The last two and a half years have served as a stark reminder that stability is not something to be taken for granted. The world has grappled with a global pandemic, waves of political and social unrest with international consequences, not to mention the hottest summer since records began. As a result, how we live, work and connect with one another and, subsequently, how we interact with the places and spaces around us has shifted perhaps irrevocably.
As a major protagonist in these unfolding crises, the commercial real estate industry has its own role to play. The industry is one of the largest contributors to our global carbon emissions; a fact that never becomes easier to swallow. While this is the reality, it’s not all bad news. Yes, there is a challenge here to limit this contribution to carbon emissions from continuing to climb, but looking at it positively, there is a real opportunity here for the industry to rally together to ensure that these emissions are reduced to science-based targets that limit climate change to 1.5 degrees, as well as create spaces that are resilient in this future world.
To help limit this increase, owners and operators are using ESG as a framework to prioritize initiatives and measure progress. It is only recently, however, that it’s become apparent that ESG alone is not sufficient if we are to prepare our sector for potential future shocks and therefore the flexibility that these may demand of us. Enter resilience.
Although a tricky pill to swallow, it’s become increasingly clear that we are not able to prevent climate change completely. As such, it becomes a priority to ensure we create spaces that are resilient to these changes, as well as trying to reduce the scale and rate of change.
In the context of real estate, resilience can be broken into three main parts, with each denoting the ability to adapt to change whether it be external (environmental or societal) or the flexibility to stay current against constantly evolving technology. These are:
The resilience of a building itself: how the physical infrastructure of the building can adapt to global challenges. E.g. power grid failures and weather-related impact. This could include flood prevention in the comms room or back up power for critical systems
The resilience of the technology within a building: how future-ready and resilient the technology is in a building. E.g. the risk of obsolescence due to technology not being upgradable and/or inoperable. This could include deploying an in-building mobile solution that can’t be upgraded to 5G.
How technology can support the building in being resilient: how much of a long-term impact technology has on a building’s ability to adapt to change. E.g. a shift to flexible working brought about by Covid-19. This may include cloud-based technologies across all IT infrastructure to allow for remote working.
What does technology have to do with ESG+R?
With ESG+R goals in place, owners and operators are under immense pressure to demonstrate how they are tracking and improving against these objectives. The consequences of misreporting data,, not using the data to optimize outcomes, are significant. If we are to create real estate that has a lasting impact and that delivers good outcomes for its users, the technology implemented needs to gather information that will enable better decisions to be made.
Modern buildings are now so complex that it’s impossible for a human to monitor all of the millions of available parameters, let alone optimize the many interrelated systems in real-time. The technology in an intelligent building can monitor every data point and over time learn how to balance and optimize every system to make the whole building as efficient and effective as possible.
Is obsolescence the price we have to pay?
It is clear that technology has a critical foundational role in delivering ESG+R in commercial real estate, however what’s of equal importance is that this strategy is undertaken proactively rather than reactively. Although we may not like to say it out loud, we are not necessarily going to be able to slow down climate change in our lifetimes. We need to be delivering real estate that builds spaces to both minimize emissions and also to ensure that they are resilient against them at the same time. Without using technology to underpin this, there will come a point when we will be left with stranded assets that are unleasable, and so unsellable and, ultimately, unusable.