Mark Hansen, Chief Information Officer, DEXUS [ASX: DXS]
Proptech is the new frontier of real estate that will change the world of work and how people interact with buildings.
Technology has transformed the customer experience. Apps, automation, artificial intelligence and mobile connectivity have placed more power in the hands of customers than ever before. Whether they are visiting a bank or buying online, customers now expect an automated seamless experience. In fact, nearly three-quarters of customers say one extraordinary experience raises the bar for their interactions with other companies.
Meeting customer expectations is a primary focus of all businesses, but when people spend 90 percent of their working hours in your building, this priority carries extra weight.
The 2018 Deloitte Millennial Survey, for example, found that 67 percent value a positive work environment over their pay packet. For Millennials raised with technology at their fingertips, this workplace experience is not just about bricks and mortar, but the technology within it too.
Property technology, or proptech, is helping the real estate sector embrace true customer-centricity. An estimated $20 billion has been invested in proptech over the last decade, fostering a thriving industry of more than 3,000 companies, according to Realcomm. Another $2 billion has been added to the proptech pipeline in the last year alone, as companies from start-ups to tech titans recognize proptech’s potential.
Smart building technology is taking around a third of the proptech pie, and Gartner predicts 25 billion Internet of Things devices will be embedded in real estate assets by2021. The global IoT market was worth $150 billion in 2018 and is expected to exceed $1.5 trillion by 2025.
There are a lot of drivers behind this investment: space optimization and occupant comfort and wellbeing among them. A further driver is energy efficiency. MIT researchers have found that smart, sustainable, and connected buildings attract premiums for both property values and rental income.
At Dexus, we are using proptech solutions to improve the sustainability performance of our portfolio and progress our pathway to achieving our ambitious long-term goal of net-zero carbon emissions by 2030. But when staff costs equate to around 90 percent of a company’s total operating budget, it’s easy to see why efforts that boost workplace productivity and performance attract the most attention.
A smart building blueprint
With such rapid growth in the proptech space, the biggest challenge we face at Dexus is the rate of change and separating the gimmicks from the game changers that lift customer experience. Proptech solutions must be highly adaptable to future technologies and changing customer needs. Gartner’s latest Hype Cycle illustrates this challenge: most property technologies are either at the peak of inflated expectations or wallowing in the trough of disillusionment. Consider this against a building lifespan which is typically 50-plus years.
At Dexus, we meet this challenge by keeping our focus firmly fixed on the longterm. Our smart building blueprint rests on six interconnected pillars: safety, sustainability, productivity, experience, wellbeing, and connectivity.
At 100 Mount Street, our new 34-storey office tower in North Sydney, we've combined the latest in smart sensors and connectivity with a dedicated IoT network. This provides the ability to plug and play technology as it becomes available without impacting on day-to-day operations.
We test technology not just for its suitability for one building, but its scalability across our portfolio. By applying our scale, we get great commercial outcomes and ultimately offer an enhanced and consistent experience for our customers.
Connected and customer-centric
We also recognize that best-in-class connectivity underpins the delivery of all other pillars of our smart building blueprint strategy. At 100 Mount Street, we have full cellular coverage throughout the building and an upgrade path to the impending 5G network standard. In addition to high performance, free WiFi in common and public spaces, we also offer a turnkey network-as-a-service solution so new customers can gain connectivity from the day they walk through our door and leverage the substantial IT infrastructure embedded in the building.
Over the past three years, we have integrated more than 270,000 data points across our portfolio into a fault detection and analytics platform. This provides insights into building performance and helps us to identify opportunities to enhance energy efficiency and operational effectiveness, including space optimization.
As an example, our SuiteX offering over one floor at Sydney’s 44 Market Street was designed with 10 flexible suites that meet our customers’ need for quality workspace without long term tenure. We can move walls and reconfigure spaces to create the optimum environment for our customers. With the help of sensors and data analytics, we’ve identified usage trends which were not envisaged and can adapt the space to suit. We believe this is the future of technology-led space design.
Convergence of IT and OT
The rapid adoption of cloud technologies and IoT has blurred the boundaries between information technology and operational technology. The emergence of digital twins, sensor data, biometric security, and building environmental controls, increasingly blended with mobility devices, now demands expertise from both the IT and OT worlds.
Convergence demands increasingly integrated teams, both in terms of technical skills and organizational structures. The Dexus smart building team comprises both IT and OT industry professionals. This ensures we have the in-house expertise to deliver the technology, create the outcomes and guide investment in capital works.
From our customers’ point of view, this convergence means we can provide deeper insights into how they are consuming spaces and services. Combining this with the wealth of data generated from building management systems enables us to quickly identify opportunities and ensure our buildings are performing optimally. By sharing these insights, we can reinforce our customer value proposition and enhance the experience for the people who spend most of their days in our buildings.
Not all CIOs are playing in the proptech space, but all CIOs face the same big-picture challenge: how to drive digital transformation while supporting business processes, addressing regulatory and compliance requirements and delivering a better experience for people. Together, property owners and managers are harnessing the power of proptech to create workspaces that businesses need to succeed.
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