Navigant Research Blog

Cities and Businesses Care about Smart Buildings: Part 2

— November 14, 2017

With 238 proposals in hand from cities and regions across North America vying to host its second headquarters, Amazon plans to make a decision next year. Cities trying to lure Amazon should turn this occasion into an opportunity to strengthen their business environments to both complement and drive investment in smart buildings.

Regulatory Certainty and Standardization of Business

In order to attract investment in smart buildings, governments should work toward offering certainty and standardization for investors. Certainty refers to predictable outcomes or guaranteed returns. Governments can establish policies that set expectations for the building sector. Cities that adopt and enforce building energy codes, for example, can quickly increase local demand for energy efficiency technology. Stable demand means a stable market for finance.

In addition, having common standards for assessing risks will be helpful. For example, many stakeholders are already familiar with existing green building standards like Leadership in Energy and Environmental Design (LEED). If governments use policies such as financial incentives to encourage broader adoption of such standards, that will make it easier for investors to assess a project and ultimately increase the likelihood of investment.

Leading by Example

As a start, enforcing policies like building efficiency codes and fostering voluntary programs to pursue LEED certification can offer certainty and standardization. Cities can lead by example, ensuring that their own buildings adhere to the policy goals, unleashing the power of information and communication technology in public buildings. In its recent report, Smart Buildings and Smart Cities, Navigant Research expects the global smart public buildings market revenue to grow from $3.6 billion in 2017 to $10.2 billion by 2026 at a compound annual growth rate of 12.1%.

One of the leaders in this area is Washington, DC, which was named the first LEED for Cities Platinum city in the world in August 2017. Washington, DC requires all new public sector buildings to achieve a minimum of LEED Silver certification. And starting in 2012, all new private buildings over 50,000 square feet were required to achieve LEED certification. Once the regulations kicked in, the private sector responded by competing for LEED certifications—developers wanted to achieve higher levels of certification against their competitors.

Regulatory certainty and standardization of business together with government efforts to lead by example are key to encouraging investment in the smart buildings sector. As stated in my previous blog, cities wishing to remain competitive in the face of new emerging technologies and a new generation of top talent will want smart buildings as an action item.

 

Cities and Businesses Care about Smart Buildings: Part 1

— November 9, 2017

In September, Amazon announced plans to open a second headquarters in North America called HQ2. The company expects to invest more than $5 billion to build the facility and create as many as 50,000 high paying jobs. In its request for proposal, Amazon listed preferences to help find the perfect location for its new campus. It is looking for a city of more than 1 million people with an international airport, mass transit, quality higher education, an educated workforce, and a solid business climate. 238 proposals have been submitted by cities and regional governments. While Amazon will look at the most obvious incentives from governments such as donated land, tax breaks and subsidies, it will also need to consider which cities will attract best talent.

Attracting Top Talent from a Business Perspective

By supporting more agile ways of working and enhancing the work environment, smart buildings can play a key role in attracting and retaining employees amid increasing competition for top talent in business sectors. Smart buildings use internet-enabled technology to gather data and bring operating systems and services under central control in order to create a better workplace.

Smart buildings can not only reduce operational and energy costs, but can also create an enhanced in-building experience to help increase productivity and promote corporate brand values. They achieve this by analyzing data on occupancy, movement, and resources in real time and by adapting systems to optimize the performance of both the building and the people within it. This way, smart buildings provide opportunities to address the challenges of productivity and comfort that are at the heart of contemporary debates about workplace environment. Cities trying to entice Amazon to their streets should take a closer look at smart buildings—which can help Amazon recruit top talent.

Relevant technologies are already available, including building energy management systems, location-aware sensors and services, and mobile phone applications. In fact, Navigant Research is bullish on continued adoption of these technologies. In a recent report, IoT for Intelligent Buildings, Navigant Research projects the market to grow from $6.3 billion in 2017 to $22.2 billion in 2026 at a compound annual growth rate (CAGR) of 15.0%. The office segment is expected to grow at a 15.7% CAGR.

Attracting Businesses from a City’s Perspective

The evolution of smart buildings parallels the digital transformation in cities. Cities can now collect large volumes of high quality data from public infrastructure, such as government buildings and street light poles, that can transform a number of city service areas. For example, digital technologies are becoming an important element in traffic and transit management, public safety, social care, street lighting, and waste services. From sensors collecting data to developers building thousands of smart city apps, the Internet of Things movement is helping cities become truly smart.

Digital transformation of city services is certainly attractive to businesses, but cities can go the extra mile to enhance its competitive advantage. For cities to lure Amazon, the business environment that complements and drives investment in smart buildings should be enhanced. Smart technologies will further innovation, inclusion, and investment within a city. My next blog will explain what cities can do to spur investment in the smart buildings sector.

 

When 5G Meets Smart Street Lighting

— October 25, 2017

It is increasingly recognized that street lights are valuable city assets that can enable various smart city services and Internet of Things (IoT) strategies. Navigant Research expects the installed base of smart street lights to reach nearly 73 million globally by 2026. One of the many elements connected to realizing the value of smart street lights is supporting the deployment of cellular networks and, in particular, future 5G networks.

What About 5G?

With the continued expansion of IoT, the number of mobile users and connected devices will increase. As subsequent data consumption increases, there will be increasing pressure on network capacity. This has the potential to cause latency problems and possibly dropped services with a detrimental effect on many IoT applications. The next generation of wireless networks will therefore need to handle more traffic at high speeds than today’s LTE networks. 5G is hailed as the solution to these and other challenges, and it promises to bring speeds 20 times faster than the current 4G networks and deliver data with less than a millisecond of delay. Telecommunications companies are aiming to commercialize 5G networks by 2020.

However, the downside of 5G networks is that cellular signals do not travel far and are easily blocked by objects. Therefore, in order to prevent signals from being dropped, 5G networks require many more base stations to relay the signals than the current 4G networks. Fortunately, small cell base stations can solve that problem. These small low power nodes can be easily attached to existing infrastructure such as street light poles and buildings. Given their ubiquity and connection to the electricity network, street light poles are viewed as a particularly effective and increasingly important means to improve the network coverage.

Convergence of Smart Street Lighting and 5G

These requirements for 5G networks are converging with other drivers for smart street lighting. For example, in February 2017, Infineon (a German semiconductor manufacturer) and eluminocity (smart street lighting solutions provider) announced a partnership to develop connected street lights with a scalable sensor hub, connectivity with support for 5G deployment, and data processing.

More recently, Philips announced plans to develop 4G/5G-enabled LED smart light poles with American Tower Corp., a real estate investment trust (REIT) providing communication towers and other transmission real estate. The smart light poles will not only house 5G network gears, but also connect to the Philips’ City Touch, a smart street lighting management platform.

5G Opportunities Expanding

As the smart street lighting deployment increases and 5G networks expand, there will be more opportunities for the two markets to be complementary to each other. To learn more about how smart street lighting can contribute to other city services, see the Navigant Research report Smart Street Lighting for Smart Cities.

 

How IoT Can Improve Airports

— March 15, 2017

Airports are busy, crowded places, and navigating through such large and complex buildings can be confusing. The flow of passengers through different checkpoints can go smoothly or stand still for hours. Around 23 million bags are mishandled (either lost or delayed) every year. However, thanks to the Internet of Things (IoT), this experience can be transformed. Sensors and connected devices, combined with intelligent analytics, are allowing airports and airlines to make rapid advancements toward a better passenger experience and reducing operational costs.

Sensors are expected to enable airport management to have a real-time understanding of what is necessary to improve traveler experience, such as dispatching additional staff at the check-in counter. This data will help speed things up and streamline numerous processes within an airport. Sensors aren’t the only IoT-related technology being applied to airports. Travelers with smartphones will be able to take advantage of location-based apps to help guide them to their gate. In fact, in the context of digital transformation across all industries, customers are demanding innovations that enable customization—whether it be ordering a coffee or booking an airline seat. Smartphones and mobile applications are the main channels for facilitating customization.

Based on a survey of 225 leading airports, the 2016 Airport IT Trends Survey found that around one-third of airports have incorporated IoT into their IT strategy, while an additional 43% have plans to do so over the next 3 years. 80% of airports in India are expecting an IT budget increase in 2017. In China, 29% of airports included IoT in their strategy in 2016, and that number is expected to rise to 82% by 2019.

IoT Use Cases in Airports

Miami International Airport (MIA) is one of the pioneers employing IoT technologies in airports. The airport’s mobile application, MIA Airport Official, provides flight information, wait times, baggage tracking, the weather, and boarding pass information. It also provides an indoor map with geolocation to help passengers navigate through the airport to restaurants and gates. The GVK Chhatrapati Shivaji International Airport in Mumbai has also launched an airport navigation app, the Mumbai T2. Based on Bluetooth Low Energy (BLE) beacons and technologies, the app provides interactive navigation assistance.

One of the biggest pain points for travelers is baggage collection, and there are IoT technologies to help with that. In particular, radio frequency identification microchips (RFIDs) address mishandling during transfer from one flight to another by ensuring that airports and airlines keep track of bags at every step of the travel. The technology also supports the International Air Transport Associate’s Resolution 753, which requires member airlines to maintain an accurate inventory of baggage beginning in June 2018. In 2016, Delta Airlines spent $500 million to deploy RFID baggage tracking technology at 344 stations around the world, the largest investment in baggage tracking solution yet. The RFID-enabled tags look just like regular barcode tags, but with tiny chips inside that are able to provide real-time tracking of luggage during travel.

There is little doubt that further proliferation of the IoT advancements will affect the air travel industry. With IoT devices and analytics, the airline industry is poised to achieve greater efficiency and better customer service.

 

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