What are the growing priorities among those who manage commercial real estate? According to recent research, smart technologies and energy efficiency are climbing the ladder.
CIL Management Consultants, a management consultancy, surveyed landlords, property managers, agents and suppliers about what they’d like to see implemented in the buildings they oversee. More investment in smart building technologies was a clear favorite going to the top of the agenda.
More than half (58 percent) of respondents indicated that smart controls and sensors are important to building management. The vast majority (92 percent) report increased spending in this area.
The added cost of these smart controls will likely lead to their implementation only within prime real estate, at least in the near term. That means Class A properties and top-tier markets.
“Properties in larger cities with higher rents can justify refurbishments and upgrades, so it is these buildings which are seeing the early investment,” said James de La Salle, director of CIL’s built environment practice. “Older buildings and commercial real estate out of larger cities are likely to take longer to adopt this technology.”
However, there is increasing recognition by owners and operators of the ROI that smart and sustainable technologies can incur. Higher efficiencies in commercial real estate not only bring costs down, they can increase tenant satisfaction, improve space management and ensure strong energy performance.
As adoption permeates out to secondary markets and below-prime properties, there will be new opportunities for suppliers who develop systems and technologies such as controls, occupancy monitoring and data led services for the sector. CIL forecasts a 10 percent growth rate over the next five years, and profit margins of over 20 percent.
“As property managers build a stronger economic case for smart technologies, we predict a sector of high growth and strong margins, with clear benefits for commercial real estate,” said de La Salle.
The research also shows increased investment in energy efficiency improvements across commercial real estate, driven by climate change mitigation, new regulations and the desire for cost-saving. While the industry has largely focused on the substantial reductions that switching to LED lighting can bring about, 84 percent of respondents foresee a rise in their future spend on advanced HVAC systems as well.
Based on the survey results, CIL is forecasting growth of 5 to 10 percent in this area over the next five years, driven in part by the uptake of more advanced systems. This is particularly true of the HVAC market as it shifts towards local heating and cooling of rooms, alongside the development in smart thermostats and room monitoring.