How can PropTech make buildings and the people within them more efficient?

On the 23rd January we hosted a roundtable with a brilliant group of representatives from the property, PropTech, engineering, legal and design industries to explore this very topic.

Attendee List:

• Adam Blaxter Paliwala, Technology Blueprint (Chair)
• Aneta Popei, HB Reavis
• Steven Hale, Crofton Consulting
• Josh Artus, The Centric Lab
• Jack Coles, Fixflo
• Bronny Wilson, Equiem
• Steve Smith, Asset Mapping
• Sonny Masero, Demand Logic
• Dan Jestico, Iceni Projects
• Jane Wakiwaka, The Crown Estate
• Olga Turner, Ekkist
• Sebina Auckburally, Gowling
• Roe Peled, PointGrab
• Josie Nash, Infabode
• Tameka Archer, Infabode
• Oliver Durham – Winch, Coyote
• Johanna Courtney, TDMB

Introduction:

The second of our popular ‘Tech for Good’ roundtables set out to explore how PropTech can improve the efficiency of the buildings in which we work, live and play, and the impact this can have on the environment, people and costs.

According to the UK Green Building Council (UKGBC), the built environment contributes around 40% of the UK’s total carbon footprint.  Almost half of this is from energy used in buildings (e.g. plug loads and cooking) that has nothing to do with their functional operation.

Whilst Newly constructed buildings tend to be more energy efficient, 80% of buildings in 2050 will have already been built, therefore a major priority needs to be decarbonising existing stock.

Although, even new builds do not always work as intended. The Building Performance Evaluation report which looked at 50 commercial buildings found that on average newer buildings were only 25% efficient compared to what they were intended to do and that inefficiency was largely down to building systems and building control systems, which is where 60-70% of the energy consumption comes from.  These problems wasted energy, costs money and had an impact on the people in those spaces.

The research showed that it created discomfort and lowered productivity as people were either too hot or too cold, or CO2 levels were too high.  This also meant that the certain rooms were not being used.

According to Josh Artus at Centric Lab, buildings that have been built typically exclude the human factor as the information/data has not been collected or is not available in a scalable manner. Neuroscience shows that an individual’s biological state impacts their cognitive experiences. The human tasks needed in the 21st Century are complex and stress impacts them greatly. Therefore, a building needs to be planned, developed, engineered and managed in a way to mitigate stressors such as commuting and pollution have an impact on an individual’s well-being and support 21st century productivity.

So how do we improve the efficiency of our buildings, and the well-being and productivity of the people within them? How can PropTech help?

Here’s what our group of experts thought…

Energy and efficiency improvements are needed in the construction process 

• The efficiency of a building starts with the construction process and the materials used. Cement is one of the largest CO2 and carbon emitters. There needs to be a greater focus on the materials that we use to build and the way that we transport materials.  Should we think about other materials which can be locally sourced?
• There have been some recent innovations with the introduction of materials which can counteract the effects of toxins caused by pollutants, e.g. paint designed by companies such as AirLite.

• Are new construction methods truly better than the traditional methods? There have been many conversations about improving the efficiency of the build process and using methods such as modular building.  Whilst modular building may be more energy efficient is this really the case in the long term? Most are built for a single purpose – could this cause problems further down the line? Should we be thinking about the longevity of a building and how to reuse/adapt it.

The OXO Tower is a building which has been built in a traditional way but has been used for many purposes; a power station that has been an industrial space, office space, residential, retail, and now it has a restaurant on the top of it.  This building was not built with any specific function in mind it was simply built as a building.  If you build buildings like that and they are adaptable, the embodied CO2 is spread over a much longer lifespan.

Long term thinking is needed in the design process

• For a building to be truly efficient or sustainable it needs to be economically and socially viable. It needs to be fit for the intended purpose now and in the future, “there’s no point having the greenest, most energy efficient building in the world, if no one wants/needs to use it” says Dan Jestico, Iceni Projects.

Long term design needs to be thought about at the very start of the process by all parties involved in the process.  We need to be thinking about what sort of spaces and buildings our society will need in the years to come, in order to make effective decisions on the operations, construction, planning and design. It’s not just about efficient/sustainable buildings, it’s about efficient/sustainable communities.

• Technology is already influencing how we behave and interact as a society and so we should be thinking about how technology will therefore impact buildings (whether its directly or indirectly).

How is PropTech helping?

• Creating more transparency and accountability

Equiem helps landlords open up communication about their ‘green’ initiatives through their platform which creates accountability and raises awareness of the agenda. Equiem’s Australian clients embed all their sustainable data into the platform so anyone working in the building can see energy quota and air quality, waste all in one place. They believe this transparent approach and direct line of communication will help increase occupier/tenant satisfaction and lead to renewals, and new tenants joining in.

This is also having a secondary affect in that because landlords become more accountable, and are consequently investing more in tech to improve efficiency so they can communicate this to occupiers via the app.  Those that are not transparent mean landlord and occupiers both end up doing their own things with no joined-up approach. It becomes counterproductive/inefficient.

• Unlocking insights from data

PointGrab  uses image based sensors and deep learning algorithms to monitor how spaces are used and track an individual’s journey through a building.  This can help to inform decisions on how best a space can be utilized to increase efficiency and provide a better experience to employees who need to find a desk to room to meet their needs, and access services like cleaning and catering.  The platform has also been used for safety and security purposes by understanding how many people are on a certain floor at any one time and making sure the fire and evacuation regulations are not being broken.  They predict there will be several new use cases to improve well-being and productivity.

Asset Mapping  build apps/maps for smart buildings.  They gather data from lots of different systems to inform asset registries, maintenance schedules, and occupancy analytics. They found that typically buildings are only 55% utilized and tend to be even lower on Fridays due to home working.  They aim to help clients utilize and manage their stock more efficiently, lowering costs.

Demand Logic install one single device into a commercial building and within 24 hours create a virtual model of that building’s internal systems.  According to Sonny Masero, often, efficiency is associated with energy but it’s also about the operation of the building.  They make that very transparent and work with older building stock like the Crown Estate as well as brand new buildings like South Bank Place or the Leadenhall Building.  They found that in reality, older buildings can be more efficient.  “we benchmark over 100 buildings and the buildings from the Crown Estate, which are much older are actually at the top of that list.”

• Streamlining property management processes

Fixflo provide a web based software service for residential and commercial property managers to efficiently plan maintenance and more effectively and quickly deal with issues.

There are many more examples of technology solutions which exist to improve efficiency.  However, there are still several barriers to effective adoption.  These include a shortage of skills and knowledge needed to use the tech, ease of use, and the incentives of those with the power to make decisions…

Creating the right incentives for change

As the group spoke about the design process, the construction of a building, and the PropTech solutions available, this was the overarching point that came up throughout the discussion.

• Decisions are ultimately driven by money – The efficiency of a building and the people within them is a challenge that seems to be caused by capitalism and profitability. Therefore, costs of using renewable materials need to be driven down to remove this barrier and incentivize developers, and efficiency improvements need to have a direct impact on the value of a property.  
• Business models need to be challenged – Facilities Management companies are typically paid to deal with complaints and are paid more for callouts. They are paid to maintain a list of things regardless of whether they are working or not, which is clearly inefficient.  The results are also evidence of a broken business model as, in many cases, the same problems exist at the end of the year as the beginning of year.  Demand Logic are already starting to challenge this and drive change with the Crown Estate.  They aim to bring down maintenance schedules down to half the time it is now and deliver better quality by using data analysis to influence processes and decision making.
• The way in which we hold property requires change – designs are not always being thought through as often land will be transferred to a land owner or is held on a 1000 year basis, which means there is little consideration for how the land is going to transform. If a building comes down in 25 years someone will just build something else. It will only be considered if a long lease falls under 100 years and they are forced to think about how they sell the asset. Sebina Auckburalley, an experienced lawyer at Gowling, suggests lawyers need to design contracts differently and introduce more sub-leases.
• Could Local Authorities and banks drive change or are they part of the problem? – They could influence change by demanding that certain criteria be met in order to receive funding or approval for a build. Should banks implement favorable lending? This seems to be already happening in Japan with ‘Green’ Banks. Real Estate Investment Trusts (REIT’s) are also asking more questions to assess the resilience of an asset to climate or societal changes. However, there is a risk that if they are over prudent in their contracts, this could create inefficiencies and stifle innovation.
• Introduction of regulations for health and well-being – legislation needs to be considered for materials which are proven to have negative impacts on health, however, there needs to be a balance as this could also if materials which are in mass production are banned. Ekkist, a consultancy firm for wellness are already driving this agenda as one of the UK’s first WELL Faculties™ in March 2018

Will the demand be driven by new generations?

Technology is changing behaviour and behaviour is changing technology.  As the use of technology increases, our awareness of the environment grows and we start to think more responsibility about our own impact.  As we connect with others with similar views, this starts to infiltrate our values or it starts to become a trend which society jumps on. Is efficiency, particularly in relation to energy, becoming a trend and will this truly drive changes within the property industry?

We’ve already seen this happen in the food industry, where culture and consumers have driven change. How do we make caring about the environment and efficiency ‘trendy’.  Whilst this may be controversial, there is an argument which says veganism has become ‘popular’ which has consequently had an impact on the food consumers buy and the industry as a whole.

Whilst this ‘trend’ may not (yet) influence decisions, we can still appeal to those who make decisions and have the funds by developing a robust business case which highlights the impacts.  Tech companies need to articulate ROI, and work closely with property companies. That said, there is research which exists and highlights the impacts of well-being and environmental impacts, and there needs to be a point where we don’t try to argue with scientific research.

From another perspective, technology itself is creating new uses for property.  As we are able to collect more data about the building, the landscape, our behaviours, there becomes a growing need or data warehouses.  In addition, our lifestyles have changed.  We are able to work from anywhere at any time, this has led to remote working or co-working in our work lives, and co-living or relocating more often in our personal lives.  All of this requires a change in the way in which homes and offices are developed and designed. Those that can respond to these new demands, for example, by creating shorter leases for occupiers.

For example, HB Reavis in their latest completed project, 20 Farringdon Street, addressed workspace flexibility by offering various lease-terms and fit-out options across different floors. Some occupiers have taken traditional, long-term leases, whilst others were attracted by flexible membership at co-working space HubHub. The building also offers a ‘Plug and Play’ service for scale-ups, who want privacy but cannot commit to long term leases, due to their growth predictions. Having a co-working space within the building is also attractive for the traditional occupiers who can use HubHub as an overflow space or for project teams. This concept as such focuses on supporting business growth of our tenants, from start-ups, through scale-ups to corporates and fosters innovation and collaborative ecosystem within the building.

Summary:

• Human failings can become a barrier – You can have the best solutions, best designed, best constructed and best contracts in place, but you need the right skills, the right incentives and the right business models in place.
• A combination of long term thinking is needed in terms of the planning, and delivery of the building and also plugging the gap in the short term, in terms of information, and understanding how something is being used and the impacts. Smart decisions about the assets need to be made using intelligent information.
• Disparity between tech businesses and property businesses – It takes a long time to build buildings but not to build tech (6 – 12 months).  Property moves slowly.  In order to understand how to get better use from a space you need to understand how it’s currently being used, and work with the property companies and the industry.  Don’t just be disruptive. Embrace FM and speak their language.
• We can use data and insight to go deeper into understanding individual needs. Research shows that different personalities need different working conditions and therefore there needs to be a consideration for individual differences and differences in tasks/roles.  For example, higher cognitive tasks will need subtle human to human interaction.  Should HR drive this within businesses?  Should they provide coaching, understand their staff better and feed into physical asset the needs to fit around the person?
• Until there is the appropriate legislation, greater research needs to be done to better understand well-being and its impact on productivity in order to relate it back to the key drivers of a business.