Smart Buildings

The Growing IoT Divide in Commercial Real Estate

Major crises are like junctions in the road of our economic development. Be it a pandemic, a war, or a natural disaster, time slows down as all affected wait for the outcome of the crisis to decide which way to turn. During the early stages, the future is unknown, companies begin to reassess all their plans to see if they will still be worth pursuing based on the latest information. As the crisis progresses, more information emerges and those firms begin to cancel, change, or reprioritize their plans based on how advanced they were, or how it helps them survive and thrive in the new landscape they find themselves in. As such, these crisis junctions can create and widen divides in our industries.  The COVID-19 pandemic is the perfect example of a crisis that has created these kinds of junctions and divides for businesses and industries. Those companies who were set up for remote work […]

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Major crises are like junctions in the road of our economic development. Be it a pandemic, a war, or a natural disaster, time slows down as all affected wait for the outcome of the crisis to decide which way to turn. During the early stages, the future is unknown, companies begin to reassess all their plans to see if they will still be worth pursuing based on the latest information. As the crisis progresses, more information emerges and those firms begin to cancel, change, or reprioritize their plans based on how advanced they were, or how it helps them survive and thrive in the new landscape they find themselves in. As such, these crisis junctions can create and widen divides in our industries. 

The COVID-19 pandemic is the perfect example of a crisis that has created these kinds of junctions and divides for businesses and industries. Those companies who were set up for remote work before the pandemic transitioned into the first lockdown much more smoothly than those who inevitably struggled trying to work it all out in March 2020. Brick-and-mortar retailers who hadn’t moved online suffered greatly as online shopping boomed, forcing the closure of numerous ‘household name’ retail brands. COVID gave digitally-enabled firms a huge advantage while giving the others little hope in keeping up during this extended crisis.

Not many industries have suffered more during the pandemic than the commercial real estate (CRE) sector. Firstly in handling low to zero occupancy during the various lockdowns, then in return-to-work challenges, and now the large office segment of CRE faces a hybrid work triggered workplace consolidation that threatens to reshape the entire industry. However, the Building Internet of Things (BIoT) has stepped up and shown its value as a virus mitigation tool and return-to-work enabler, as well as the best way to manage space, occupancy, health, and security in the complex new hybrid work landscape. 

Those buildings that had already begun their digital journey before the pandemic, with some technology and infrastructure in place, were well-positioned to adapt their buildings and reopen when the time came. Those buildings that weren’t, had to scramble to understand, purchase, and install BIoT technology for the first time, with no occupants to test it on, while also in an era of uncertainty, budget restraints, and impending recession. While there was always a divide between smart buildings and not-smart buildings, the years of imbalance caused by COVID has widened it significantly, rewarding smart building pioneers.

“The pandemic has gone on to validate the BIoT investments of more forward-thinking building owners and operators. Effectively demonstrating the value of many previously existing BIoT solutions to deliver more resilient, efficient business operations. In doing so, it has also helped to expose a growing digital divide between the IoT “haves and have nots”,” reads our new report: The Internet of Things in Smart Commercial Buildings 2022 to 2027. “Many of the IoT initiatives that proved most effective for building operators over the course of the pandemic have a significant lead time and could not be initiated and delivered effectively while the ravages of the virus were at their peak.”

Consider the sudden importance of good air quality in buildings, which, almost overnight, went from a nice-to-have to critical in bringing back workers. To upgrade HVAC systems to those that can respond to the dynamic occupancy levels, new behaviours, and regulations, buildings would need both sensor data from the HVAC and automation systems, as well as environmental and occupancy data from sensors throughout the building. That new system would then need to be trained in real-life “normal” scenarios that have rarely been available since the pandemic began. Now, as society strives for a new normality, pre-pandemic smart buildings are adapting and optimizing the emerging hybrid work shift, while the rest fall behind as enterprise tenants flock to those buildings that can support their own recovery today.

“For most companies, there was simply insufficient time available to plan and deploy cloud-based, remote access BIoT projects in the midst of a lockdown, so they were forced to simply leave their systems running on standard schedules while restrictions persisted,” explains the 250+ page report covering all aspects of the BIOT. “Many of these companies that were caught cold by the rapid impacts of COVID on working practices have since gone on to invest as they prepare for a return-to-work for visitors and employees. Until systems upgrades are completed and fully tested, however, they remain at a distinct disadvantage relative to those who already had the prerequisite communications infrastructure, sensor networks and data analytics in place to help them adapt during the pandemic.”

The rise in remote and hybrid work has driven investments in mobile and IoT infrastructure services that enable remote visualization, access, and control of building systems during the pandemic. A recent survey by IoT Analytics found that a resounding 90% of respondents having “remote asset access” would become more important because of the pandemic. Many organizations have also increased the scope, scale and level of investment in IoT projects, with 27% of respondents accelerating their IoT plans as a result of the pandemic, according to a 2021 Eseye survey. And, Microsoft Azure’s IoT signals report found a 44% increase in overall IoT investment for CRE.

“In a commercial real estate market still subject to higher-than-average vacancy and sub-lease rates, changing tenant priorities are helping to sustain the rental value of modern, IoT enabled buildings,” reads our brand new IoT report. “Companies that had yet to invest in BIoT technologies prior to the pandemic have already been subject to higher operational costs than those that had, and without the modern tech-enabled solutions in place to set them apart from BIoT enabled buildings in an increasingly competitive market “Non-BIoT” buildings may fall further behind in the pecking order, and find themselves needing to discount their properties to attract new tenants.”

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