The 3-30-300℠ Principle: Smart Buildings Unlock Exponential Value

It's no coincidence that the green buildings, building automation, and the Internet of Things (IoT) are coming into stride at the same time. While Cisco predicts that by 2030 more than 500 billion devices will be connected to the Internet, pundits at the 2016 Building Energy Summit® made it clear that smart building technology is evolving at lightning pace and delivering way more than just energy savings.

Energy savings have typically been the driver that ignites ownership's interest in investing in smart building solutions. And rightfully so, given that building automation and integrated control systems can generate 10-40 percent savings in energy costs alone. But just looking at energy savings misses a much bigger value proposition: When calculating the ROI on smart building investments, it is important to consider all the other ways smart building solutions contribute to a company's bottom line.

The "3-30-300℠ Principle" refers to the estimated amount a company pays per square foot annually for energy costs, real estate costs, and the cost of its workforce. This example helps put an organization's affected operating costs into better perspective. With energy representing approximately $3 per square foot, energy savings merely scratches the surface of the overall value proposition for smart buildings. Using sensor technologies to understand how occupants actually use space has the potential to reduce the $30 real estate costs by a factor of 10x the energy costs. And because a company's largest expense is often its payroll – at $300 per square foot – if you use smart building technology to offer customizable and controllable environments to increase employee productivity and tenant satisfaction, the value can be 100x the energy costs – or more.

Smart buildings use the power of the IoT to deliver exponential value across multiple business outcomes. That more complex value proposition is exactly why conversations at industry-leading events such as the Building Energy Summit® are focusing on how smart building technology contributes to much greater business goals. The discussion is turning to how to use smart building technology to create an enhanced occupant experience and an overall better workplace.

The Smart Building Value Proposition
When you calculate the value of the full 3-30-300℠ principle for smart buildings, the investment in IoT technologies is a no-brainer. Consider the following:

• Integration enables the greatest efficiencies. Automated building equipment can be effective in saving energy costs, but the greatest savings are generated when all the building systems are integrated over a smart building network. The network aggregates and shares real-time data in order to optimize building performance and empower facility managers to streamline repairs and maintenance. Smart buildings use less energy, which not only reduces operational expenses, but also reduces the burden on our power generation infrastructure.
• Smart buildings support today's mobile workforce. In order to support the growing mobile workforce, smart buildings enable reservation of workstations, conference rooms, lockers, and even parking spaces. With integrated sensor technology and location services, the workplace can learn worker patterns and respond automatically to personal preferences for temperature and lighting. In addition, the ability to manage space in a much more efficient manner and monitor space usage on a real-time basis provides valuable insight for the corporate real estate executive to support overall workplace strategy.
• Connecting the worker to the workplace improves satisfaction and productivity. Employees increasingly demand a more interactive and flexible workplace – which smart buildings are well suited to deliver. With many workspaces still too hot or cold and meeting room schedules often outdated, organizations can create a "smart office" environment where employees can use smartphone apps for parking, access control, lighting, temperature, reserving space, wayfinding, concierge services, integrated communications – or even ordering lunch.
• Real-time data drives genuine business intelligence. Companies are increasingly learning how smart building operating systems can be used to boost competitive advantage. As cloud computing and centralized portfolio control become more prevalent, organizations are capturing more relevant data points than ever that provide new insight into how their business is running. Integrating end-to-end systems and reviewing data and analytics on the performance of real estate assets – such as energy usage, indoor air quality, space utilization, occupancy, and productivity – is fueling more informed business decisions.
• Corporate social responsibility for the win. It is estimated that approximately 25 percent of global energy use comes from commercial buildings. Each building that can reduce energy usage and trim its carbon footprint can benefit the environment and help foster a culture of corporate sustainability. The opportunity for smart buildings is rich, from reducing greenhouse gas emissions to integrating alternative energy technologies.

Invest in Worker Productivity and Satisfaction
Smart buildings are changing the way people work and how buildings work for people. As businesses begin to recognize the magnitude of opportunity today's technologies can deliver, they are beginning to rethink their workplace strategy. A dynamic, smart workplace is interactive and responsive to the needs of the people who work there, creating a better work environment. Smart buildings not only help to attract top talent, but also they motivate employees to come to work each day ready to engage, produce, and deliver value to the organization.

While smart buildings help to deliver energy savings and impact the $3 average energy costs, smart organizations will recognize the exponential value technology can deliver to the $30 and $300 part of the equation. From smart homes to smart cars to smart hotels … the IoT is revolutionizing the way we live and work, and smart buildings are redefining the future of the workplace.

Darlene Pope is the Senior Director, Energy and Sustainability Services, for JLL, a financial and professional services firm that specializes in commercial real estate services and investment management. She is based in Potomac Falls, Va.; email Darlene.pope@am.jll.com or call 703-444-5720 to contact her.

Posted on Aug 08, 2016