CREtech and MIPIM PropTech, two of the largest conferences dedicated to real estate technology came to New York City over the past month. This year felt like a clear inflection point; the owners in attendance were no longer just the “early adopters” who are willing to take risks on technology to get ahead of the curve.
The halls were also filled with the “early majority,” many of whom have had little-to-no exposure to technology before. If there was one takeaway from this group, it was surprise at how challenging it is to differentiate technology companies at first glance.
This was true for everything from brokerage software to construction management solutions, but perhaps most so with smart building platforms that leverage sensor data to drive NOI by modernizing building operations and cutting OpEx.
The truth is, the “how it works” for every smart building solution is pretty much the same. First, you collect data, then you analyze that data, then you translate that analysis into recommendations to optimize performance.
But are wide variations in capabilities depending on how technology companies go about these steps.
As such, it seemed prudent to provide the industry with a standard set of questions with which to think about smart building solutions. The goal is to cut through the buzzwords, use common sense to arrive at what makes a technology platform valuable, and help owners bypass the paralysis-by-analysis that usually accompanies initial forays into technology.
1) Are you dependent on the building management system for data?
A building management system (BMS) can house a lot of valuable information, but it should not be the primary source of data because few assets besides Class A offices are likely to have a BMS in place. Even portfolios of purely Class A offices should be skeptical with a BMS-first strategy as the analytics tend to be limited to HVAC startup / shutdown optimizations and miss critical aspects of building operations such as preventative maintenance, advanced fault detection, and vendor management.
2)How do you affordably capture real-time, equipment-level performance data?
Anyone can capture equipment-level data using off-the-shelf hardware from legacy device manufacturers. The problem is that manufacturers add margin to the cost of their devices to generate profit. The difference ends up being an 80% markup, which either means exorbitant costs or pared-down scopes.
In addition, many of these “smart meter” devices can only capture data at 15-minute intervals. While this may be okay for high-level energy management, it’s insufficient for advanced fault detection such as short cycling.
It should be a red flag if the solution provider does not have a good answer for how they will affordably capture large amounts of real-time, equipment-level data.
3) Do you integrate environmental sensors? Why and when?
Environmental sensors such as leak detection, temperature, and indoor air quality can be powerful supplements to any smart building platform. However, these are most effectively delivered targeted to solve specific pain points. A spray-and-pray methodology generally leads to unnecessary costs and lengthy installations.
What are some specific examples of how the solution provider alleviated a significant pain point with a targeted sensor deployment? Do these different applications feed into the same platform or are they stand-alone “point solutions?”
4) Do you utilize non-sensor information? How?
Non-sensor information includes the documentation that is usually kept as paper records, such as O&M manuals, maintenance schedules and logs, spec sheets, riser diagrams, etc. This also includes information about equipment such as its age and location within a building.
Does the solution provider capture and digitize this information? If so, how do they use it to streamline workflows and drive value? How are the digitized documents stored and tagged to individual systems in a way that’s intuitive for non-technical building operators?
5) What is the average number of end points per building?
You don’t have to look for a specific number, but the order of magnitude will be illuminating. If it’s in the 10’s, the solution provider likely only pulls from utility meters and maybe deploys a few submeters.
If the answer is in the 1,000’s push them a little harder; this likely indicates that they are dependent on the BMS and are simply integrating with a system that functions using thousands of sensors, not creating a unique dataset for the asset.
The 100’s is the sweet spot; the provider captures data from every critical piece of equipment in the building, from the largest chiller plan to the smallest rooftop unit, as well as a range of environmental sensors.
6) What is the breakdown of current deployments by property type?
In addition to asking the number of buildings a provider has deployed in, get the breakdown of their deployments by property type. The goal is to tease out if they’ve demonstrated a consistent focus on commercial real estate or if the provider has drifted into providing a more generalized solution.
While impressive structures, stadiums, hospitals, university campuses and the like are fundamentally different from offices and apartment buildings. The same is true for corporate offices that do not own the building. Not only are there unique mechanical setups, it’s less likely the solution provider will be able to “speak the language” of commercial real estate to ensure buy-in at every level of the organization.
7) What are the non-energy benefits?
As one of the largest operating expenses in the P&L and a growing area of concern for investors, energy must be a factor in the overall value proposition of smart building technology. But one of the most frustrating things landlords face when first evaluating solutions is the outsized emphasis that many tech companies place on energy management and utility cost savings.
Owners should avoid thinking that energy savings is the only benefit that can be achieved with IoT-based data and analytics; maintenance and repairs make up just as large share of the OpEx budget as energy does.
The combined value from optimizing maintenance activities, identifying equipment faults in real time, and delaying capital expenditures for replacements can have just as much dollar savings, not to mention a much larger impact on what landlords care about most – the tenant experience.
8) How do you pull the data and insights out of the mechanical room?
For smart building technology to be effective, it must drill all the way down to the components of equipment. At the same time, users should not need an engineering degree to derive value from the platform.
How does the provider display information to owners and asset managers? Is it the same metrics, just at the portfolio level, or is it a fundamentally different view, tailored to what these users care about most? How can they effectively benchmark their properties from an operational perspective without having to understand what “short cycling” is or how many kWh is too much?
9) Does the platform do controls?
This is a tricky one. At first, it would seem obvious that a smart building would utilize data to automatically control equipment to maximize efficiency and tenant comfort. Unfortunately, connecting controls to any cloud-based software is a significant cybersecurity risk.
The truth is, hackers have already held owners ransom after getting control of their automation system. It’s naïve to think that it’s impossible to happen to your buildings. Keeping cloud-based software on a standalone network is a much safer alternative.
10) What does it cost? What’s the pricing model?
The pricing models of smart building platforms can be just as varied as the technologies themselves. The most common model is a one-time charge for the installation and an ongoing subscription fee. In these cases, you should be looking for prices in the range of around 10 cents per square foot for the implementation and no two to five cents per square foot for the subscription.
There are also solutions that require no investment whatsoever, and instead recoup their costs through a share of the energy savings that are implemented. This can be appealing from a cash flow standpoint, but it should be noted that there is no incentive for these types of solutions to deliver non-energy benefits.
Finally, companies some companies have started offering a turnkey solution for one low subscription price. Despite being priced like a normal software-as-a-service, The subscription includes the installation and networking of sensors, onboarding and training users on the platform, and a dedicated client success team of building engineers who ensure that insights are implemented.
Many landlords opt for this last model because they can easily roll the costs of the platform into the discretionary operating expense budget of the property.
11) How do you develop new insights and solutions?
As part of the “how it works,” many technology companies claim to use machine learning and/or AI to identify actionable insights. But the truth is that these techniques are only good for spotting patterns, not understanding what those anomalies mean in real life.
How do the insights delivered from the platform continuously get smarter? How does the solution provider avoid sending a deluge of generic alerts? Does the solution provider leverage the experience of their clients’ engineers to map data to the real world?
12) Does the company create a digital twin? What does that mean?
Out of all the buzzwords surrounding smart building technology, “digital twin” is the most nebulous and difficult to understand. The most direct explanation is that a digital twin is a digital replica of a physical asset. As such, it can be created in a multitude of ways and for a variety of purposes.
Digital twins can be created using BIM models, building management systems, or by simply taking photographs of mechanical rooms and equipment. BIM models are the most exact, but also the most expensive and are often based on static models that may not be up to date. Building management system-based digital twins can be powerful, but again are only applicable to the sub-set of the market that can afford robust building management systems in the first place.
Taking 360 degree photo scans of mechanical rooms and embedding information, similar to Google Streetview, is the most cost-effective strategy and can be done in any asset. These scans do not have the exact dimensions that a BIM model-based digital twin would, but this is often not necessary for building operations. What’s more important is to have a central repository for historical performance, maintenance activities performed, and documentation.
13) How does the system help with dispositions?
Nearly all commercial real estate companies will eventually look to sell of their assets to realize a return on their investment. When it comes to forecasting operational expenses and CapEx needs, the figures are largely based on guesses and incomplete property condition assessments.
As a result, buyers may want to buy a building, think it’s worth X, but only offer Y because they’re assuming their going to need to replace some critical equipment.
How does the platform support property condition assessments and bring transparency to both buyer and seller so that risk can be minimized and both sides can make a data-driven decision?
14) How large is the aggregated database?
The tagline for Farmer’s Insurance is “we know a thing or two because we’ve seen a thing or two.” At the end of the day, this is how smart building technology works. The more data that is collected and scenarios encountered in the field, the greater the library of insights that can be offered to the entire client base.
How many hours of equipment-level data have been captured to date?
We invite you to put the Enertiv Platform against this rubric. Schedule a demo today to get our answers.
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