In just two decades, advances in computer technology have radically altered our economies, and our societies, faster than at any other point in history. The opportunities resulting from developments like Wi-Fi, smartphones, artificial intelligence (AI), cloud computing, and connected devices - or the ‘Internet of Things’ (IoT) - are so significant that they represent a new industrial revolution. ‘Industry 4.0’ is of a magnitude that is as transformational – if not more so – as the harnessing of steam power or the invention of the mass assembly line (Figure 1).





Traditionally, real estate has been a laggard in embracing this new technological era - consumers and businesses have instead been leading the way. Recently though, there has been a realisation among landlords, occupiers, and building users about the power of property technology - or ‘proptech’ – to provide better, more engaging and sustainable assets.

As a result, proptech is radically redefining the requirements for successful buildings. Landlords must include this technology if they are to attract, and retain, occupiers – and to protect, create, and grow income.

The proptech universe is varied and diverse, touching every aspect of real estate - from identifying investment strategies, to construction and design through to operations. In this article, we consider three important dimensions of proptech at asset-level: smart technology, occupier engagement, and operational efficiencies.



Smart technology

‘Smart’ technology refers to any network in which software and hardware are connected to provide immediate information. When applied to buildings, smart technology allows 24/7 visibility over operations, which enable efficiencies to be optimised in real-time. Heating, lighting, and air conditioning systems can be automated, for example, meaning that they are adjusted up or down in accordance with how heavily parts of the building are being used.

As such, smart buildings make the building more attuned to user needs. Perhaps more crucially though, they minimise needless consumption of precious water and energy resources. Smart buildings are an essential prerequisite to creating more sustainable, environmentally friendly real estate. After all, you cannot reduce what you cannot measure.

An example of this is Cromwell’s partnership with Deepki - a consumption data tool for analysing energy, water, waste, and carbon dioxide use - within our European portfolio. The Deepki platform comprises an ESG data hub that provides a comprehensive view of the current efficiency of every asset. It means we can identify where improvements can be made to align to Paris agreement climate change objectives or when assets may become stranded, thereby allowing proactive management or divestment.

Closer to home, smart technology is a key component in our ongoing refurbishment of 400 George Street, Brisbane - a 44,000sqm building that comprises of office, retail, and childcare uses. We have delivered best-in-class end-of-trip facilities using smart technology and fixtures that measure water consumption in real time. We have also upgraded the building access control system to Schneider Electric EcoStruxure Security Expert.

Our focus is now transitioning to refinement and upgrading of the building management system (BMS) to the EcoStruxure platform, which will allow continuous monitoring of equipment and operations. The upgrade will allow us to improve performance and undertake pre-emptive maintenance before issues emerge as well as easing reporting. This type of smart technology typically results in 80% of issues being resolved remotely, a 29% fall in unscheduled maintenance and 20% lower energy costs.




Occupier engagement

Proptech allows human users to understand and interact with the building in new ways, usually via smartphones. So-called occupier engagement apps can offer automated building/guest access, direct temperature/lighting control, food/coffee pre-ordering or pre-booking of desks or meeting rooms. These features can connect individual users to the wider community within the asset through message-boards or meet-ups, or to the local community by offering discounts at local businesses or advertising nearby events. It makes it easier for any building faults to be reported directly to the asset manager meaning faster resolution – trip hazards can be photographed and logged immediately on the app for example.

Occupiers can derive information on energy or water use at a touch of a button or gain deeper insight on how their staff use the space. For landlords, occupier engagement apps can provide valuable data on how occupiers use their buildings, including where pressure points are and where improvements can be made. Apps like these create a more collaborative relationship between landlords and occupiers which assists to meet compliance obligations, achieve ESG objectives, and build long-term value.

Occupier engagement is a priority for our 400 George Street refurbishment. By adding an app connected to a smart framework, developed by Schneider Electric EcoStruxure, we expect to increase the appeal of the asset to occupiers. In addition to aiding occupier retention, apps can increase brand awareness, increase occupier satisfaction, provide data for better asset management, and ultimately deliver a higher investment return.





Operational efficiencies

Proptech offers significant potential to remove some of the hurdles that have traditionally impeded the efficient occupation and management of real estate. Virtual lease or contractor contracts, for example, can be used to lessen the time it takes to formalise occupier agreements, engage services, and lower associated legal costs. Virtual data-rooms can be established to centralise access to building information preserving data that may otherwise be lost, and accelerate the due diligence process when assets are traded. AI can be used to automate data collection and analysis.

While the technology is at a fledging stage, Cromwell has already experimented with using AI technology to enter historic leases into Yardi, our asset management software, and explored virtual data room technology. Though being an early adopter in this space may be disadvantageous if dominant providers emerge, it is still critical to monitor developments and be ready to adopt suitable solutions at an appropriate time.

The real estate industry is just beginning to harness the power of proptech to make buildings and their management better. It is a journey without an end, given that technology will continue to evolve and iterate at an accelerating rate as one advancement builds on another. It is crucial for landlords to understand the transformational impact of proptech, and to adapt accordingly. Investors, occupiers, and building users are coming to expect proptech solutions within real estate. Those assets with the best technology will deliver superior performance; those without will under-perform. While it has been slow to get going, the proptech revolution promises to profound and utterly transform real estate.

It is crucial for landlords to understand the transformational impact of proptech, and to adapt accordingly. Investors, occupiers, and building users are coming to expect proptech solutions within real estate. Those assets with the best technology will deliver superior performance; those without will under-perform. While it has been slow to get going, the proptech revolution promises to profound and utterly transform real estate.