BTL Mark: Resolve interoperability issues & increase buyer confidence
In the seventh year of this conference and tradeshow, Realcomm (www.realcomm.com) continues to be an event at the crossroads of real estate and technology. From a Commercial Real Estate (CRE) point of view Realcomm is very important to those owners that want to incorporate technology as part of their business. Technology in this regard is a very broad term and ranges from brokerage software, online real estate listings and management portals to services that bring broadband and wireless Internet to buildings, and last but not least, building automation systems. Of course, for most readers on this site, the last item on the list is the most important one.
The appeal of being able to get in front of building asset managers is indeed the significant attraction of Realcomm for building automation and technology players. One of the significant differences this year was that Realcomm was co-located with the annual BOMA meeting. For those unfamiliar, the BOMA show is an exhibit and conference for building owners and managers, and it has somewhat of a reputation for being more of a social gathering place. The BOMA show ran from Friday to Tuesday and finished at 2:00 pm each day so it’s long and culminates in a big award dinner called TOBY (The Office Building of the Year, see www.boma.org).
The vision of bringing Realcomm and BOMA together is great: Bring together the events that target those responsible for real estate assets, get the economies of scale, and lessen travel by reducing the number of conferences to attend for all. The big question is did it work in Anaheim?
The Sunday before Realcomm started, the organizers held their second CIO Roundtable. This was a fascinating afternoon with nearly 100 CIOs of major commercial real estate companies. The major players are there when you look at the average revenue for companies represented, some $400m. This group of people is very important to the convergence of buildings and IT so I attended with great interest. On one hand I was impressed by the assembled group and the content presented. The greatest thing I learned was that CIOs have their own problems, and none of their problems had anything to do with the building or automation systems. While somewhat obvious, this was an eye-opener as I sat there and listened to their discussions. Because in the pursuit of convergence, the building automation world needs to have the attention of IT people and CIOs are their leaders! So it was disappointing that the CIOs did not engage much dialog with the handful of presenters talking about building systems.
The General Session of Realcomm was combined with BOMA, and the session—which lasted for two hours—was great, and there was a lot of energy and excitement on a number of subjects including interoperability (albeit here we’re talking about interoperability of business systems related to commercial real estate) from the Chair of OSCRE (Open Systems Consortium for Real Estate see www.oscre.org). There were great vision presentations from Yardi Systems (www.yardi.com) as well as an inspiring presentation from Mike Lorenz, president of one of the most significant commercial real estate development companies in the USA, DentiNY USA, a development in Syracuse, NY, with a vision of “doing things differently” in regards to commercial multi-use property (www.destinyusa.com). Jim Young, Realcomm’s founder, also made comments, helped by a number of speakers. The overall theme of the session is that the use of real estate is changing and the U.S. is lagging behind in developing next-generation buildings when compared to the many new developments in Asia and the Middle East (specifically Dubai). “It’s time to change that” was the bottom line.
Realcomm had four concurrent tracks running over the two-day event. Specifically targeted at building automation, the iBuildings track on the first day dealt with the communication and infrastructure side of intelligent buildings such as structured cabling, wireless and so on. On the second day, the iBuildings track dealt with building automation, security, energy and the use of IP for building control. The other three tracks over the two days dealt with the core Realcomm subjects such as brokerage, best practices, leadership, document management, property development strategies and technology related to owning and leasing CRE. While the three non-iBuildings tracks were generally packed, the iBuildings track was comparatively light. I moderated the Building Automation 101 session that was quite satisfactory as far as attendance, but the questions posed from owners (an indicator of interest) were not very forthcoming. The other session I moderated was on energy, and while the content from the five presenters was very strong and valuable there were only a handful of owners in the audience. Isn’t energy a subject that everyone should care about?
The exhibit floor was divided into “Real Estate Solutions” and “Intelligent Buildings”. The former was filled with core CRE vendors and the latter was a mix of CRE, infrastructure, and building automation and related technology vendors; I was mainly focused on the second half of the floor. The expo was open all day, even during conference sessions, so for some hours of the day the expo floor was very light when the audience was in sessions. The vendors I spoke to were very keen to reach this audience and thus were glad to be there. Probably the busiest booth was the joint booth of Cisco, Panduit and Richards Zeta; it was a big booth and they seemed to be busy most of the day. Technology-centric booths seemed not to get as much interest as integrators like TENG and ControlCo who seemed to have had a good outing. System vendors (including JCI, KMC, Honeywell, TAC and TCS/Basys) seemed to have done well at the show.
First of all, co-locating events simply works – period. It will take time before the benefits of the Realcomm and BOMA co-location comes through as people need to “get used to it”. Co-locating makes even more sense to bring synergistic groups together; the new technology centric perspective of Realcomm can only be complemented by the mature audiences that have attended BOMA for years, and vice versa. The economies of scale for the audience just make sense.
As first stated, the audience that Realcomm and BOMA attracts are fundamentally the right audience to demand building automation and convergence with IT, but (this is a big BUT) they do not seem to care much about the subject – WHY?
The simple answer is that this audience cares most about the value of their property, which comes from the rent they can get from their properties with a preference to low vacancies and high retention rates of tenants. Remember, these are mainly properties for lease where empty space is money lost.
Much of building systems, to date anyway, is seen as an extension of the plumbing systems and are not seen as anything that could bring value to them, especially with triple net leases where almost all the property costs are passed on to the tenant. Why should the landlord care how much tenants are paying for their energy, or if the space is comfortable or secure (within reason of course)?
I fundamentally believe that this is shortsightedness on behalf of owners, but the blame is not with them. I put the blame squarely on the building automation system industry. With a properly implemented, integrated open systems-based approach to converged building automation we know that the value of buildings—and thus their rental value—is increased, and owners, if presented with such proposition, will care big time.
Take two otherwise identical buildings A and B, where A has traditional un-intelligent systems and B has a fully integrated system (and I mean “deep” integration) with full IT network integration using TCP/IP infrastructure, integrating data networks, voice, video, digital signage, automation systems, parking, security, tenant Web portals and so on. In other words, Building B is a system that provides the owner and occupants with greater information, comfort, security, prestige and tenant experience. If we can prove to owners that B will get $X more per square feet of rental, then they will see that as an increase in the value of their property and they will take notice.
Rob Jones from SENTRE Partners presented at one of my sessions, and he made a compelling argument that in the case of one of their buildings in San Diego, by installing a converged, integrated, and intelligent system they were able to prove an increase of value of $6.25m purely from system efficiencies. If they included the increase in rent they will be able to get for the space, the incremental value gained was an astonishing $17.5m. So the argument can be made!
At events like Realcomm, the building automation systems industry needs to present a united value proposition, one that is business- and benefit-centric that plays to the [financial] heart of the commercial real estate industry. Technology talk, chest beating claims about technology and challenges within our own industry must not be a common voice of this industry—this audience not only doesn’t care about these things, they are turned off by such things.
We also need to educate this audience about what intelligent buildings and their technologies are all about, of course in a way they would see value—a perspective that outlines problems we know they have and ones that we know how to solve to bring value to our industry.
The opportunity of influencing the audience of Realcomm and BOMA is too big and significant to take lightly.
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