The Buzz on Artificial Intelligence in Intelligent Buildings
Looking back over the last ten years, technology hasn’t replaced CRE functions, but the way in which we do them has changed quite dramatically. Looking ahead to what’s coming in the next ten, we’re already seeing the shift towards new innovative solutions leveraging artificial intelligence and machine learning to next-level tackle another CRE need – how to make buildings smarter, safer and more efficient.
Second only to MRO spend, the next highest expense category at 20-30% of controllable spend is utilities, positioning facility and energy management as a very good place to leverage technology to lower costs, increase efficiency and enhance tenant comfort. In a typical 500,000-square-foot building in Manhattan, MRO accounts for $1.5 million in annual spend, with utilities close behind at $1 million.
With tremendous amounts of promise in the Commercial Real Estate space, we expect the years ahead to mark dramatic advances in facility and energy spend management. This evolution, already under way, goes beyond the basics of automating utility bill processing to extracting data from utility bills coupled with near real-time demand data within a building. While these services and technologies are already available, it is the software platforms that have become much more sophisticated. These platforms now allow for benchmarking and visibility into cost trends and opportunities across a portfolio.
While the Internet of Things (IoT) already has the ability to connect much of our building operations into a smarter, more accessible network, we expect the future of intelligent buildings to lean on IoT connectivity, sensors, and other inputs informing aspects of artificial intelligence (AI) such as machine learning, deep learning, and neural networks. But what do those terms really mean? Sometimes they are just buzzwords used interchangeably and the hype far exceeds the substance.
It won’t be that way for long as AI gains traction in the business world, but there’s still room for caution. Investments in PropTech increased from $30 million in 2012 to $7 billion in 2018 and, in general, businesses that label themselves as an AI startup attract 15-50% more in funding rounds than non-AI startups. But of 2,830 startups in Europe claiming to be AI, only 1,580 accurately reflect that description.
- AI – any technique that enables computers to mimic human intelligence to learn from experience
- Machine Learning – a subset of AI that includes statistical techniques to enable a computer to perform a specific task more effectively as more data is received
- Deep Learning – a subset of machine learning generally based on neural networks capable of learning from data that is unstructured or unlabeled
- Neural Networks – informs deep learning by providing a layered approach to processing information and making decisions
At the heart of it, these solutions still rely on inputs and outputs and companies can make sense of it by looking at a hierarchy of needs, as Hacker Noon shares. So you start with the questions: What are you trying to solve? Is it reducing operational expense, increasing tenant comfort, improving building efficiency or all the above? If so, what are the inputs that impact these objectives? And how can I vary the inputs to get a desired output?
The roadmap to truly leverage AI in building system solutions can bridge that gap between pre-determined inputs and outputs toward true artificial thinking and even autonomous building management. Neural networks will take in specific data points like load, HVAC settings, external factors, financial data and energy sources. Then, through a set of hidden layers of decision-making that is based on a system that can learn without any task specific rules, the output layer would manage both comfort and cost. Imagine the future of building systems that can monitor and interpret weather, account for seasonal changes, understand how cloud cover might impact radiant heat, calculate temperature based on how many employees showed up in the office that day, and more – without any finite, specific inputs from a human source.
Don’t mistake the trend, AI in buildings will not replace human intelligence any time soon – it will just help humans do their jobs better while software does the hard work. For the foreseeable future, platforms leveraging AI may help manage specific decisions, but property managers and engineers will keep ultimate control. It also frees them up to spend more time managing tenant satisfaction and running other building operations.
If the last couple years of the innovation boom is any indication, it’s the path we’re heading towards. But what does this mean for your bottom line today? Until the capital costs for some of these solutions come down, it’s tough to get adoption. So, we recommend keeping an eye on the technology of the future, but focus now on opportunities for leveraging today’s technology to manage your portfolios more efficiently while mitigating risk and increasing asset values. Consider an incremental “crawl, walk, run” approach.
Wherever the trends take technology in the future, the benefits of an energy strategy today are real, and leaders will reap the benefits. The buzzwords are interesting, but you can start answering important questions such as the below that affect your operations without waiting for next generation technologies:
- How do I manage energy consumption more effectively?
- How do I increase my close rate while reducing costs?
- How do I streamline facility management?
Learn more about the latest energy management technology at Yardi.com/Pulse and increasing asset value through better facility management at Yardi.com/Elevate.
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Yardi® develops and supports industry-leading investment, property management and energy management software for all types and sizes of real estate companies. For the energy market, the Yardi Pulse® Suite helps manage costs, consumption and sustainability initiatives. Yardi is based in Santa Barbara, Calif., and serves clients worldwide. For more information on how Yardi is Energized for Tomorrow, visit yardi.com.
UPCOMING REALCOMM WEBINARS
COMMERCIAL REAL ESTATE & Technology – The Importance of Developing a STRATEGY - 9/19/2019
It wasn’t long ago that a Commercial Real Estate CIO was responsible only for functions such as networking, file and print servers, computer hardware, desktop applications and e-mail. Over the last 5+ years other responsibilities have entered the sphere of the CIO including marketing, operations (smart buildings), occupant experience and cybersecurity, to name a few. Additionally, emerging technologies such as AI, Machine Learning, Blockchain, AR/VR, autonomous, robotics and others are impacting their world as well as their clients. Never before has it been so important for a Real Estate CIO to develop a comprehensive digital strategy, encompassing all aspects of the organization. This webinar will focus on the importance of developing a comprehensive digital strategy.
Founder of Realcomm Conference Group, an education organization that produces Realcomm, IBcon and CoRE Tech, the world's leading conferences on technology, automated business solutions, intelligent buildings and energy efficiency for the commercial and corporate real estate industry. As CEO, Jim interacts with some of the largest companies globally pertaining to some of the most advanced and progressive next generation real estate projects under development.
Ilan Zachar is currently Chief Technology Officer at Carr Properties, a privately held REIT known for its portfolio of trophy-quality properties in the Washington D.C. In this role, Ilan leverages vision and foresight to cross-pollinate best practices, processes, systems and resources across corporate operations/affiliates. Under his leadership, this has resulted in improvements in bottom-line costs, top-line business growth/scalability, operational sustainability and high performance and overall, strengthening his company’s role as a market leader. For over 20 years, Ilan has been executive business leader and innovative technology strategist for multinational real-estate and property development companies worldwide.
Sineesh Keshav is the Chief Technology Officer at Prologis. In this role, he oversees all aspects of the technology strategy and is responsible for leading the company’s global data and digital transformation. Since joining Prologis in 2018, Sineesh and his team have been focused on a capability driven, customer-centric approach to innovation and digitalization.
With over 24 years of experience in real estate, Kevin's expertise encompasses enterprise IT design, integration and ecological adaptation, helping his clients deriving ongoing value by improving their manageability, effectiveness and ongoing efficiencies. Prior to joining RealFoundations, Kevin served as a CIO for a large-NY owner operator and as a SVP of IT for an Ohio based REIT overseeing the strategic planning, enterprise architecture and information architectures.
Mike Salazar has extensive experience in consulting and sales with Enterprise companies, regarding strategic cross function technology, mainly focused on IoT and AI platforms. Named Star on the Rise by Security Industry Association in 2016, he is currently the Practice Director for Smart Buildings at HID Global. Through innovative solutions he helps organizations unlock value and realize business intelligence. Honored to call many of the most notable companies of our time happy customers.
Dharmendra is the Industry Principal at Yardi Systems. Dhar’s well-rounded and practical background in the industry includes experience as a software vendor, consultant and customer. Prior to Yardi Systems, he was the Vice President of Revenue Management and Analytics for Denver-based Apartment Investment and Management Co. (AIMCO), one of the largest multifamily REITs in the U.S., where he led the development and implementation of revenue management and business intelligence systems.
Malcolm Hobbs is VP of Marketing and Market Development at Join. Malcolm has extensive startup and enterprise marketing and business development experience in markets including SaaS, Industrial IoT, Analytics and Sustainability. At Join, he is helping to redefine how owners secure their buildings from digital threats and deliver advanced digital workplace services in today's tech-forward buildings.