Proptech is becoming a new buzzword in the realm of commercial real estate. I attended an event last week to listen in on a panel discussion between the industry leaders and real estate startups who are already disrupting the industry.
Proptech is an area of digital transformation in the property industry leveraging technology to address inefficiencies in real estate. IoT (internet of things), block-chain, artificial intelligence are just a few examples of proptech. Below is a summary of the discussion that took place.
What is “Smart”?
A “Smart” building is a building which utilizes automated processes to control the building’s operations (heating, ventilation, air conditioning, lighting, securities, and other systems). A smart building collects data through sensors, actuators and microchips. These data in turn helps owners, operators, and facility managers improve asset reliability and performance.
“Smart” Integration and Strategies
There is no one size fits all strategy when it comes to “smart” integration. Each organization needs to define their own smart strategy taking into consideration various factors including the investment type, building age, and tenant types. Organizations are advised to dedicate an in-house innovation/strategy individual to take ownership of the strategy and involve vendors participation. Vendor involvement can be defined during the procurement process. Properties need to think ahead and put the infrastructure in place to receive smart technologies. It is strongly advised for properties to test different products and strategies first before fully implementing it. Remember to “try before you buy”.
Technology is Driving Transparency in Real Estate through Big Data
Building technology is generating key performance data through the usage of sensors, actuators, and microchips. Working with data analytical companies and sharing performance across the industry to improve algorithm accuracy, companies can develop analytical models to drive decision making. Key performance data can provide an edge to property managers to increase operations efficiency and tenant engagement. We do not need more data, we need better data. It is in the interest of the organization to bring on data scientists to translate the data. When data is made transparent, both the operators and tenants are accountable for the building performance.
Cyber Security and Data Ownership
With the usage of “smart” technologies, the number 1 risk for any organization is a potential cyber security breach. When this happens, your brand, reputation, and company valuation are all on the line. It is strongly advised to bring your IT team close to building access and operations. We need to place more importance on protecting the captured data from both the building and vendors. Companies are also working with third party cyber security companies to reinforce security to look for malicious behavior. Data ownership is another concern. We need to understand who owns the data and what data we already own. Look at terms of the contract with existing vendors and protect ourselves contractually when it comes to data ownership.
How does smart building tech look like in 5 years?
- Today, it is still rare to see collaboration between vendor, data technologist and the property team. However, this will hopefully become the norm.
- With all the data we are collecting, we can apply our learning on future design of buildings and systems.
- When the industry shares data among each other, everyone benefits. We will soon be able to view how our property perform against other properties within the geological area
- With the help of technology we can achieve operational transparency, thus creating an open dialogue with the tenants.
- There is currently no direct correlation between Proptech integration and property valuation but that is soon to change.
What are your thoughts on this phenomenon? Leave me a comment.