Thursday, April 18, 2024
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Innovating to Reinvigorate Real Estate


Never has the opportunity to innovate been more favorable for commercial real estate (CRE) owners. Several poignant reasons include responsiveness to support new work models promulgated by the newest digital workforce generation (Gen Z), heightened expectations from tenants regarding support of sophisticated functional capabilities pertaining to digital engagement services, satisfying increasing regulatory pressures to adhere to more stringent environmental mandates, and addressing pragmatic issues to maximize facility utility despite uncontrollable events such as inclement weather.

What innovation means to enterprising CRE owners is that they can potentially use their properties to maximize its inherent value proposition in a myriad of novel ways. Indeed, by shifting the thinking to how their facilities serve patrons in different paradigms, CRE owners can grow new service revenues well beyond those linked to more traditional business models such as relatively simple leased tenancy occupancy agreements.


Uniformity of CRE has its benefits and challenges. Consider a healthcare example: leasing retail space for ambulatory operations is quite popular today, to wit: the re-purposing of formerly used retail space for such practices. However, there is a hidden lesson that CRE owners should heed before rushing to embrace this trend, and that is that there is no permanency in any business model. To illustrate, de-regulation of telehealth is very rapidly causing providers of healthcare service to re-think “brick and mortar” approaches to clinics, and instead invest in bringing healthcare services directly into the homes of their patients. Simply put, while re-purposed retail has been a boom for those seeking to use these spaces for clinics, relying on this trend to continue is not a prudent approach.

New innovations offer a way to stay ahead of this cycle, which requires investments in enabling technologies. Let’s examine a few.


Tenants, visitors, and patrons of buildings expect to engage with digital services as they would in the comfort and convenience of their homes. Arguably, there is greater consumer expectation that building owners will provide a more rewarding consumer experience given a perception that the former can afford to invest in state-of-the-art systems. Prime examples are dynamic network connectivity, digital media displays, and experiential technologies, namely: Augmented Reality (AR), and Virtual Reality (VR). Competitively, these are fundamental necessities to attract, retain, and promote facility utilization, and building owners who competitively offer such services will undoubtedly siphon tenants away from those who don’t offer them.

Pervasive, secure, and high-performing network connectivity is a fundamental capability that building owners must provide. Almost every facet of digital engagement today involves some form of mobility. Fortuitously, the wireless industry offers a robust palette of infrastructure solutions to address the most demanding needs. This is particularly important given growing trends pertaining to the proliferation of wearables, smart fabrics, and consumable sensors that when combined with edge computing, offer the means to create a multiplexed, immersive, engagement experience.

Similarly, the intersection of digital media displays with dynamic network connectivity and edge computing achieves actionable, interactive capabilities imbued in static, semi-permanent (i.e., moveable stanchions), and/or robotic solutions.

AR is driving new ways for people to engage in both professional and social endeavors, and it is making huge strides in promoting more efficient utilization of building services. For the tenant this may mean wayfinding and ‘presence’. For a building’s facilities department, it may mean real-time maintenance repairs via remote support, as well as virtual planning and construction visualization. Similarly, VR allows tenants to ‘experience’ buildings amenities and capabilities, and it affords property owners the ability to better plan and decide how to market their facility to different tenant prospects, before the proverbial hammer is even swung.


The use of Artificial Intelligence (AI) in commercial real estate is not new to building owners and property managers. That said, the application of ‘digital twin’ modeling to evaluate patron and tenant interactions with various building services under different conditions (i.e., time of day) is becoming commonplace. This innovation offers building owners an opportunity to safely, conveniently, and affordably optimize building operations across multiple systems. In concert with data analytics, building owners can use AI to promote superior operational management excellence through predictive utilization pattern abstraction, thereby mitigating frivolous expenses. For example, systems of remote sensors can collect environmental or pattern data, and then use unstructured machine learning to anticipate cause and effect. In practical terms, an example might be the use of sensors and AI to automate bathroom facility maintenance procedures, eliminating unnecessary cleaning routines by knowing when to re-stock, clean, or address bathroom issues.

Furthermore, the application of AI and remote sensing to building automation systems (BAS) is demonstrating substantial reductions in facility operating expenses, most visibly by improvements in Heating, Ventilating, and Air Conditioning (HVAC) management systems, sophisticated lighting controls, and chatbot-driven thermal management systems (blinds, shades, and electronic privacy glass). AI-driven analytics can even support anticipatory load demands based on a multitude of factors such as building occupancy, weather changes, and other relevant factors. Excitingly, AI based BAS is profiting from new innovations in AI-managed environmental recovery systems such as augmented power generation via solar, wind, and thermal radiation. Finally, AI-driven Business Intelligence (BI) provides unprecedented control tower views to CRE owners of facility operations in easy-to-understand ways.


While many of the afore-mentioned innovations revolve around the development and application of digital systems, there are many new innovations in materials that can be incorporated into new buildings and/or retrofitted to existing structures. Transparent solar cells are one such innovation, which (mostly) allow the transmission of the visible parts of the spectrum, while generating photo-voltaic energy from interactions with photons in non-visible parts of the spectrum. The same concept can be scaled to apply to ‘skins’ that are applied to the building’s façade. Another innovation is that of meta-materials, which allows for a wide variety of possible applications, including ‘seeing’ through a portion of the building, perhaps satisfying certain citizens who desire to reclaim views of their skyline, and certainly pedestrian and/or vehicular traffic, who desire to ‘see’ around the corner of the structure. A further example is the use of metalized ceramics, which at scale, provide the means for buildings themselves to become vast storage cells of energy to support the electrical power needs of its occupants (and the community). This is a fitting circular evolution of the electronic capacitor back to its original roots, when it was originally known as an ‘accumulator’. A final example is that of shape-shifting metals and electronics, which is progressing from laboratory novelties to usefulness in purpose-built applications – perhaps signage that changes shape in response to different use cases.


CRE building owners must also consider future man and machine transportation patterns with regards to their premises. While human locomotion traffic is likely to continue to be via traditional ground surfaces, machine-based traffic does not necessarily have to obey such constraints. Indeed, building owners could lease their facilities to support drone fleets and/or airborne sensory motes that utilize proximity and/or interface attachments conveniently placed along the side or on the top of the building for power or other services such as docking. Similarly, if autonomous electric heliport experiments prove successful, then buildings might provide future entrances at locations far from the ground!

Just as materials science, and mechanical and electrical engineering innovations wrought architecture masterpieces of yesterday, today’s courageous CRE building owners have the opportunity to create the real estate of tomorrow.

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