Upon entering the halls of the Anaheim Convention Center (directly across the street from Disneyland) I was expecting to see a semblance of an Epcot Center “Building of the Future”. What I witnessed was a mix of the old and new, established and emerging at the joint conference sponsored by Realcomm (an organization focused on technology and its impacts on commercial real estate) and BOMA (Building Owners and Managers Association).
I came to realize that beyond all the technological changes that are emerging - such as IP-based buildings, smart lavatories, and mobile collaboration software tools – much greater trends and forces are at work. Following are the seven key findings I discovered from this conference, and they should impact the way you think about technology adoption, real estate, and customer markets:
1) Equipment sensing and monitoring is old news, but comes in different forms.
Building automation systems from Honeywell, Johnson Controls, and Siemens have been operating in buildings for the past several decades. They each utilized their own proprietary systems and software. Now, these companies are migrating to standards-based (if not open standards) platforms that allow building owners to more easily migrate to various control vendors. Companies like General Electric (offers remote water filtration monitoring) and Millennial Net (utilizing wireless mesh sensors) are also helping building managers to enhance the ways in which owners care for properties.
2) A wall still exists between the integration of enterprise level IP-based systems and local building automation systems.
Many owners and operators are concerned about retooling their structures with IP-based monitoring and control systems. They are not convinced of the payback in terms of pulling this data into their enterprise systems. Those that have done so have pursued this strategy to help differentiate them in a crowded and increasingly underperforming commercial property sector or have wanted to build “experiential” consistency across multiple properties situated in various geographic locations.
3) Building design and construction is at the heart of the new economy.
Many people in attendance at the conference are from the traditional bricks and mortar world. These people are not the ones who have led technological change. However, upon reflecting on the many changes occurring in the technological realm, I can’t help but see how building developers and owners won’t be at the epicenter of innovation in the coming years.
Wireless sensing networks, nanotechnology, renewable energy sources, homeland security and response, asset lifecycle management, worker optimization and productivity, CAVES (Computerized Automatic Virtual Environments – or virtual reality), and more are all occurring and most owners are completely unaware of the potential to leverage these factors to improve the lives of their tenants – their primary source of revenue and value - which will all go to increase their buildings’ differentiation, retention rates, service immediacy, lowered costs structures, and overall profitability and property valuation.
4) Go to Asia for the buildings of the future, happening now.
Asia has been developing properties like no other region in the world. It was mentioned at the conference that the local workers will only want to live and work in the newest properties. Add tremendous growth, an insatiable thirst for technology, and substantial investments by private and government entities and the perfect storm is creating a whirlwind of advancement in many of the Asia countries – particularly in Korea – which is pursuing its “U-City” program. U-City stands for ubiquitous communications and computing embedded into the fabric of city buildings, roadways, electrical infrastructure, retail, manufacturing, and residential establishments.
There will undoubtedly be significant productivity and economic development gains from these projects – often on the scale of billions of dollars. However, the question was asked if Asia could be building a perfected form of structures for the current economy – not the future economy – where large commercial towers will not be needed.
5) The US is struggling with outdated structures, silos, and thinking.
Government regulations, Byzantine building codes, and entrenched developers and labor unions are eating at the core of US competitiveness globally. While we often view these issues as being domestic problems, they are having an international impact because of the way it affects U.S. capital investment, worker productivity, and economic efficiencies.
More importantly, because of the success and scale that our construction trades have enjoyed, there is increasing difficulty in having various parties come together to collaborate on new building designs, technology investments, and value-added services for the end users of commercial property. Developers are motivated by the quick flip, architects and trades are motivated by standards and processes (which mean maintaining the status quo), property managers want to reduce costs and are unable to make capital investments, tenants don’t know what is available or they do know, but no one offers it.
Given the soaring property valuations and low borrowing rates, only visionary developers will pioneer needed change today. And it is unlikely that the other US developers will change their tune until a major shift occurs (perhaps when oil/barrel jumps from $60 to $100 or even $400 – like some at the conference suggested).
6) European cities offer a template for future communities.
While Europe has often been derided for its lack of entrepreneurialism and growth, the region may unintentionally benefit from its legacy of small roadways, city plazas, small and historic buildings and retailers, expensive gasoline, and fantastic railways. Given the significant economic growth of India, China, and other developing countries, we can anticipate significant consumption of natural resources.
This will impact the cost of everything from steel (cars) to oil (gas and electricity). Thus, one could anticipate higher reliance on public transportation and pedestrian lifestyles. Europe is uniquely suited for this transition, and many of its cities have embraced digital technology and lifestyles, making collaboration between Estonia and Spain much easier and more productive. In contrast, America’s reliance on trucking systems that support real-time commerce and Just-in-Time inventories could soon become an Achilles heel.
7) Technology is changing the purpose of buildings.
Many in the commercial property sector are bemoaning the impacts of telecommuting and personal computers (which eliminate the need for floors filled with bean-counters). However, the fact remains that people will continue to work and collaborate in both real-world and virtual-world formats. People are still flying around the world to begin relationships, close deals, and deal with communication problems.
The need for personal interactions where non-verbal communication, intimacy, and trust are formed drives us to meet with people not just on a computer screen – but in person. Thus, the form and function of existing commercial properties will need to change to accommodate the new modes of working. Telecommuters, independent professionals and specialists, contract workers, creative staff, educators all need places to collaborate and learn in places designed to accommodate their diverse needs for high speed connectivity, noise abatement, privacy/socializing, personalized learning formats, shopping, dating, living.
Property developers and the technology vendors who work with them can begin to carve out a new segment within commercial and residential property development that takes into account these needs and delivers new forms of tenant living.
Well, as you can see, there was much learning to be had at the conference. While I am not sure I would have benefited in the same way by viewing the various presentations from my computer screen, I can imagine that before long, more conferences will create a blended interaction between the real and virtual worlds for their audience members - undoubtedly impacting the nature and form of convention centers and conferences (including those across from Disneyland).
-John C. Williams, Managing Director, The FocalPoint Group
jwilliams@thefpgroup.com
