Building IQ (JPM)

Intelligent buildings are becoming part of global real estate market

by Emma Johnson

The following is an excerpt from the May/Jun 2007 issue (Volume 72, Number 3) of JPM^�, Journal of Property Management.

At one time, security cameras capturing an entire building�s entrances on a single wall of monitors elicited �oohs and aahs.� Today, a skyscraper�s every system�including HVAC, signage, elevators, light and temperature control, and yes, even security�can be monitored on a single video wall by a single person.

Intelligent buildings are nothing new. Long embraced and now commonplace in new developments in Asia and the Middle East, these smart buildings with their high-tech networks and business systems are not just gee-wiz things of the future, experts say.

Rather, they are becoming an inevitable part of the global real estate market. Increased pressures on connectivity, energy efficiency and marketplace competition now force developers, leasing agents and real estate managers to consider investing in intelligent buildings to differentiate themselves�or even to stay in the game.

�People have been dying to learn about this technology, but they require return on investment proof before they begin,� said Tom Shircliff, co-founder of Intelligent Buildings Group, a Charlotte, N.C.-based consultancy that creates ROI investment modeling for commercial properties. �As technology becomes more mainstream, advanced, and more common sense and obvious, people take it more seriously.�

IT�S INTELLIGENT DESIGN, STUPID

While intelligent buildings are nothing new, neither is the confusion surrounding their ambiguous definition, said Paul Ehrlich, founder and president of Building Intelligence Group, a Minneapolis-based intelligent building consultancy.

�I�m not sure people know what intelligent buildings are,� Ehrlich said. �It means many things to many people.�

To some, intelligent buildings�also referred to as smart buildings or integrated buildings�are defined by energy efficient or environmentally friendly technologies. Others define them by way of high-tech tenant amenities like digital signage and directories, broadband and wireless services, and building automation. In the most basic sense, intelligent buildings require one or more of their systems to be automated and interconnected.

Ballantyne Village, in Charlotte, N.C., is one such building with an integrated system. The 800,000-square-foot mixed-use entertainment, retail and condominium property�s HVAC systems, security, signage, lights and fountain controls are operated via a central location.

Ballantyne has sensors that monitor carbon dioxide, and as a result can count the number of people in a room and automatically adjust climate control. Restroom soap, toilet paper and paper towel dispensers automatically communicate with facility managers when empty. Swiping an access pass opens doors for tenants, while concurrently turning on the lights and heating system.

Despite examples like Ballantyne Village, however, the lack of concrete parameters defining smart buildings has stunted their growth in the United States. Their value�as it relates to energy efficiency, tenant satisfaction, reduced labor and long-term cost savings�is misunderstood, Ehrlich said.

He said because the technology is largely untested in the states, convincing profitable U.S. developers, investors and real estate managers of its value is difficult. Converting to integrated building technology almost exclusively would require the re-education of nearly every level of the industry�from architects to developers to leasing agents and property managers.

Once builders become acquainted with smart building technology and see its potentially positive impact on their bottom line, Ehrlich said they will warm to integration.

�It�s all about the investment on return. The returns on these investments are ridiculous�in the hundreds of percents.�

The full article is available as an online exclusive in the May/Jun 2007�JPM� issue.

IREM Members have free access to the JPM� online archives and the �Online Exclusives,� articles that are only available on the IREM Web site. Non-members can subscribe to JPM� at www.irem.org/jpm.