• Smart Buildings
  • Finance Investing
  • Commercial Building Energy Efficiency

Telling the Right Story to Drive Smart Building Market Transformation

Casey Talon
Mar 15, 2019

Connected City 4

Markets transform by innovation, bolstering the bottom line and generating new top-line revenue. In the smart buildings market, innovators have reaped the benefits of remote-accessible, automated, and high efficiency systems for over a decade. At the same time, most commercial building owners have yet to invest in these key technologies for tackling climate change and driving huge enhancements to the experience in commercial buildings. The momentum isn’t crippled by a lack of technology advancements, but in transforming mindsets. 

Communicate the Bottom Line to Get Executive Support

Communicating financial bottom-line impacts is critical. While the budget owner may sit in operating business lines, from real estate to facilities management, a successful smart building strategy requires investment and systemic change that must be supported by executive leadership. JLL’s 3-30-300 rule of thumb frames the obstacles the smart buildings market has faced for years. Energy savings was long the metric at the center of the storyline for investment, but it simply falls short. Reducing OPEX and addressing occupant demands as a proxy for the head count costs are starting to make a significant difference as more impactful use cases for executive decision makers exist than energy savings alone.  

Take a look at the story the Canadian Green Building Council (CaGBC) outlined in its new report, Making The Case For Building To Zero Carbon. The CaGBC puts the money front and center, showcasing its research, which found an astounding 24% annual operating costs savings. This focus on OPEX is crucial as a metric that has direct impact on the bottom line. Let’s put some numbers to the test using data from a recent Building Owners and Managers Association (BOMA) study. For a test case commercial office building of 500,000 SF, 25% energy savings from smart building investments would deliver about $260,000. However, a 25% reduction in total operating expenses would deliver a saving of about $1,000,000—which, based on the BOMA statistics, equates to 100% of the average repair and maintenance budget. These OPEX savings suddenly become powerful internal bargaining tools when you can set offset an entire line item from annual savings!

Promising Data May Encourage Technology Investment

The correlation between technology investment and employee behavior is difficult to prove but certain smart building use cases offer promising data. A CBRE case study published in a recent report by the Urban Land Institute noted, “Installation of a lighting system with a timer on a circadian-friendly schedule that adjusted the brightness and color of lighting throughout the day led people to say their work performance was 18% better, and 71% felt more energized, 76% felt happier, and 50% felt healthier.” 

The bottom line drives executive decision-making and smart building solutions can deliver cross-cutting benefits that all measure up on this important financial metric. The connectivity, data, and operational changes smart building solutions enable offer significant changes to how buildings are operated and experienced, and telling this story through a financial lens will help drive mass-market adoption.