What’s the NOI implication of tenant comfort? With so much focus on OPEX reduction, can the visceral benefits of building automation equate to measurable benefits for building owners?
Many of us have seen the stats. Per the U.S. Energy Information Administration, electricity accounts for approximately 61% of energy consumed in commercial real estate buildings. Accordng to EnergyStar.gov, about 30% of the energy consumed in a building is wasted. Crude math suggests that equates to roughly enough power to light up Las Vegas for 3 years. So, net net, the case for using building automation to cut energy consumption, and hence, energy related OPEX is fairly clear.
At the same time, aside from Common Area Maintenance (CAM) fees, many building owners generally don’t pay the electricity bills; their tenants do. So, a question becomes, should building owners and developers care all that much about how energy efficient their properties are if they don’t actually pay the bills? Sure, the CMO might like to be able to point to a “green” building, but does that really justify higher rents?
To muddle the equation even further, many building automation advocates are increasingly pointing to quality of experience benefits as a key reason to invest in building automation. What constitues quality of experience? In building automation parlance it could mean, a room that always stays at a comfortable ambient temperature. It could also mean a floor that is lit uniformly – not too bright, not to dim. Ideally, it means a workspace that constantly maintains the atmospheric conditions that are most conducive to optimal productivity, regardless of time of year, time of day, and number of people in a given space.
But the question remains, can a building owner charge more if they can deliver that experience? To borrow a phrase from the old magic 8 ball, “Signs point to yes.” Here are five reasons why the qualitative benefits of building automation that could help building owners to make their properties more attractive, and command higher rents.
- Comfortable employees work smarter. There is a growing body of evidence that suggests the impacts of atmospheric conditions in the office have a profound impact on productivity. A more productive workforce is a quantifiable benefit to any employer/tenant.
- Better conditions create more usable space. Uniform HVAC and lighting helps create more useable square footage per floor. As co-working and other open floor plan work spaces become more popular, the ability to leverage all the square footage in a floor plan makes that space more attractive.
- Automated systems create workplace effciencies. Leveraging automated access and control systems to streamline access to a building and/or secure spaces within a building help employees more around their workplace more freely. In addition to saving time in their day, it also helps to reduce the need for paid security personnel. In turn, this can result in a tangible operational savings for tenants.
- High tech employers demand high tech offices. As the information economy continues to occupy larger portions of global GDP, the companies that earn their business providing high tech solutions want to benefit from them as well. To this end, being able to point to high end amenities related to intelligent automation will help a building stand out vis-a-vis competitors that can’t offer similar benefits.
- It pays to be ahead of the curve. As more governments formalize sustainable energy benchmarks, building owners will be faced with regulatory compliance issues that will impact their ability to rent their space. For example, as California strives to have all new commerical real estate meet “net zero” energy guidelines by 2030, building automation systems may not only hold the key to meeting government regulations, but also in their ability to effectively compete for tenants that will also bear some regulatory burden for meeting compliance standards.