In a tight market, distinguishing your investment property from the next one can be difficult. This is especially true in core areas, where nearly all properties are newly built with top of the line amenities.
However, there is one way that investors can add value to a property that not only sets its apartment from others in its class but also provides an excellent return on investment.
Smart Buildings Pay For Themselves In A Few Short Years
Smart buildings use technology in order to automatically control heating, air conditioning, ventilation, security, and lighting.
Because smart buildings use a combination of sensors, microchips, and actuators in order to constantly adjust the property’s reliability and performance, they are able to significantly increase the amount of energy a building uses on a day to day basis.
This is true not just for large buildings: even buildings under 100,000 square feet can realize large savings. And although at one time the cost of installing smart tech was at one time prohibitive for smaller properties, the evolution of cloud-based analytics and the drop in prices for sensors and other technology means these smaller properties can benefit from increased ROI.
Exceptional Energy Use
The average commercial property wastes up to one-third of the energy it uses. That adds up to $200 billion in energy costs each year, with $60 billion of that sum wasted.
Smart buildings can significantly reduce that amount through the use of systems that automatically monitor and adjust energy usage throughout the day.
Automated systems can easily monitor each area of a building and adjust heating and cooling according to the number of people present, time of day, and outside temperature. Motion sensors let the building know when a room or floor is occupied, automatically shutting off or turning on lights when occupants leave or enter.
By ensuring HVAC and lighting systems are used only when necessary while still maintaining an optimal level of comfort, investors can realize significant savings.
Smart Buildings Cost Less Тo Operate
Installing smart technology in a new building adds relatively little in terms of capital costs, especially once you factor in the overall savings realized from reducing operational and maintenance costs of the property.
Sophisticated data analysis built within the technology ensures owners can not only control energy usage, but automated checkup systems can detect and notify management when equipment failures are imminent, allowing them to be fixed before more serious (and expensive) issues develop.
Intelligent Buildings Attract High-Quality Tenants
Properties with smart technology are easier to market to higher quality tenants. This sector expects smart tech features, not just for the savings, but also for the level of eco-friendliness they offer companies.
These businesses are in part responding to consumer demand; statistics show that sustainability is one of the factors that influence whether they purchase a product or service from a particular company. In fact,
55% of consumers globally say they are willing to pay more for products or services provided by companies dedicated to making a positive social and environmental impact.
With the increased attractability, investors can decrease vacancies, obtain higher rent, and increase tenant satisfaction.
ROI limits the willingness of owners to invest in smart technology. Without clear, calculable ROI it is difficult for these medium and small buildings to take the plunge. The wise decision is to stay with their current system until they can calculate a safe transition.
How To Measure The ROI Of Smart Technology
In order to measure the ROI of a smart building system, management first needs to analyze their present energy usage.
Smart sensors do this by transmitting data in real time to a central dashboard that allows management to see the average usage daily, as well as overall system performance.
Even if an investor is not yet ready to install fully integrated technology that can automatically adjust a building’s HVAC, lighting, or security systems, they can install sensors that allow them to monitor current energy usage.
This data can be broken down to determine energy usage by the hour, day, week and month for each system you’d like to measure. With this information, owners can adjust systems on their own, based on key previously determined key performance indicators.
The ability to dig deep into the data also helps owners which systems make financial sense to invest in. For example, if a property already uses LED lighting, the data acquired from sensors might demonstrate that they would realize little savings by upgrading to automatic lighting.
On the other hand, qualitative data could show owners that installing automated control systems for the HVAC system could decrease energy usage by 20%. In fact, 40% of all commercial costs of a commercial building go to the HVAC system, so this level of savings wouldn’t be an unreasonable saving for most properties.
With concrete, real-time data on energy usage and building performance, it can be fairly easy to measure ROI on a monthly and yearly basis.Tags: commercial buildings, commercial income properties, commercial real estate, commercial real estate investing, HVAC, income properties, ROI, smart buildings technology