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Smart building tech: Do we sense a pandemic-driven boost?

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Smart building technologies are hardly new. In fact, they’ve been around since the introduction of basic building automation systems (BAS) in the 1970s. However, these were stand-alone systems focused on lowering building operating costs with the involvement of little to no “intelligence.”
In recent years, there has been an increased focus on and investment in smart building technologies with the advent of the internet of things (IoT), the development of sensor technology, and improved data analytics. Moreover, many technologically-advanced devices can be retrofitted with legacy equipment, making their adoption more feasible. These developments have taken automation and control to new levels, leading to an expansion in the smart building market.
The UN expects the global urban population to reach 68% by 2050 from 55% in 2018. Since urbanization increases demand for sustainable living and work spaces, several governments are considering—and have begun implementing—smart city projects to which smart buildings are integral.
Partnerships and collaborations within the industry have also made the technology more accessible, with incumbent information technology and building technology companies teaming up with niche tech companies to fill gaps in their portfolios.

What is smart building technology?

Smart building technology refers to the marriage of hardware, software, and processes designed to automate, manage, and control building operations. Building owners and operators are turning to smart building tech to increase operational efficiency and deliver an improved occupant experience, with the ultimate goal of maximizing returns.
Smart building tech involves the integration of—
Smart building tech involves the integration of—
Source: SPEEDA Edge based on various sources
Several applications of smart building tech are currently available with the potential for more
Several applications of smart building tech are currently available with the potential for more
Source: SPEEDA Edge based on various sources

Building tech has gotten smarter over time

Smart buildings have evolved from being just automated structures that provide tenants with remote access and monitoring, to those that harness technology to gather intelligence on equipment and energy usage as well as occupant behavior, using this to respond to, for instance, occupant needs and weather conditions.
Smart building evolution
Smart building evolution
Source: Siemens

What’s driving the industry?

Energy efficiency is the holy grail of smart building tech. Heightened public awareness and government regulations are exerting greater pressure on businesses to be cleaner energy consumers. At the same time, businesses are keen to rein in rising energy costs by reducing wastage. Smart energy management systems can monitor real-time data to isolate abnormal usage and predict maintenance needs.
Improving the occupant experience. Building operators are increasing their focus on occupant health and wellness, as employers seek to boost employee productivity by creating comfortable and personalized working environments. Smart building technologies allow the real-time monitoring and control of temperature, lighting, air, and sound quality at a granular level.
Pandemic-safe environments. In addition, the COVID-19 pandemic has accelerated the adoption of smart building technologies. As employees return to work, there is heightened focus on occupant health and wellness as well as creating a COVID-safe environment. Building entry control, space efficiency to accommodate agile working styles whilst maintaining physical distancing, sanitation and hygiene, air quality management, and in-building navigation and traffic control to reduce the transmission of infection have become important (and urgent) considerations.
The pandemic may also fuel a new wave in the demand for co-working spaces. JLL estimates that co-working spaces will account for 30% of office space by 2030, compared with 10%–20% in pre-COVID 2019, as agile teams and employee mobility gain traction.
Adoption may become more mainstream. Larger buildings with sufficient budgets (Class A office properties, shopping malls, chain and franchise hotels, and university teaching hospitals) were the early adopters of smart building tech. Now, next-tier properties (Class B office properties; retail stores; independent hotels and guest rooms; and medical offices, clinics, and non-teaching hospitals) have the opportunity of adopting these technologies. Consequently, the smart building market is anticipated to expand at a seven-year CAGR of 21.6% to reach USD 265.4 billion by 2028.

What do building operators stand to gain?

Increased energy efficiency. This is probably the most desired benefit, as buildings seek to reduce their carbon footprint and optimize their energy consumption, particularly in respect of lighting and HVAC. According to the IEA, the buildings sector accounted for around 30% of energy consumption and 28% of CO2 emissions in 2018 (compared with the industry sector’s 37% and 24%, respectively). Yet, PwC reported in 2019 that commercial facilities were wasting as much as 30% of the energy consumed, and that connected solutions can help reduce energy consumption in offices by an average of 18%, in retail stores by 14%, in hotels by 8%, and in hospitals by 14%.
Greater operational efficiency. The variety of data gathered from sensors and software can be used to detect trends as well as equipment abnormalities and faults in advance. This facilitates predictive maintenance leading to improved productivity (reduced maintenance hours) and lower equipment downtime. According to the EU Community Research and Development Information Service (CORDIS), predictive maintenance is 3x–9x cheaper than a reactive approach. For example, the Burj Khalifa in Dubai reduced total maintenance hours by 40% by partnering with Honeywell to deploy a building automation system. 
Improved returns. Facility managers can use data gathered on occupant behavior and preferences to create personalized experiences, which may pay off in the form of higher returns. According to the Center for Real Estate of the Massachusetts Institute of Technology, buyers and tenants are willing to pay an 8.2% premium on rent and a 23.7% premium on transaction prices, respectively, for smart buildings offering personalized occupant experiences.
Improved building and occupant safety and security. Areas such as building access, fire and life safety, and structural integrity can be monitored in real time, potentially reducing threat response time.

Who are some key players in the smart building tech space?

The prominent incumbents in the space, such as Siemens, ABB, Schneider Electric, Honeywell, and Johnson Controls, offer solutions including components as well as connectivity and analytics platforms. They are concentrated in the building automation and analytics segment. Top disruptors such as VergeSense (building automation and analytics), Cloudastructure (access and identity solutions), Redaptive (energy management), View (lighting solutions), Thule Energy Storage (HVAC services), and Measurabl (rating systems) are present across the main segments.


What are the risks?

A long-term strategic view is critical. Effectively deploying smart building technologies requires a well-articulated long-term strategy. Deployment can be complex, involving the systematic integration of multiple elements (devices, networks, etc.) with traditional building hardware and setting up a consolidated infrastructure. Companies offering consulting services have been set up to address this need.
Data privacy concerns are exacerbated by the risk of cyberattacks. With the copious amounts of data being gathered and processed by smart building technologies, buildings need to comply with regulations such as the General Data Privacy Regulation (of 2018) governing the EU and the California Consumer Privacy Act (2020). The threat of cyberattacks is also real: Kaspersky reported that, globally, almost four in ten computers used to control smart building automation systems were maliciously hacked in H1 2019. Therefore, a smart building strategy must include policies for cybersecurity, data protection, device management, and information access.

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