The 21st-Century Real Estate Deal: How the Internet of Things Is Changing Commercial Real Estate

The commercial real estate (CRE) industry is on the verge of a major disruption: the Internet of Things (IoT). Technology is making its way into an industry that historically lacks the innovative spirit, and we’re beginning to see a drastic change in what it means to be a real estate broker. As client needs evolve, brokers must develop new skills to keep up with the changing technology landscape and remain competitive.

The Evolving Commercial Real Estate Landscape

Today, many offices and industrial properties throughout the U.S. are old and outdated. They are costing owners and tenants huge amounts of money and, in many cases, hindering business growth. These assets are dead and play no role in advancing the strategies your board and management team have set forth, thus hurting overall enterprise performance.

In this age of innovation, buildings should have the capacity to work in alignment with your business objectives, helping to achieve your goals and improve operational efficiency. What if the building you are sitting in right now had the ability to work with you and your employees to understand trends, optimize work environments and increase revenue?

The good news is that it can. Welcome to the 21st-century real estate deal.

The Internet of Things Brings Buildings to Life

Look closely at an older, historic building. Observe its structure, entrance doors, lobby, elevators, parking area and office space. Notice anything? Probably not, because that building is dead. It is just sitting there, doing nothing, providing no additional value to the occupants inside.

Imagine if that building were alive. What if the building could communicate with your business and help achieve your goals? The IoT is allowing organizations to bring both office and industrial buildings to life.

Buildings are generating data every second of every day, and it’s up to today’s real estate brokers to help their clients capture and understand that data. Whether it’s the HVAC system adjusting the temperature throughout the day, manufacturing equipment running and shutting off as needed, or a security system logging when an employee enters or leaves the premises, buildings can now provide value-added insights that can help management make more informed business decisions.

To make these smart decisions, your building must be a part of your corporate growth strategy. It can be a tool to accelerate growth and reduce operational expenditures. With this in mind, organizations need to be aware of the benefits of utilizing smart building technologies. In a warehouse, building automation can give organizations complete visibility into their supply chain, increase delivery accuracy, modernize storage strategies, drastically cut utility cost and increase customer satisfaction.

From an office perspective, smart building technology creates a more collaborative work space for employees, and increases productivity and performance. Imagine if you pulled into your assigned parking space and the building knew you were there. Your office computer and lights turn on, climate control is set to the way you like it, and your coffeemaker brews you a cup of coffee. These things are all possible with connected devices.

Revolutionizing Commercial Real Estate

Currently, the CRE industry is very transaction-focused. A broker represents a client, finds what he or she needs and collects a paycheck. But this era of transactional real estate will soon come to an end, and the IoT is a major reason why.

The IoT is forcing commercial real estate brokers to acquire a new, more sophisticated skill set rooted in technology, cybersecurity and innovation. Nowadays, clients require brokers to be more than just real estate experts — they must also be technology strategists that can help clients acquire buildings that support their corporate technology goals.

Companies can gain a noticeable competitive advantage by using a real estate broker who understands the market, and who can work with them to design a building automation strategy that supports business goals.

The Internet of Things Is Here

Disruption is coming to the commercial real estate industry. According to a white paper from IDC and SAP, 60 percent of global manufacturers will use data collected from IoT devices to optimize their processes this year. The report also predicted a 15 percent boost in delivery and supply chain productivity by 2018 thanks to the IoT. Another IDC report estimated that global IoT spending would reach $1.29 trillion by 2020, with an annual growth rate of 15.6 percent.

In other words, the IoT is here and changing the commercial real estate industry for the better. Clients want and need brokers who understand this change. Navigating the markets and negotiating deals is not nearly enough. To assist in the transformation of business processes at both the office and industrial level, clients need a true strategic partner and broker who brings a technological skill set to the table.

To put it simply, if you wish to remain competitive in the commercial real estate industry during the age of the IoT, you have only one option: Disrupt yourself before the competition does it for you.

Listen to the podcast: When We Don’t Know What We Don’t Know — Connected Cars, Smart Homes and IoT Security

Kevin G. Joseph

Cybersecurity Strategist, IBM

Kevin Joseph is an IBM Cybersecurity Strategist serving the Great Lakes Region of the United States. He is focused on delivering client value to corporate executives through business level discussions.