Bringing the Best Part of Owning a Tesla to Smart Buildings

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Tesla is the hottest car manufacturer (and stock) on the market. The cutting-edge electric cars feature autopilot, lightning fast acceleration, and an unrivaled interior. But the best part of owning a Tesla is that it gets better with time. When a design or software improvement is developed it gets deployed to all Teslas, typically at no additional charge. Tesla owners eagerly await the latest over the air (OTA) updates, which allow for upgrades like streaming capabilities, voice commands, camp mode, and even games. 

Is Tesla’s live-service model a glimpse into the future of smart buildings? It would certainly be a departure from how smart building deployments have been conducted traditionally. “In the past, someone designed and installed the program and then walked away. It’s not touched or improved upon. Nothing changes, though the tech is always improving,” said Pete Coman. He is Chief Technology Officer at People | Technology | Space (or PTS for short) and has spent three decades designing and consulting on smart building technology. Lately, he has found himself asking the question: “Why isn’t the workplace like a Tesla, why aren’t they connected and when improvements are available, they are deployed?” 

Smart building is a catch-all term for the wide variety of technology proliferating through the sector. Advanced lighting, occupancy sensors, high-efficiency HVAC, air quality monitoring, keyless entry, and all manner of sensors are upping the IQ of our buildings. To help buildings bring on these new technologies, landlords often hire smart building consultants to find the right sensors, software, or actuator and make sure that they play nice with the systems already working in the building. This is a thriving industry, the global smart building market size is anticipated to hit $127.09 billion by 2027. 

The vast majority of that investment will be in office buildings. “Generally offices have been the biggest market for smart building tech. That’s because offices are high end, rents are high,” Joseph Aamidor, founder of Aamidor Consulting said. “There’s a lot of costs in running offices that lead owners to invest in tech to reduce those costs. Offices historically are where you see the most uptake.” 

While offices have certainly invested in technology, there is plenty of room for improvement. “LEDs are beyond peak adoption, we’re probably already done with LEDs,” Aamidor said. “In terms of sensors, that’s still early. HVAC controls in general, that continues to be a big area, at least within operating. There’s a lot of waste. HVAC usage can be 40 plus percent of a building’s energy consumption, so any efficiencies you can create can be significant.” 

So far, much of the marketing around smart buildings has been targeting landlords looking for a better NOI. But many of these same technologies can also create a much better user experience. When it comes to these kinds of technologies owners are unlikely to make big investments that their tenants aren’t demanding. “We have to create smart workspaces before we create smart buildings,” Coman explained. That means going to tenants, not owners, to show them how technology can be leveraged to meet their corporate goals. 

Tech companies are one of the driving forces for smart building adoptions. Technology is their sector and there is an expectation that they should have the latest technology. In the pre-COVID world, tech companies spent aggressively on offices in order to attract the best talent. Now many of these same companies have adopted remote work. Even still some of the biggest tech companies are still signing office leases, hoping to have the culture and creativity that an office creates, even if employees are not expected to be there full time. This has created a whole new set of challenges for buildings: no longer can they expect people to file in and out at certain times/days. As our workday becomes more flexible, our offices must be ready for unpredictability. 

Globally, buildings are already playing catch up when it comes to adopting technology. One way to help bring buildings further into the digital age is to adopt a continuous approach of technological improvement similar to Tesla’s upgrades. Going years, sometimes decades, between capital improvement projects, will be a thing of the past. Smart buildings will see software improvements happening far more rapidly and these will need to find a way to update the buildings without disrupting their 24/7 vigilance. This might require both smart building tech vendors and consultants to have ongoing service agreements rather than just completing project-based engagements. Think about the type of relationship a tenant could have with their landlord if buildings operated like Tesla, constantly improving the tenant experience without having to be asked. That would create real value for everyone involved. 

Over the air updates are commonplace in computing and electronics but has proven to be a tough nut to crack for Tesla’s competitors. Rooted in technology, the firmware that enables OTA updates with few bumps along the road is a technical marvel in and of itself. The cybersecurity threat posed by such a feature alone is enough to scare off some looking to replicate the technology. Tesla has offered OTA updates since 2012. Offering the same type of technology might not be feasible in commercial buildings, where there are even more interconnected systems at play than in a vehicle, but the concept of continual improvement is the core takeaway. 

There’s a reason Tesla is the most valuable car company in the world just 17 years after its inception. Founder Elon Musk created the company’s business around technology and customer experience, leveraging new technology to create value for customers long after their initial purchase. By keeping customers engaged in an on-going relationship, Tesla has created the most loyal customers in the automotive sector with an overall satisfaction rating of 90 percent. Roughly 80 percent of Tesla customers buy or lease another Tesla for their next car. 

Tesla’s radical business model may not be a perfect fit for the far more traditional world of commercial real estate, but the brand still has plenty of lessons to teach owners about the best way to use technology, actively engaging customers with improvements whenever possible. Owning buildings become less passive every year. The most successful owners of the future will be the ones on the leading edge of improving the tenant experience, whether they need a consultant or an over the air software upgrade to get it done.

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