by Jessica Bates — Originally published in the July/August 2018 issue of BOMA Magazine — Science fiction author Arthur C. Clarke famously wrote: “Any sufficiently advanced technology is indistinguishable from magic.” When we see what is possible—directions to anywhere we want to go at any time, instant data transfer to anywhere in the world, printers that create three-dimensional objects, virtual reality headsets that can show us places we’ve never been—we feel the truth of this statement. We can give orders to our phones, and physical objects arrive in the mail shortly thereafter. It’s easy to take these benefits for granted.
And yet, technology also can feel very far from magical, particularly in the workplace. Instead, it can seem confusing, fragile, overwhelming and unnecessarily complicated. User errors, system incompatibilities and cybersecurity issues abound.
Technological advancements are unquestionably making our lives easier, so why do they sometimes seem to make our jobs harder? Because technology isn’t magic, even in commercial real estate.
“Technology is just a tool to achieve something,” says Deborah A. Boyer, executive vice president and director of Asset Management at San Francisco-based Swig Company. “You can’t just place a new piece of tech in your building and expect it to solve all your problems; you need to properly evaluate it and create an implementation plan as you would for any other new initiative.”
Boyer acknowledges this has become a little more complicated lately. “I think we are all struggling to keep up with tech now because there’s been such a flood of new products into our industry,” she explains. “For a long time, commercial real estate technology wasn’t in the spotlight—it wasn’t a ‘sexy’ industry for tech start-ups—but now, the floodgates are open and there’s something new coming out every day.” The real magic trick is figuring out how to distinguish between the options that will be a good investment for a property and those that will end up just making more work for you and your property team.
What Problem Are You Solving?
Specificity and clarity are key to successfully integrating a new technology into your property or portfolio. Boyer suggests starting by clearly defining the “need.” “What is the problem you’re having? What is the tenant service you want to enhance?” she asks. “Don’t just start acquiring tech for the sake of acquiring tech. You need it to solve a problem for you.”
It’s helpful to know what kinds of technology are available right now. Boyer puts commercial real estate technology, often lumped together under the heading “PropTech,” into three basic categories: building operations solutions that run or monitor the property; tenant-facing technology, such as tenant portals; and administrative tools, such as accounting software. For each of these, options exist that can make property professionals significantly more effective.
Rob Teel, senior vice president of Global Solutions for Yardi, says that the Internet of Things is having a truly transformative effect on the first of these three categories, the technology that relates to building operations. “You no longer have to physically check gauges and inspect equipment to make sure your property is running smoothly,” he says. “You can glance at a dashboard on a screen to see exactly how your property is operating and if any issues have occurred.”
Teel says that fault detection, metering and remote monitoring and automation of building systems, such as lighting, should be no-brainers for any property: “If your property doesn’t already have these, you are on the verge of falling behind the industry curve.” The value proposition on each of these is well-proven; they prevent potential damage to properties, save staff time and improve the bottom line.
In a sense, the easiest places to add technology are simply the places where machines unquestionably outperform humans. Chandra Dhandapani, the Dallas-based chief digital and technology officer for CBRE, says that “machine learning” applications spring to mind immediately. “Buildings produce so much data, from the behavior of the occupants to the performance of the equipment, humans simply cannot process all that data,” she notes. Programs using artificial intelligence (AI), on the other hand, can determine the optimal baseline for energy output, for example, and flag unusual usage for the human operators to then review.
These applications are only going to get more sophisticated. “You’re already seeing buildings that are equipped to anticipate necessary changes in lighting and temperature based on the movement of the people inside,” Teel adds, “although these applications are still in the early stages of adoption.”
For tenant-facing technology, successful applications are typically there to facilitate faster and easier communication. Tenant portals and smartphone apps allow building occupants to quickly access building information and submit service requests. Some companies also are unveiling apps that serve as a digital concierge service for tenants, connecting them to more unconventional amenities, such as backup childcare services; fitness classes; on-demand haircuts, manicures and massages; and food delivery.
Such applications can have a big impact on the tenant experience, and also supplement the face-to-face service building teams provide. Work order systems that allow both the building team and the tenant to track the status of requests, for instance, also create a more streamlined, positive experience. “These are very simple ways to add value,” says Teel.
“Back-office systems” is another technology category that is evolving rapidly, again due to the ability to analyze large amounts of data. “When you think about Yardi, for example, we’ve been tracking information on leases, construction projects, work orders, service requests and financials for 35 years, and some of our clients have been with us for decades,” explains Teel. “We have a wealth of data that can guide future decision-making in very precise ways.”
Ideally, properties should have at least moved beyond spreadsheet-based systems to accounting software designed for property management. These options are clear time savers and add significant functionality, such as easy comparison of costs over time.
Showing Technology Who’s Boss
One of the challenges of successfully implementing new technology is how the decision itself gets made. End-users often have a very different perspective than company leadership. “You need to be connecting the different parts of the organization together,” says CBRE’s Dhandapani. “If you aren’t working with the people who will be using the technology, then you’re going to overlook details; but, if you’re not factoring in long-term company strategy, then the initiative is doomed to failure.”
BOMA International, in partnership with property management software provider Building Engines, recently announced the findings of a study on technology trends in the commercial real estate industry that supports this idea. According to “Commercial Real Estate Technology Trends 2018,” solutions chosen by company leadership or building ownership were 20 percent more likely to be “highly effective” than those chosen at the property level. “Initially, that’s surprising because you’d think that those working more closely with technology would be better at selecting more effective solutions, but technology needs to do more than just run buildings,” says Phil Mobley, head of research for Building Engines in Boston. Mobley also is vice chair of BOMA International’s Technology Committee and worked on the technology trends report. “When an effort is driven by those at the top, you get the full resources you need for the implementation and you know it’s going to work with the long-term plan for the building,” he adds.
However, according to the results of the survey, building owners and asset managers are least likely to define themselves as effective with technology—only 4 percent self-identify as “tech-savvy.” “Technology companies need to find a better way to serve people in these roles,” Mobley cautions. “Owners and asset managers simply aren’t getting the insights and information they need from technology to make timely decisions consistently. But, when they select solutions, they tend to be very effective.”
A good chief information officer, or CIO, can make a huge difference, points out Yardi’s Teel. “The best CIOs are in touch with the vision of company leadership, the needs of their property managers—what problems are they having, where do they need more support—as well as what technology options are available,” he says. “CIOs can work with vendors and manage the project implementation across the company,” and bridge the gap between owners and end users on property teams, be they property managers, building engineers or leasing agents.
Of course, this can go awry when the CIO tries to take on too much on their own. “The CIO is a great connector, but they should not gate-keep,” Teel warns. “For example, a vendor will probably want to speak directly to the end-users; the CIO can’t assume she or he knows all the answers.”
Whatever your role, having a good understanding of how new technology should be implemented can make any process go more smoothly.
According to the experts, if you’re intimidated by implementing a new tech solution, you may simply be overthinking it. “The way to implement a new tech solution is the same way you implement anything new in a property: First, define the problem very carefully, then look at your options and find experts to help you,” says Dhandapani. “At CBRE, one of the things we look at is whether we want to ‘build, buy or partner.’” She and her team have a specific set of guidelines that govern these decisions.
When purchasing a new technology solution, the longevity and the compatibility of the product need to be factored in: Will the company that created it be able to provide ongoing support, and how does it work with existing systems? “We’re usually looking for things that integrate,” explains the Swig Company’s Boyer. “If there’s an option that already exists that works with your system or one that’s being offered by a vendor you already have a good relationship with, start there.”
Asking for recommendations from peers—the same way you would for any new service provider—can be another strong strategy. “Even if you already have a product in mind, it’s part of good due diligence to ask what others’ experiences with it have been,” says Boyer. “You can’t always trust everything you hear in the sales pitch.”
She cautions, however, that this only works if you know exactly what you want from the technology, as every property or portfolio is different. “We were evaluating a new tracking and reporting option, and we kept getting rave reviews,” Boyer recalls. “But, while we were setting out our exact goals for it, we realized that it was lacking basic functionality we needed. When I asked earlier adopters how they had dealt with this, they said that simply hadn’t been a requirement for them, even though it was a definite deal breaker for us.”
Clearly defining success criteria—and communicating it to the vendor—is key. “We only know what our clients tell us,” says Teel. “Don’t assume that it’s going to fix a certain problem if you haven’t told us that you’re having that problem.” Likewise, you don’t need to know everything about how the technology is going to work, as long as you’ve made the specific goals it needs to achieve clear.
While going through the process, ask as many questions as you can. Vendors should be available in the months following deployment to help with issues as they arise, so you won’t be surprised if something doesn’t go quite as expected.
While cohesion across a company can help support big tech changes, this can be more of a challenge for third-party managers. “If you’re a third-party manager, you can’t rule out anything,” states Julie Arce, vice president and general manager for JLL in New York City. “We work with many different types of technology across our buildings, because we are working with so many different building owners.” What one client finds critical, another may be totally uninterested in.
“There’s an extent to which we have to be more adaptable,” Arce adds. “But, it’s still critical to make sure everything within a single property is compatible—it’s best to keep it as simple as possible.” Because of the challenges of managing different types of technology in different buildings, Arce is more reluctant to be an early adopter. “I tend to lean on options that are highly proven, as they mean less time investment for my team and an easier sell to owners,” she explains.
Being an early adopter comes with significant benefits, however, if properties can make it work. According to the technology trends report by BOMA International and Building Engines, early adopters are approximately four times more likely to be “high achievers” when it comes to technology effectiveness. “Big rewards require taking risks,” Mobley says. He compares industry technology to the conversation around sustainability about 10 years ago. “Many people were reluctant to try ‘green’ solutions, because they kept waiting for lower prices and proof of results,” Mobley recalls. “But, by the time the rest of the industry started to catch up, the early adopters had been reaping benefits for a few years.” If early adoption can be done in a smart and calculated way, the payoff can be exponentially greater for those buildings or companies than for those that take a “wait-and-see” approach.
Boyer is a dedicated early adopter and has a long list of property success stories. Her company was the first owner of a multitenant building to have ever piloted the nowpopular Comfy app, which allows tenants to control the
temperature and lighting in their spaces. “You have to do it thoughtfully, but being an early adopter has paid off very well for us many times,” she says.
Early adoption can be a great choice for properties that have a unique problem. “We had an awkward space that we were trying to find a tenant for,” she recalls. “It was on the ground floor, but didn’t have enough street exposure to be good retail, and we struggled to find an office tenant for it.” Instead, her team partnered with LiquidSpace to pilot the first “altSpace” model (a team space available for immediate occupancy), listed it on the LiquidSpace rental platform and very quickly found a tenant at a competitive rate.
Dhandapani, too, is willing to try cutting-edge options. Some of her properties have been using virtual or augmented reality to show prospective tenants what their space could look like. Doing this has even headed off future issues. “We showed one client what the design they requested would look like using 3-D visualization technology, and they spotted some issues that they hadn’t considered at first,” she recounts. “We were able to modify the design before we started working, saving money and time and leading to a happier client.”
Learning to Do Magic
Not everyone is happy about the high-tech transformation of the commercial real estate landscape, but experts say this is just part of the process. “I remember when fax machines first came out and people complained that no one was using regular mail anymore,” Boyer jokes. “The good news is that options that seem new and scary are going to be absolutely taken for granted in a couple of years.”
That’s not to say you can just wave a magic wand and expect staff to become experts instantly. “Some of my workforce is not that experienced with technology, and there has been some hesitation in trying new things,” says Paul Muck, LEED AP, facility director of the Praxair Technology Center in Tonawanda, New York, for Newmark Knight Frank. “The key to success has been offering plenty of education and fostering a culture where it’s okay to ask questions and make mistakes early on.”
Muck also recommends identifying “champions” on your staff—employees who can help guide more reluctant colleagues through the process. It also can help with buy-in to start with a smaller project and demonstrate success. With a budget of only $1,000, for instance, Muck installed low-cost energy monitors on multiple floors of a building and tracked the reduction in usage after he upgraded one of the floors to LED lighting. After seeing an 80 percent reduction in power over just two months, he received more enthusiastic buy-in for utilizing LED lighting around the site.
New tech solutions can get a bad reputation among staff because they often mean more work, at least initially. It’s important to demonstrate exactly how something will end up helping them do their jobs better or more efficiently. “Teams will feel far less burdened if they can see what the benefits will be,” notes Teel.
But, how exactly do you become tech-savvy? “Stay curious” seems to be the consensus. “I skim everything about new tech that comes across my desk, and, if something catches my attention, then I dig deeper,” Boyer says. “You need to recognize that you can’t possibly keep up with every new product that comes out, so the best thing you can do is stay interested in learning more.”
Keep an open mind when it comes to getting information from a variety of sources. “I love learning about new technology, so I read a lot, I talk to my teams, I talk to my peers and I talk to colleagues in entirely different industries—there’s a surprising amount of overlap in the issues we’re all having,” explains Dhandapani. “And, to be perfectly honest, my 11-year-old has taught me some of the best new tricks.”
How magical, indeed.