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  • Writer's pictureBrian Snow

The “Connected Machine”—thoughts on the digitization of Commercial Real Estate

Today the world is proliferating with billions of IoT sensors, connected devices, and cloud and IP enabled systems that are leveraging vast oceans of data to provide increasingly sophisticated views of the built environment at warp speed. From mobile devices and robotic autonomous vehicles, to embedded sensors and augmented reality, we are in an age of the “connected machine” noted Jeff Bezos, the CEO of Amazon during a recent forum at the Aspen Institute. These connected machines, numbering in the billions are increasingly part of the built environment around us. As digital technologies proliferate further into the built environment, they will fundamentally impact the ways that humans and organizations interact with their surroundings.

This past week in San Diego, a variety of themes were constantly echoed at the Realcomm/IBCON conference which is the annual gathering of Smart Building Technology and Commercial Real Estate. The over arching theme was the central role that “data” and the mountains of it, that are being integrated, augmented and synthesized by technology.

The second theme was this concept of pushing the limits of technology at scale—in the words of futurist and opening session key note speaker Dr. Larry Smarr of CALit2—

its hanging a piece of tin on the edge of an exponential……This is the warp speed nature of the changes occurring in the industry.”

The conference was attended by technology companies you would expect at a smart building event; energy, utility automation, sustainability SaaS, data analytics, robotics, commercial real estate platforms, VR/AR, security technology companies and a host of other integrators of sorts. Each was pitching their wares to the most educated consumers of the technology—CRE professionals both technology and operational, consultants hired by CRE owners, academics from the leading technology institutes and a smaller set of venture capital and private equity investors.

As I walked the conference and met with several dozen startup and mature technology companies, it was puzzling to find the fragmented and narrow approach that most are still taking to this large-scale opportunity. When you consider that commercial real estate is the largest asset class in the world with some $16 Trillion in AUM in the US alone noted a recent Blackstone investor report—the opportunity to disrupt this asset class is a huge “addressable market.” This fact alone would tell me we are at the beginning of this new digital era and that the winners and losers are yet to be recognized.

Like most other conferences, the meat of the intellectual dialogue happened inside the various panel discussions that are going on formally and informally. These discussions offered further insights into the fast moving current where in the words of one of the speakers that the “technology is moving at 120 Mpg but the commercial real estate industry only moves at 25Mpg…” But the owners and investors of real estate are catching up and they are driving the discussion to a more unified view of their assets. It was in these discussions that a more tangible view of the future started to come into view in a highly granular 3D/HD picture by the end of the week.

The next phase of digitization of real estate will have several leading factors:

1. Sensor to Investor: The collection and measurement of data must flow from the building asset collected by a mesh of sensors all the way through the value chain, from operator to investor in a unified view.

2. Simplicity to scale: Technologies that make it easy for asset owners and operators to deploy at scale with de minimus CapEx will win. Faster to market and faster to deployment will win the day.

3. Single platform: Some of the best technology has not proven itself to be an enterprise capable platform. Those that have must actively acquire and consolidate the field down/upstream and deliver a platform to owners that make #1 & #2 above a reality for the investor class. This will only happen when more capital is allocated to consolidating a number of technology point solutions.

4. Oil Rig of Data: Once this has been done and investors have a single unified view of their assets, only then will they have the ability to have this “oil rig” on top of a blue ocean of data that pumps information and decisions that enhance the value and sustainability of their assets.

Regardless of the current Administration’s pull back from the global Paris climate accords and more tangibly the practical policies of the past several administrations, the business case is too strong for these technologies to reverse their progress. These exponential improvements in how we operate the built environment is improving financial performance of assets, driving a competitive advantage for the companies leading these changes, offering transparency into environmental and sustainability performance, fostering innovation, building customer/tenant loyalty, improving risk management and attracting talent the world over.

Failure to be sustainable will impact any brand, any government in every corner of the world.

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