Page 46 - REALCOMM EDGE-Fall 2017-FINAL

Editorial

Early Adopters of Smart Building Technology

Will Have the Advantage

Jon Bolen
COO
ENTOUCH

s CRE leaders begin to leverage technology to maximize Historically, the CRE business has centered on conducting
profits, smooth operations and delight tenants, a less transactions, writing lease and sales contracts, and supporting
A progressive perception still lingers. In a panel discus- tenants through siloed facilities management and business
sion offered at the Realcomm conference in San Diego in June, services. However, a powerful new consumer group known as
a comment from one of the presenters millennials is now challenging this status
sent an uncomfortable wave of chuckles quo. They bring a new set of expectations to
rippling through the room. Addressing the negotiating table, desiring a technology-
the group of commercial and corporate enabled experience at work and at home,
real estate and technology professionals, delivered in an eco-friendly and sustainable
the presenter declared, “We’re changing, manner. And, they can be no longer be
and it’s not a decision. We don’t want to marginalized or ignored. A recent Brookings
be Luddites 15 years from now making report predicted that Millennials will make
horse carriages.” up nearly 75% of the workforce by 2025.
The comment was made in reference Long-term revenue growth and profitability
to the force of innovation and change in will depend on satisfying this dominant and
commercial real estate, and how typically slow the industry is increasingly influential demographic.
to adopt new ways of thinking. As you know, the Luddites were To leverage this market dynamic—and more importantly, to
a 19th century labor group that protested the introduction of avoid being perceived as irrelevant—CRE decision-makers must
technology for fear their skills would be replaced by machines. agree to adopt smart technology, and then acquire the technical
According to a Navigant research study commissioned by resources to integrate it into existing systems. It’s not just about
ENTOUCH, smart building technology investments are begin- deploying technology for technology’s sake. It’s about improving
ning to gain momentum. Revenues generated from the sale the business and sustaining success well into the future.
of commercial IoT devices—a core technology used in smart As one survey participant put it, “A building is a building. They
buildings—are projected to rise at a compound annual growth have changed very little. But, experience and use has changed
rate (CAGR) of 8.2 percent over the next 10 years. significantly, and we need to understand that.”
Still, CRE executives remain cautious. As one Navigant survey
respondent and president of an international CRE services firm Measurable Benefits for Those Willing to Make a Move
put it, “Change is so dramatic, and fear of the unknown is real.” For an industry that prides itself on long-standing success,
Expert panelists at Realcomm corroborated the notion, citing a the best place to start is by examining how technology can
less than three percent adoption rate of smart building technol- achieve fundamental business goals. Three key priorities are
ogy among CRE enterprises, despite CRE staking a 14 percent well worth examining:
share of gross domestic product. One panelist went so far as Maximize Profit: Making the most out of every lease and sale
to suggest that venture capital investments have been “more is what defines CRE success. The fact is, millennial executives will
aggressive in cannabis” stocks than in CRE technology. go the extra mile to set up shop in a building that supports a
So what is the hold up? Could it be ‘success’? CRE companies tech-enabled workspace and protects the environment. Because
have made money consistently over many decades, so what’s the of this, smart buildings retain tenants longer and sell for higher
incentive to change? profits. In light of this, the market for global building energy
management systems (BEMS) is expected to grow to $5.2 billion
Study Shows Industry Prime for Change by 2020, at a CAGR of 17 percent from 2017.
The Navigant study suggests there is much to change, and Optimize Management: Reactive equipment repair and main-
it is benefiting the early movers in surprisingly short order. tenance is expensive. Boots on the ground and truck rolls eat up

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