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Office & Commercial

How private LTE and CBRS are paving a path for in-building connectivity

While the majority of use cases which support private LTE have been in the industrial, manufacturing and supply-chain sectors, with FCC rules regarding CBRS nearly complete, the technology may be an ideal candidate for IoT connectivity in smart building applications where device density is increasing at an exponential rate.

As the number of IoT devices in use reaches a whopping 75 billion by 2025, private LTE is an easy pathway to 5G and can better support dense device environments to enhance both cellular connectivity for building occupants and securely connect smart building IoT devices to the cloud applications and the edge.

Until now, private LTE has been considered a less viable option for in-building connectivity because it operates in licensed spectrum- but that will change soon in the U.S.

The advent of CBRS will create a market opportunity which did not exist before says Roderick Nelson, CEO of Geoverse, which sells licensed private LTE spectrum for smart building applications designed for commercial office and industrial premises.

Geoverse is a licensed mobile operator and neutral host which offers carrier grade indoor and outdoor cellular coverage for commercial office buildings and IoT connectivity for smart building devices provides building owners the ability to monitor, measure and analyze smart building data to enhance tenant experience, save energy cost and enhance workplace productivity.

?Clearly the stimulus to the market is the advent of the CBRS spectrum coming from the FCC. The adoption of cellular wireless has been complicated by the use of a licensed spectrum. Now with the availability of CBRS, the enterprise is capable to take action to deploy cellular technology,? said Nelson in an interview with In-Building Tech.

Private LTE Roderick Nelson CEO of Geoverse
Courtesy of Geoverse: Photo of Roderick Nelson CEO of Geoverse

Private LTE holds significant advantages and the single network platform is well suited for two purposes.

First, it is a superior connectivity solution compared to Wi-Fi for enterprise applications because it offers higher signal and bandwidth performance, security, and has better voice call capabilities. Second private LTE can provide coverage enhancement for drivers of mainstream carriers, said Nelson.

While there are private LTE deployments that use licensed spectrum in the U.S. and internationally, there has never been a large allocation of bandwidth which will come with CBRS.

Based on the diversity of use cases which exist in the licensed private LTE marketplace which range from heavy industrial applications such as mining to logistics, warehousing, retail, education and healthcare, and commercial office buildings, Nelson says he feels confident that its adoption will be rapid once final approvals are granted by the FCC.

One of the main advantages to building owners is that once CBRS moves beyond its final stage of approval, building owners can remove duplicitous costs of deploying Wi-Fi and cellular infrastructure yielding significant cost savings in the long-term by using private LTE.

Private LTE pathway to 5G in commercial office buildings

While 5G offers three primary advantages–enhanced mobile broadband and higher speeds, low latency and massive device densification–it?s densification which will add the greatest value to the commercial office sector.

?We think that in verticals like commercial office, retail and warehousing the density of devices is going to dramatically increase and private LTE an easy pathway to 5G can support high connection density,? said Nelson.

?No other technology in the marketplace today has been engineered for a whole range of devices up to gigabit speed,? he added.

To this point, smart buildings today are increasingly using IoT devices to drive energy management, occupant comfort and workplace productivity and all three are significant to the enterprise market as more building tenants, especially in the technology sector are demanding robust connectivity and more landlords are using smart building devices and sensors to better monetize assets.

As an example, the Edge and Siemens AG ?S?building technologies headquarters in Zug, Switzerland, each deployed more than 12,000 IoT connected devices capable of monitoring everything from HVAC systems, humidity levels and lighting to room reservations and parking space availability.

There is still one government hurdle that is holding up CBRS development: ?the final certification of the Spectrum Access Systems and Environmental Sensing Capabilities (ESC).

Commercial real estate investors remain optimistic as market plateaus

Commercial real estate investor sentiment remains optimistic, quelling fears that effects from a maturing late stage cycle, rising rates and considerable pullback from Chinese capital would significantly dampen market performance in 2019.

Two-thirds of investors described the market as being somewhere in the ?middle?not quite a boom or bust,? according to a report released by research firm Real Capital Markets.

Significant opportunities for growth exist in both primary and secondary markets but will likely require more work to identify, underwrite and close, the report found.

Underwriting will continue to move towards a more conservative approach due to factors such as rising rates, the maturity of the cycle, the pullback in Chinese capital.

?For the past decade, we?ve experienced unprecedented levels of investment activity where each year established another new record. With words like ?plateau? and ?flattening? now entering the lexicon, it?s important to note how far the market has come and that in these good times, plateaus are part of a healthy cycle,? said Tina Lichen, COO of Real Capital Markets.

Rising rates impact commercial real estate investor sentiment

While rising interest rates are playing a bigger role in commercial real estate investment, rates are not likely to change buyers? market positions — at least, not this year.

?There is a lot of noise and over-exaggeration regarding market conditions. The volatility of the stock market creates greater opportunity for real estate because of the stability this alternative investment provides. As a broker or an investor, it?s the perfect storm,? said Kevin Mansour, managing partner of The Mansour Group, a division of Marcus & Millichap. He remains very optimistic about 2019, especially for investors looking to acquire properties up to $20 million.

The survey found that multifamily remains the preferred asset class among 35% of investors, with industrial as a close second (28%) due to a stable outlook driven primarily by e-commerce growth. Niche-oriented assets such as data centers, net lease investments and specialty office also remain attractive, while retail continues to lag.

commercial real estate
Courtesy of Real Capital Markets: commercial real estate investor sentiment

Higher rents have continued to propel the multifamily sector, with significant foreign and domestic capital waiting to be deployed in this sector.

However, experts express concerns about the future outlook as upstarts of new construction have waned, leaving investors wondering whether ample business and corporate expansion will take place to boost the sector in the?coming year.

Multifamily investors are also closely watching the continued increase in rents.

?Rents now represent a higher percentage of gross income than ever before. While this is good for the landlord, it?s not good for the consumer?at either end of the spectrum. At some point something has to give,? said Wayne Vandenburg, chairman and co-CEO at TVO Capital Management, which owns and manages multifamily assets in the U.S.

Investors suggested that while 2019 may be a status quo year for investing, 2020 — an election year — may see things slow until the results and a clearer direction are known.

JLL beats Q4 earnings estimates by 20%, revenue climbs across all segments

Jones Lang LaSalle Incorporated (JLL) reported stronger than expected operating performance in the fourth quarter of 2018, despite growing concerns from analysts over the late stage commercial real estate cycle.

The Chicago-based firm reported earnings per share of $5.99 in the fourth quarter of 2018, beating analyst expectations by 20% at an estimated at $4.84. Diluted earnings per share were ?$4.37, up from $1.66 in 2017.

Revenue for the quarter of $2.82 billion came?in above the consensus estimate of $2.7 billion and year-over-year revenue $4.9 billion was higher by 13% compared with 2017.

?Net income increased to $201.1 million from $76.2 million in the prior-year quarter.

“2018 was an exceptionally successful year for JLL. We made great progress in executing our beyond strategy while achieving outstanding financial results,” stated Christian Ulbrich, CEO of JLL.“We entered 2019 with strong business momentum that positions JLL for continued top-line and earnings growth.”

The company?s double-digit growth was fueled organically with all four business segments gaining traction.

JLL’s leasing and fee revenue growth climb in US markets

Fee revenue growth from leasing in the RES service lines climbed nearly 75% in the fourth quarter and accounted for more than 50% of the year to date growth. ?

Leasing led segment growth outperforming against the U.S. office market gross absorption driven by large deals and momentum in the New York, Midwest and Northwest U.S. markets.

Property and facility management and project and development services also performed better than expected in the US market with an average of 10% increase compared with a year ago as a result of a ramp-up of recent wins and expansion of existing facilities management relationships with corporate solutions clients.

Asia Pacific growth was driven by?the property and facilities management division through expansion of new business and client mandates and robust leasing activity in the office and industrial sectors from China and Australia which had the highest increase in revenue across all services lines in the region. ?

Operating expenses, excluding reimbursements, were $504.1 million for the fourth quarter and $1.8 billion for the full year, increases of 10% and 16%, respectively, over 2017.

Total assets under management were $60.5 billion as of December 31, 2018, an increase of 2% from the third quarter of 2018. ?The increase was a result of $2.9 billion in acquisitions and $0.7 billion from increases in net valuation which were offset by $2.2 billion of dispositions and withdrawals and $0.4 billion of foreign currency decreases.

 

 

JLL’s ‘Future of Work’ survey finds HR, IT to play transformative role in CRE

Commercial real estate (CRE) directors are moving beyond traditional industry drivers and increasing emphasis on outsourcing services aimed at enhancing human experience through technology.

The move?is a clear indication that enterprise human resources and IT departments are poised to play a transformative role in the delivery of CRE services in coming years.

More than 45% of commercial real estate directors indicated that they expect CRE to increase collaboration with HR and IT departments in the next three years, according to the results from JLL?s Future of Work survey.

The global survey captured the views of 561 commercial real estate directors from 30 nations across a range of industries from banking, telecom, healthcare, retail manufacturing and others.

Outsourcing of highly specialized CRE services

Forty-one percent of directors indicated that they currently outsource CRE services and additional 30% stated that they plan to increase looking outside of their organizations for real estate services.

While the news bodes well for CRE providers, clients’ expectations surrounding CRE services will significantly change to a more specialized and tech-centered approach according to Dr. Marie Puybaraud, global head of research at JLL Corporate Solutions.

As demand for outsourcing in areas such as energy services, lease administration, facilities property management, transaction management, and construction rises client requirements are shifting to areas with highly-specialized activities.

The survey also found that despite the increased interest in outsourcing services, 65% of C-suite executives indicated they felt that existing relationships with the commercial real estate industry could be strengthened.

The reason for the disconnect may be the shift in client motivations which are changing from traditional drivers such as cost-savings, labor arbitrage, high-quality services and technical expertise to workplace productivity, data-driven decision making and employee experience.

As more corporate executives outsource services to external partners it is creating a need for upskilling CRE real estate teams particularly in data analytics, workplace productivity and employee experience according to Puybaraud.

?New value drivers are emerging and explaining why we are seeing a shift to a new set of skills, said Puybaraud. ?High-tech technology is a top investment priority among and along with elevating employee and human experience.”

The survey found that more traditional CRE roles were being replaced by jobs such as human experience designers, space planners, AI experts and IoT engineers?when participants were asked whom they would include in the CRE dream team of the future.

 

CBRE revamps 360 app to bring people-led, AI-enhanced workplace experience

CBRE has revamped its workplace app CBRE 360 and re-designed the product offering to bring an enhanced experience to clients through artificial intelligence and human-centered?tenant experiences.

The rebrand of?CBRE 360,?which leverages CBRE?s expertise in workplace strategies and flexible space solutions, is called Host. It will also add front-of-house teams whose focus will be anticipating and serving the needs of tenants and employees, said Alex Andel, CBRE’s joint global lead of Host.

The commercial brokerage says that the building app has been re-designed to meet the growing demands of enhancing workplace employee experiences for its enterprise clients.

?Employees today have new expectations for the workplace. This is driving corporate occupiers and landlords to offer curated experiences and high-touch customer service, enabled by predictive technology,? said Georgia Collins, joint global lead of Host, who underscored that combining people and technology into an integrated offering eliminated shortcomings found in tech-only solutions.

Host?s scalable product suite includes concierge services provided by ?hosts? who focus on creating a helpful and comfortable tenant atmosphere, enhancing employee-facing services such as reception, IT support, meetings and events a combination of customer service and the app.

The move underscores the notion that while technology plays an integral role in creating a frictionless workplace experience, a people-first approach is also essential.

Host?s platform connects employees to their work environments, amenities and communities and can be tailored to specific client requirements to enable?users to navigate the workplace, schedule meetings with colleagues, reserve workspaces, use food and beverage services, and access building and concierge services through a mobile app platform.

CBRE tenant app uses AI to drive employee experience

The company says Host?s AI-driven ?recommendation engine? is unlike any competitive offering, and that it can learn employee preferences over time to deliver highly personalized experiences, while also ensuring that all space needs are sustainably and efficiently met.

?The market suffers from an ‘app for that’ syndrome. There is an app for visitor management, an app for controlling temperature, an app for booking meeting rooms. Host integrates specialty technology and end-user experience features on a single platform, allowing employees to access their workplace needs from a single app,? said Brennan McReynolds, global product and technology lead for Host.

AT&T and Redaptive partner to make commercial buildings more energy efficient

Commercial buildings account for 19% of energy usage in the U.S., with heating and lighting comprising more than 50% of those costs. Despite the decreasing costs associated with LED lighting fixtures and other energy savings installations, many commercial building owners have yet to adopt energy efficient lighting and HVAC systems due to higher upfront costs.

Now AT&T and Redaptive, a provider of an efficiency as-a-service (EaaS) energy savings platform, is enabling companies to overcome the capital costs and installation barriers that can prevent the adoption of efficient building infrastructure such as lighting and heating/cooling equipment to help commercial building owners reduce greenhouse gas emissions.

Through platform integration with AT&T?s Internet of Things connectivity, Redaptive is able to implement energy-efficient building equipment for AT&T and its customers with no upfront capital investment.

In 2018, the company used AT&T?s IoT connectivity to provide EaaS to more than 600 buildings in the U.S., reducing annual electricity use by almost 160 million kilowatt hours, equivalent to avoiding the greenhouse gas emissions from consuming almost 10.7 million gallons of gasoline.

A recent customer deployment of LED lighting at two Connecticut hospitals, part of the Eastern Connecticut Health Network (ECHN), was able to save the hospital system nearly $600,000 in operating costs over the term of the contract.

energy efficiency data from Redaptive's commercial building platform
Courtesy of AT&T and Redaptive: Energy cost data from Redaptive?s EaaS platform

IoT connectivity enables energy installations in the commercial building

While the Redaptive?s EaaS solution was highly effective, deploying it required a digital connectivity infrastructure.

The Redaptive platform required a reliable and cost-efficient connectivity solution that could transmit real-time data and, working with AT&T, the company was able to address the complex data backhaul problem that typically required either hard-wired connections from each circuit or the deployment and maintenance of a dedicated Wi-Fi network ? both of which can be costly.

?As we were developing our service, a dependable and sure connection was absolutely critical. We also needed a collaborator that could work closely with us during the development of the service. AT&T was a great fit, bringing IoT expertise and their world-class network, ? stated Arvin Vohra, co-CEO, Redaptive

AT&T collaborated with Redaptive to embed an Internet of Things (IoT) connection directly into power measurement equipment in addition to an LTE connection, which enabled ?Redaptive to transmit data straight to the cloud via AT&T?s LTE-M network, which is designed to extend battery life of IoT sensors up to 10 years and provides wireless coverage in difficult-to-reach areas, such as deep inside buildings and in below-ground storage.

In recent years, the lack of availability of capital to fund the upgrades, a lack of expertise and resources to vet technology, limited internal resources to implement retrofits and difficulty of tracking performance and connecting energy efficiency projects to bottom-line savings have all been significant factors inhibiting the adoption of energy-saving lighting and HVAC installations.

Using the EaaS model, AT&T has been able to install more efficient lighting systems at nearly 650 of their own facilities ranging from data centers to retail stores. In 2017, the program saved AT&T nearly $20 million on electricity costs and avoid carbon dioxide emissions equivalent to taking almost 21,000 cars off the road a year.

?Since 2008, the AT&T Energy Program has aggressively pursued energy efficiency projects at our facilities. There came a point in time when the readily-fundable projects ? those with high return on investment ? were gone. We needed a way to continue the momentum, and EaaS helped us overcome funding hurdles and expand our portfolio of projects tremendously,? stated John Schinter, assistant vice president of Energy, AT&T who acknowledged that often times due to budget constraints the allocation capital to meet energy savings goals can be scarce. ?

 

 

18-hour cities emerge as top areas for commercial real estate development

Second-tier cities with higher-than-average urban population growth are becoming fertile and viable areas for future commercial real estate investment.

Often seen as an alternative to investment in the “big six” real estate markets–Boston, Chicago, Los Angeles, New York, San Francisco and Washington, D.C. ? most of which are often dubbed 24-hour cities, 18-hour cities are being propelled by faster than average growth.

According to a recent report by PwC and the Urban Land Institute, nine of the top 10 markets and 17 of the top 20 markets with strong projected employment growth and stability fell into the category of 18-hour cities. ?

Cities like Nashville, Orlando, Austin, Fort Lauderdale, Dallas/Fort Worth and others are surprisingly more stable due to population and employment growth.

18-hour cities
Courtesy of PwC & Urban Land Institute Projected Employment Growth and Stability for Top Markets in 2019

The projected average annual population growth over the next five years in these markets is 1.3% ?compared with 0.7% for the United States as a whole, and five-year annual employment growth is expected to reach 1.2% compared with 0.6% for the United States.

18-hour cities were also seen as faster growth markets due to lowers costs of living and setting up businesses compared with larger markets.

The influx of more than 1,800 companies which left California to move to the Southwest, specifically Austin and Dallas/ Fort Worth are evidence of the dramatic shift.

Portfolio managers believe there is some room to go in this cycle, especially in a potential downturn, where faster-growth markets are seen as areas where investors prefer to be.

18-hour cities are doorways to suburban sub-markets?

18-hour cities are becoming more diversified by industry which is increasing investor confidence that these markets will remain protected from isolated events capable of disrupting their local economies.

The report found that the increased comfort level is driving more investors to look to non-gateway markets.

One of the landmark features of 18-hours cities is that they generally offer developed desirable urban neighborhoods and attractive suburban sub-markets which are likely to grow in the near future.

The survey found that 18-hour markets saw an average of 55% of their new residents relocate in the suburbs over the last five years.

These markets are especially attractive for retail development and office markets, as retail follows rooftops and development grows to meet the new resident requirements and residents prefer working closer to where they live.

JLL launches Curae to improve tenant experience in commercial office buildings

JLL Property Management has launched JLL Curae, a new integrated suite of products which use technology-enabled services and leverages buying power to improve tenant experience through programs designed to enhance workplace productivity and efficiency.

Named after the Latin term “Curae” ?which translates to “I care for”, ?the company says the new suite of services have been developed to meet the changing needs of office tenants and create a seamless, enhanced tenant experience.

The new service offers landlords and property owners access to HqO, an app-based tenant experience platform that recently received an investment from JLL Spark, and easy access to supplies at lower costs from Office Depot.

“Through these products and new offerings, we will be empowering our clients across the country with innovative services that go beyond what you would expect from a property management provider to creating a working world where wellness, education, value, and sustainability are standard offerings for our tenants,” stated?Mark Zettl, president of JLL, Americas, Office Property Management.

HqO, recently raised $6.6 million in seed funding, part of which was funded by JLL Spark a $100 million Global Venture Fund and Proptech investment arm of the commercial real estate services firm, in September of 2018.

For occupants, HqO will provide the ability to use a mobile app to receive important transportation updates and alerts, smart building features, access to amenities and communication regarding events and wellness programs.

The branded app enables landlords to make building operations more efficient and offers customer support and services for amenitizing the property by providing property managers access to anonymized data about client demographics and tenant interests, that eventually will lead to increase in NOI and overall asset value.

In addition, Curae, which leverages JLL’s collective buying power will also enable the firm?s office tenants to procure supplies and office products at extremely competitive prices from Office Depot.

The company says that the new offering goes beyond the traditional marketplace supplies offered to building owners and addresses a variety of tenant purchasing needs such as office and breakroom supplies.?

Using building apps curate services improve tenant experience

While offering top of the line amenities play an invaluable role in attracting tenants, building a sense of community helps landlords to retain tenants.

According to a recent report by PwC and the Urban Land Institute more property owners are now becoming curators of services- much like in the hospitality industry and this trend is expected to continue.

As a part of the program’s rollout, landlords can use JLL Curae to provide tenants with a variety of curated services through social, recreational and educational programming designed around occupant interests such as book and travel clubs, tastings, and speakers about topics relevant to the tenant community.

“Coming to JLL from the hospitality and residential world, I’ve been excited about infusing the office experience with elements from those two sectors that have long demonstrated the hallmarks of an outstanding service culture; it is apparent – the office world is ready to join in,” stated ?Zettle.

As tenants continue to push for robust amenities packages, owners are starting to offer amenities well beyond the fitness center and recreational areas to event programming and service-specific tailored to a building?s tenants and employees.

 

 

Google leases space in Los Angeles mall for new campus; why others may follow

Large, vacant retail spaces are being transformed into vibrant workplace campuses by big tech companies?and it seems this trend is just beginning.

Alphabet Inc., the parent company of Google, has signed a 14-year lease with Hudson Pacific Properties Inc. and Macerich to relocate its office to Los Angeles? Westside Pavilion Mall where it plans to develop a more than half a million-square-foot campus. ?

Similarly, WeWork which recently purchased Lord & Taylor?s former flagship store location in New York City?has plans to build out a future high-tech space to be leased to entrepreneurs and startups.

While retail spaces and malls may seem like unconventional spaces for tech companies to set up shop, they offer several advantages.

Undoubtedly part of lure has been the drastic decline in retail rents. Pressure mounting from e-commerce growth has reduced asking prices even in Manhattan, where the city?s most popular retail corridors experienced widespread declines in the fall of 2018.

Fifteen out of the 17 high-profile retail corridors posted a minimum reduction of 15% in the per-square-foot asking price of ground floor retail spaces, according to a bi-annual survey conducted by the Real Estate Board of New York (REBNY).?

The year-over-year drop registered as the highest total number of corridors in decline since the year 2000.

But cheap rents aren?t the only thing luring big tech companies to large retail malls.

Power supply and digital connectivity drive tech tenants to retail sites

A robust power supply, digital infrastructure and access to public transportation are among the most important features that tech companies look for when selecting office space according to JLL, a leading commercial real estate management and investment firm.

Malls are often pre-equipped with both the power and cellular infrastructure required to meet the growing demands for data storage and transmission necessary for tech?operations and satisfy the expectations of a growing population of tech-savvy employees who demand robust digital connectivity.

Attracting and retaining top talent also requires a location which is easily accessible by public transportation. Time spent commuting is unproductive and offering a location which enhances the quality of life for employees has become critical to employee retention.?

Large retail malls are often found in thriving locations that meet the requirements of millennial employees who are looking for access to off-campus amenities such as parks, health clubs, and trendy restaurants.

The use of existing retail shopping centers as technology campuses is a part of larger trend in commercial real estate sector known as adaptive re-use which re-purposes buildings for uses other which they were originally built or designed.

Adaptive re-use can be a?more attractive alternative compared to new construction due to its inherently sustainable and economic benefits that are often alluring to eco-friendly technology companies and their employees.

 

WeWork rebrands as Softbank drastically cuts funding to $2 billion

WeWork announced that it will receive $2 billion from SoftBank — far less than the $16 billion in cash influx expected from the Japanese behemoth investment firm.

The move to cut funding came after Softbank?s stock price dropped, due to global stock market turbulence in the past month.

The recent $2 billion in investment will bring the company’s valuation to nearly $48 billion and Softbank?s total investment into the co-workspace provider to $10.7 billion, of which nearly $6 billion was funded in the past six months alone.

The co-working provider also announced plans to operate under a new name, The We Company, which will run separate business units that lease office space, rent out residences and run schools.

According to co-founder Adam Neumann, the company has plans to continue to brand these business segments into WeWork, WeLive and WeGrow.

?WeWork?s mission is to create a world where people work to make a life, not just a living. WeLive?s mission is to build a world where no one feels alone. WeGrow?s mission is to unleash every human?s superpowers,? said Neumann in a blog post yesterday.

wework Adam Neumann blog
Courtesy of WeWork: Photo of the vision for the WeWork ecosystem, drawn by Miguel McKelvey in 2009

The re-branding effort has been criticized by analysts for being utopian and quixotic after Neumann said that The We Company?s guiding mission will be to ?elevate the world?s consciousness,? amid WeWork?s steady leakage of cash — which has now mounted to more than $1 billion in the past nine months.

The company continues to lose money from renting out office space in order to expand aggressively in major markets. Last year, after becoming the largest occupier of office space in Manhattan, WeWork experienced significant backlash from commercial landlords and property owners, who started to say no to the co-working operator.

However, Neumann who seems to have a more optimistic view, said that more than 30% of Fortune 500 companies are members of the WeWork community and many users credit?the company for providing the flexibility to grow to new markets.

Neumann also stated that small and medium-sized businesses in WeWork are experiencing an 18% annual growth rate compared to the global average of 1.7%.

As of now, it?s also not likely that Softbank will gain majority?control, with only $1 billion left to buy shares leaving a looming uncertainty about how the company will build out three separate segments as cash eventually dwindles.

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