The 2010s have been a game changer for real estate – from the proliferation of IoT tech, to smart cities becoming a reality, to co-working changing the workplace forever. Perhaps one of the biggest breakthroughs for the industry has been the explosion in PropTech investment, which hit $14 billion globally in the first half of 2019, as opposed to $1.8 billion for the entirety of 2015.
This unprecedented level of investment created a fertile environment for experimentation in CRE, with many organizations utilizing big data and IoT to gain the building performance insights that would have been unthinkable ten years ago. This is already leading to the merging of IT and OT, creating brand new opportunities for building managers to reduce operating and energy costs while delivering an exceptional tenant experience. Moreover, the demands on real estate professionals are changing, creating new career opportunities that require dual expertise in facilities management and modern technology. Here’s a look back on the key PropTech breakthroughs of the past ten years.
Coworking changes the workplace
The relationship between workers and workspaces has changed fundamentally because of visionary coworking companies such as Regus, WeWork, Impact Hub and the technology that underpins them. Not only has the aesthetic and layout of offices changed globally, but employees now have mobile apps and online services to log work orders, book conference rooms and make complaints, helping to maintain their own productivity. At the same time, the importance of the physical office is diminishing, with remote working more popular than ever in recent years; employees are spending more time working from airports, cafes and from home.
Every year, organizations typically spend $3 per square foot on utilities, $30 per square foot on rent and $300 per square foot on payroll. This ‘3-30-300 rule’ crucially demonstrates that building maintenance improvements have the greatest impact on employee productivity, not utility costs. As we enter the 2020s, it’s clear that PropTech solutions will have to accommodate increasingly flexible work arrangements and a diverse array of employee preferences to drive productivity.
Mobile apps for everything
The ten year anniversary of the app store has come and gone, and mobile apps continue to impact the way we interact with technology. New approaches to facilities management and property investment are still being discovered and refined, meaning that CRE professionals at every level no longer have to be at the office and behind a computer to make crucial decisions that can change the trajectory of their organizations.
For example, a good building management app presents the opportunity for commercial property managers to streamline operations, save time and cut costs. As the facilities management industry continues to shift from reactive to proactive maintenance, FM teams are gaining a distinct competitive advantage by harnessing the power of machine learning, big data and analytics from the palm of their hands. From building management to corporate communications and investment, the right app delivers timely portfolio performance insights while giving real estate professionals the flexibility they need to be agile from the field.
IoT devices become cost-effective and sophisticated
While the Internet of Things (IoT) is a relatively academic idea that’s been around since the early 1980s, the use of IoT devices rapidly expanded in the past decade, increasing from 15 million+ devices connected in 2015 to nearly 27 million connected devices in 2019. IoT device functionality is more diverse than ever – if it can be measured, there’s an IoT device for it.
In real estate, this has created a stark contrast between buildings that are ‘smart’ and buildings that aren’t — the former is capable of capturing vast amounts of big data, often through thousands of IoT sensors. A smart building solution creates one centralized, intuitive pane of glass, to increase visibility and building optimization for this wealth of data. Having one central system integrating all the relevant building hardware and software creates brand new opportunities to reduce operating and energy costs while delivering a consistent level of occupant comfort. Moreover, these data-based insights support a diverse range of stakeholders, enabling high-level, informed investment decisions.
The cloud and SaaS take over
Before cloud technology, property managers and real estate investors relied on disconnected spreadsheets, databases and inaccessible systems to make decisions about their portfolios. The ability to store and analyze huge volumes of data with powerful, remote servers has made thousands of petabytes of building performance data accessible and usable–helping investors and building managers gain greater insight into their portfolios to make decisions based on real-time data. This innovation was actually a pivotal moment for Switch; as our co-founders decided to totally rebuild the Platform to capitalize on cloud functionality in 2012.
The ubiquity of cloud computing means that Software-as-a-Service (SaaS) is now the dominant subscription model in PropTech. Real estate organizations no longer need to purchase expensive edge computing hardware to run their BMS systems, for example, and software updates of almost any kind now roll out quickly, at scale and with minimal disruption.
Smart cities become a reality
Urbanization has increased at a massive rate in the last decade. Based on current trends, the UN reports that “in 2050, 68% of all people will reside in cities, proportionally twice that of 1950.” This means that buildings must operate more efficiently to house current residents and anticipate future urban transplants alike.
Smart cities like New York, London and Paris are responding to this need, using IoT sensor technology at scale to measure their residents’ water consumption, waste, parking usage and more. Panasonic CityNOW is just one example of how a smart city can use parking tech to manage increasingly dense traffic and autonomous vehicles. As Ericsson Vice President Esmeralda Swartz puts it, “when you can derive data from everything that is connected and utilize it to improve the lives of citizens and improve communication between citizens and the government then a city becomes a smart city.” This trend is projected to only continue in the next decade, with smart city investment estimated to increase by $55 billion in the five years leading up to 2021.
Looking forward to the 2020s and beyond
So there you have it – the spread of IoT sensors, cloud technology and smart devices have worked in tandem to provide unprecedented insight into our buildings and how they are performing. The 2020s seem equally promising, integrating these technologies further and creating an even more compelling case for digital facilities management. Moreover, 3D printing has the potential to change the way buildings are manufactured, and AI may further refine the way we analyze building performance data in ways that we can’t yet imagine.
What’s your strategy for the 2020s? Talk to a Switch Engineer and find out how your organization can get a head start on the next ten years.