Internet of Things: It’s Worth the Investment

BUILDING DIALOGUE – Internet of Things

In his seminal 1998 work “The Information Paradox,” author John Thorpe pinpointed the difficulty in justifying the real business benefits of information technology spending. Business owners know they have to utilize emerging technology, even if identifying and measuring its value can’t always be fully realized. Hence, the paradox.

Katie Winter
Design Director, Kieding

A year later, Kevin Ashton, a British brand manager for Proctor & Gamble, coined the phrase “The Internet of Things,” later citing that data could be gathered from everything in the real world.

Simply put, the Internet of Things is the network of physical devices with embedded sensors or software that connect to the internet, collecting and sharing data. Nest Labs’ security systems, Amazon Echo, Ring HD and hundreds of other devices are just scratching the surface of the IoT home market. The principle is identical for commercial buildings but with vastly more sophisticated equipment and technology.

Both Thorpe and Ashton were tech visionaries, although there was no apparent connection between their theories at the time. That would begin to change rapidly, and in dramatic fashion. Indeed, the building-related IoT sector is projected to reach $76 billion by 2020, according to the Continental Automated Buildings Association, with 70 billion IoT-enabled devices by 2025. Those numbers are beyond the comprehension of the individual user, but clearly, IoT is the next tech disrupter, and new office buildings will reap a fair share of the benefits.

“IoT is vital to a tech-forward city like Denver,” says Michael Hensley, associate at Pickard Chilton, the design architects for downtown Denver’s 1144 Fifteenth, the city’s newest skyscraper. Based in New Haven, Connecticut, Pickard Chilton knows the Denver market well, having designed DTC’s 4600 South Syracuse, completed in 2000.

Hensley, project lead for the building design, noted that sun and climate must be considered in Denver new-building construction.

“Abundant daylight and temperature changes have to be closely monitored, especially floor-to-ceiling glass in the building,” Hensley explained. “The scope of the data collected at 1144 and how it can be systematically analyzed is growing every day. The newest IoT technology optimizes BMS (building management systems) but scales down to the individual user and the environments they inhabit.”

IoT is like an accelerator for gathering data in these buildings. Think IBM’s ubiquitous Watson platform, a supercomputer that uses IoT “cognitive computing” to harness building data, which allows property managers and engineers to optimize systems while reigning in the bottom line. While the array of IoT technology products continues to ramp up, costs are going down, which is vital for small to medium users, and the whole of the inventory of existing office buildings.

There are 5.6 million commercial buildings in the U.S., according to the Commercial Buildings Energy Consumption Survey. It is not yet known on a large scale how much or how little IoT tech is able to monetize energy savings, for example, but that piece of the technology is imminent.

Consider for a moment that the bulk of metro Denver office buildings were built during the 1980s, and that inventory is still largely intact. Metro-area building owners have been increasing both HVAC and common area improvements for years in order to compete with other existing properties and, certainly, new ones.

Building amenities have taken center stage for at least the last five years as lobbies, lounges, outdoor spaces and other work-play zones have become bigger, bolder and more millennial-friendly. All these spaces will eventually be connected via IoT as the platform continues to unfold. This presents a serious dilemma for owners: Where will the most value exist? Sexy and highly visible dual-purpose spaces, or nuts-and-bolts back-end HVAC systems? Most owners just can’t do it all at once without pricing their buildings out of the market.

“Obviously it’s extremely costly for older buildings to retrofit new tech, and the payback just hasn’t been proven yet,” said Heather Farley, senior real estate manager with Denver’s DPC Development Co., a Colorado-based owner and developer of commercial properties. Farley notes that DPC is already utilizing IoT technology in its buildings, but only in a limited capacity.

“It’s entirely possible right now to control temperature all the way down to the thermostat level, but that’s just not prudent,” she says. “Yes, the technology is there, and portions of it are working well across the market. But in other instances, even new tech on the HVAC side is projecting out a 100-year payback. Who can do that?”

That same question obviously applies to the tenant side, as business owners evaluate what is necessary for the office and what isn’t at this stage of the tech ramp-up.

Tenant-side temperature controls and IoT-powered light and occupancy sensors shut down the heating, cooling and lighting of vacant suites or portions of suites. Wireless printers and monitors have been around for a while, and security is always an ongoing issue. New redundant features in smart locks can complement live video streaming apps when human security is not always reliable. And, of course, there is firing up the coffee machines, switching on lights and displays and whatever else a tenant might deem essential to be controlled automatically and monitored remotely. A key for individual tenants will always be how IoT tech will mesh with the office culture, and how flexible and scalable those systems will be.

One of the great ironies with IoT development is that, like Thorpe and Ashton, it is relatively unknown. Go ahead, ask around. Maybe that’s because the home market for IoT products came first. Or maybe most people simply confuse IoT with the “smart” revolution. Clearly, IoT goes way beyond smart, and it may go way beyond what most of us can imagine.

As one high-spirited tech columnist would write in 2015, “IoT has become prodigious yet ephemeral, as difficult to grasp and explain as the Holy Spirit.” Let’s hope he’s only half right.

kwinter@kieding.com

Published in the March 2017 issue of Building Dialogue.