This week, the Urban Land Institute is gathering a number of real estate thought leaders together in the city of Houston, TX. We’ll take a close look at how new technologies and services are creating business value as well as improving asset performance in the built environment.
I will be facilitating a panel discussion around technology innovation as a disruptive force in real estate. Joining me will be Roger Vasquez, Director of Engineering for Transwestern, Laurie Actman, Deputy Director for Philadephia’s Energy Efficient Buildings Hub and Alan Stewart, Senior Account Executive for Weathermatics.
Building Scale Improvements
Since we will be in downtown Houston, we chose the iconic twin towers of Pennzoil Place to highlight and represent what is arguably a massive opportunity to upgrade existing building stock. According to a March 2012 study by the Rockefeller Group & Deutsche Bank, scaling building energy efficiency retrofits in the United States offers a $279 billion dollar investment opportunity and the associated energy savings over 10 years could total more than $1 trillion.
Let’s highlight one such icon. Pennzoil Place was built in 1975 and considered the first post-modern skyscraper, due to the unique trapezoidal design that was employed. Envisioned by renowned architects Philip Johnson and John Burgee, this influential structure was once named “Building of the Decade” by a New York Times architecture critic Ada Huxtable.
Advance the calendar 35 plus years and time has not diminished the impressive silhouette cast by this classic skyscraper across the Houston skyline.
Exterior beauty aside, how do the systems and technologies behind the curtain that operate these massive structures stand the test of time? Certainly avoiding replacement costs for essential building systems is not an option, but we’ll explore how newer technologies that leverage the network and data are playing an increasingly more prominent role in the building upgrade decision process.
What were the tenant requirements back in 1975 before telecommuting, smartphones and building automation became prevalent? Simpler in some respects I’m sure. What happens when a large tenant decides to move to a newer site because of technology or greener amenities? How does the owner strike that balance between the retrofit of such modern amenities and sticking with the basics?
Fortunately, Pennzoil Place has the support and vision of its owner and property managers when considering such an array of forward looking upgrades. A great deal of thought goes into balancing energy efficiency with tenant comfort as well as other tenant technology amenities. We’ll hear more from Roger Vasquez, Transwestern’s Director of Engineering, the property management firm responsible for making these upgrade assessments on behalf of the building’s owner Metropolis Investments.
What about other perhaps less prominent class A, B or C buildings scattered throughout our cities and suburbs? Do they have the combination of vision, capital and market conditions that will allow them to evolve beyond the status quo?
Regional Scale Buy-in
Transitioning from individual building assets to regional or city scale technology adoption is our next area of discussion. To get a perspective on the impact of such change within an urban core, like Philadelphia, we will point to our guest panelist, Laurie Actman. Laurie has that regional purview given her role at the Energy Efficient Buildings Hub (EEB Hub), established in Philadelphia by the U.S. Department of Energy (DoE) as an Energy-Regional Innovation Cluster since 2011.
The EEB Hub’s charter focuses on improving building energy efficiency by reducing energy use in the region’s commercial sector 20% by 2020. EEB has aggressive goals to be sure, but according to the Hub:
- 77% of Buildings in Philly were built prior to 1990
- Philly’s energy usage is 29% higher than the national average
- Providing a potential for over $600M in local energy retrofit spending within the region
So, there is a great deal of opportunity in operational savings and economic growth just in this localized urban core using the latest proven technologies that are financial feasible.
In addition to energy, what are the drivers enabling the adoption of new technologies in existing buildings?
- Tenants desire for open floor plans or cubicles that get replaced by workbenches to compress space, improve efficiency and ultimately reduce their rent
- Telecommuting via the insatiable growth of smartphones and tablets making data access an imperative
- Businesses using WiFi networks to store files in the cloud instead of in cabinets
- Water usage slowly making its way to the forefront
How are companies positioning themselves in the marketplace to add value to existing properties?
- Improved building energy footprint via efficiency or alternative sourcing
- Ensuring tenant data access via Distributed Antennae Systems (DAS)
- Electric Vehicle Charging
- Virtual Concierge Services
- Intelligent Parking Systems
Each of these improvements requires a pragmatic decision process that balances financial feasibility with proven technology.
When we return from Houston, we’ll learn a little more about what makes up that technology decision process at the building, regional & city level.