiency in buildings, enhance the experiences of tenants, visitors and customers, and save money. Within the real estate realm, the IoT is creating a new generation of smart buildings.
IoT in CRE
In commercial real estate, IoT can be used to improve the quality of life for tenants while benefiting a building owner's bottom line. There's been an explosion in recent years of interconnected digital sensors that monitor everything from a building's temperatures and elevators to security cameras and door locks. IoT connects sensors and devices that automate control, remotely monitor performance, and collect data and metrics.
IoT usage is burgeoning across transportation, healthcare, utilities, and housing. But the commercial real estate industry recently became the highest user of IoT, according to Gartner research.
IoT has the capability to touch every point of the industry, even down to the very construction of a commercial building. Connected devices can be used by appraisers, developers, construction managers, and agents to make it clear what's being delivered and who's taking care of which task. IoT-connected devices might also have the capability of immediately alerting the correct parties of last-minute changes (such as a design change that would impact the overall value of the commercial property), so there’s less confusion for workers regarding their directives and outcomes. They can be designed to connect all of the major systems in the facility. From HVAC to lighting, IoT can show how the building's units function as a whole.
Ultimately, leveraging IoT applications in commercial real estate responsibly can lead to cost savings through better operations. Such insights can lead to less maintenance and replacement costs. Following, we take a closer look at three ways IoT can leverage CRE.
1. Workplace Optimization
IoT creates commercial business and workplace benefits because it analyzes huge volumes of information in real-time. For example, a manager might use IoT connectivity to better understand where their employees spend most of their time throughout the day and identify rooms or offices that have no real purpose. In a similar manner, a retail business owner might benefit from paying attention to the most highly trafficked areas of their store's layout to optimize their sales strategy. Doing so, owners and managers can reduce operational costs as a tenant, while facility managers might rent unused premises to another team or business.
2. Enhanced Experiences
As we've already touched on, IoT can strengthen the overall employee and customer experience in any commercial real estate establishment. From improved air quality to reducing bottlenecks in certain spaces, there are so many ways to make commercial buildings feel more pleasant using IoT-gathered information. Some of the most popular IoT improvements for CRE buildings include smart elevator systems, optimized conference room/space scheduling, and smart lighting systems that activate upon movement.
3. Lighting Efficiencies
Instead of turning on the lights in the entire floor or building, IoT information can be programmed to activate lighting only in the offices where employees are working or customers are shopping. Using IoT to create optimized smart lighting and/or intelligent LED lighting systems, businesses can reduce energy costs. The same can be applied to areas such as HVAC, which can be efficiently programmed to regulate the temperature in commercial properties.
We’re only just scratching the surface of IoT in CRE, but you can’t deny the benefit and importance of IoT in commercial real estate. To learn more, reach out to your friends and trusted professionals at Valbridge Property Advisors.