As the end of 2020 approaches, the commercial real estate industry continues to face uncertainty from the COVID-19 pandemic. Many companies have shifted to a work-from-home model where possible, with no clear timeline for bringing employees back to the office. The unpredictability created by COVID-19 is driving office tenants to stay as flexible as possible and increase their options — forgo renewing leases, subleasing their spaces and delaying commitments wherever possible. That makes it challenging for commercial real estate professionals to secure buyers and tenants.
In addition to the current challenges, there is much discussion in the industry about commercial real estate’s future. For example, businesses are adjusting to a virtual workforce and might not need as much office space in the years ahead — and the space they do need will likely have different requirements than the recent past.
This was pointed out in a recent interview on CNBC with BlackRock CEO Larry Fink, who said he does not envision the firm’s entire workforce ever being in the office at the same time.
“I don’t believe BlackRock will be ever 100% back in the office,” he said. “I actually believe maybe 60% or 70%, and maybe that’s a rotation of people. But I don’t believe we’ll ever have a full cadre of people in the office.”
The industry is facing two key challenges — how to bring people back into the workplace safely, and how to adjust to the possible changing norms and behaviors of building occupants. Fortunately, new digital building technologies can help address both challenges and measure the likely changes that the new normal will inevitably bring.
The process starts with tiny, wireless sensors that can be installed in light fixtures or mounted on ceilings, walls or desks. These sensors build an internet of things (IoT) sensory system that can detect a variety of activities inside buildings, from motion to occupancy, temperature, ambient light and energy consumption. Data is stored and analyzed in the cloud. Applications translate the data into actionable insights that building operators can use to help make buildings safer and more efficient while improving the overall occupant experience. Energy can be saved. Space can be better maximized. Predictive maintenance can take place onsite or offsite.
However, the overall mission of this technology was always much bigger: to create future-proofed buildings with intelligent IoT endpoints that capture and process rich data streams to assist commercial real estate professionals — and in turn, occupants — in many ways. Case in point: COVID-19 and encouraging tenants to return to the physical workspace, renew leases and adjust to the new norms in a post-pandemic world.
According to an August 2020 study from marketing consultancy firm Edelman, only half of employees currently deem office spaces “safe” due to COVID-19. It is important for the commercial real estate industry to bring confidence and a focus on well-being — both mentally and physically — back into the workplace, and an IoT sensory system can play a key role.
The data from smart building sensors can help building owners and managers reduce the risk of occupants contracting COVID-19. For example, data can be used to help enforce physical distancing policies, direct cleaning efforts and reduce occupancy limits. IoT technology can provide insight into how much contact is happening within buildings by identifying the busiest, riskiest and most over-occupied spaces so management can make proactive preventative decisions based on real-time data. Operators can see what is working and what is not, and they can continue to reduce contact risk.
Specifically, the IoT technology has the capability to:
IoT technology can also conduct digital contact tracing if an employee tests positive for COVID-19. This process of tracking down people and places that an infected person has been in contact with can help reduce the spread of the disease and enable employers to only quarantine those who have been exposed to keep healthy employees safe and productive.
Privacy is a key discussion point around digital contact tracing systems. Some have been built so that they do not require names to be entered into the system or require employees to use their personal cellphones. Building occupants wear Bluetooth badges, and the IoT system locates where within the building a positive individual has been, what other badges they have interacted with and for how long. This can circumvent the need to quarantine entire buildings of people while ensuring those potentially contagious stay home. This information also helps focus deep sanitization efforts.
Nobody knows how commercial real estate and business life will change and evolve. Will there be more satellite offices? Will there be an exodus from large cities as employees continue working remotely and potentially move to more affordable areas to live? What will happen to desk hoteling and coworking spaces?
One thing is certain: as the recovery phase of COVID-19 gets underway, data from smart sensors will help tell what is happening inside buildings and how the space is actually being utilized. This will empower owners and tenants to make data-driven decisions.
For example, if companies do start to open satellite offices, the data will show how often the space is being used, the volume of occupancy, peak usage hours, most popular locations inside the space and much more. Most importantly, it will provide data on when the space is at or over maximum capacity, allowing business owners to make decisions on expanding office space or bringing employees back into the headquarters.
Smart sensors and the data they provide can help guide developers and owners through changing norms at the enterprise, building and department levels, and even down to the usage of individual workspaces. The data will remove the guesswork and allow commercial real estate professionals to respond more effectively to whatever is next.
IoT technology will assist companies in optimizing their space usage, provide a granular, data-driven pulse on how workplace usage evolves in the new normal, and help their employees maximize productivity. And, during COVID-19, it can help tenants stay safe. This could give smart buildings and those who own and manage them an edge in the commercial real estate world now and into the future.
Mark Milligan is senior vice president of marketing at Enlighted, Inc., a Siemens company.