Smart Buildings


Smart Buildings

How IoT technology aims to add value for commercial real estate companies

Executive summary

Enhancing performance and reimagining tenant experience

Technology is changing the most fundamental truth about commercial real estate (CRE)—that value is based solely on location, location, location. While it still matters that a space be close to customers, employees, or suppliers, information-based applications have the potential to add new ways for the CRE sector to create value for customers, differentiate from competitors, and even find new sources of revenue. Specifically, the Internet of Things (IoT) is already having a significant impact on the CRE industry, helping companies move beyond a focus on cost reduction. IoT applications aim to grow margins and enable features such as dramatically more efficient building operations, enhanced tenant relationships, and new revenue generation opportunities.

While consumer IoT devices have drawn the most press attention, it is enterpriselevel adoption of technology that will likely have the bigger impact on the industry. Indeed, the CRE industry is perhaps uniquely positioned to implement the technology, using IoT-enabled building management systems (BMS) to make building performance more efficient and also using sensor-generated data to enhance user experience. Gartner’s recent smart-city forecasts highlight the potential: “Smart commercial buildings will be the highest user of Internet of Things (IoT) until 2017, after which smart homes will take the lead with just over one billion connected things in 2018.” This not only allows CRE to expose wide segments of the population to IoT technology—it provides owners an opportunity to have direct conversations and relationships with building users rather than only with their tenants. For instance, sensors in shopping malls can help owners connect directly and offer services to the end customers. This would lead to building relations with the end customers and also strengthen tenant engagement. 

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REflexions issue 4 - October 2016

REflexions is a bi-annual digest, dedicated to the real estate investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients.

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