smart building valuation

Should a Building’s Ability to Create a Healthy Environment Be a Bigger Part of Its Valuation?

No one likes to be the only one talking in a room. Okay, I should rephrase that, only sociopaths like to be the only one talking in a room. That is why we have always encourage everyone we possibly can to write more about the innovations that are happening in the property industry. We were honored to be mentioned in an article that came out yesterday called The Missing Ingredient in Building Valuations. It continued a conversation that we had at our New York Real Estate Tech Week event, Technology and Collaboration in the Built Environment. The panel was titled “Your Building is Talking, Are You Listening?” but like any good conversation, it got a little side-tracked. We started talking about if the “smarts” of a building affects its value since so much of the valuation calculation of a building revolves around income vs expense and not building hardware.

The article points out a part of the building’s value offering that we were failing to take into consideration. It is not the smart technology itself that should factor into the equation, the article argues, but the outcome of what the combined power of the system can do:

“Smart building valuation needs to go beyond the usual checkboxes: location, leases, and the tile in the lobby. It must consider a building’s health, i.e. its ability efficiently to provide a comfortable, safe, and productive environment day in and day out. Health can only be accurately determined by looking at broad sets of smart building data. We must examine maintenance and operational records for upkeep and performance information, IoT and sensor data that fill in gaps left by meters and smart building systems, and, most importantly, human-generated information like complaints, comments, and work order requests that provide the granular user feedback on whether the smart building is performing well or poorly.

“Smart building valuation needs to go beyond the usual checkboxes: location, leases, and the tile in the lobby. It must consider a building’s health, i.e. its ability efficiently to provide a comfortable, safe, and productive environment day in and day out.”

I tend to agree with this. I have written about how the KPI for the office building of the future might be the happiness of its occupants, not their productivity. But I do think that we need to take things one step at a time. We are already asking property professionals to add another layer of complexity into an already incredibly complicated and high-risk task. Asking them to quantify something as indefinite as enigmatic as human health and wellness might be a bridge too far.

Another point the article makes is that there is a human element to their operations that should not be overlooked in the quest for efficiency and data. It points to the voice of the building manager as one that needs to be louder in these conversations. This is something I couldn’t be more in line with. We solicit submissions from practitioners in the property industry and always try to keep them a central part of our editorial. But the internet has what is called the 1-9-90 rule. Ninety percent of the people involved will only spectate, nine percent will engage and only one percent will create. And these numbers don’t take into consideration an audience as busy and distracted as building managers and operators.

We ask that anyone working in any capacity in the property industry to feel free to use our platform to share their ideas. If you are really lucky, someone will write an article in response telling you what you missed.

Editor and Co-Founder

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