future-proof real estate with the smart building collective
wellbeing & sustainability in real estate & hospitality podcast
Welcome to episode 063 of the Green & Healthy Places podcast in which we discuss the themes of wellbeing and sustainability in real estate and hospitality.
In this episode we’re in Amsterdam talking to Nicholas White, Co-Founder and Managing Partner of the Smart Building Collective, a smart building and pro-tech business with its own certification framework focused on leveraging technology to measure how a real estate asset is performing.
It covers key metrics such as the building usage, its performance, the building environment, health and safety, user behavior and connectivity.
We discuss how a smart tech is at the heart of both sustainable green buildings and healthy buildings nowadays, as well as playing a role in real estate ESG strategies. We also look at some of the more innovative real estate developments that he’s been a part of recently that give a sense of where the industry might be going in the future.
Matt
Nicholas, thanks for joining us on the show. Amazing to have you here. You're dialing in from Amsterdam where you’re based?
Nicholas
Yes, I am. Thanks for having me.
Matt
Listen, why don't we start with a bit of background to give the genesis of what you do with the Smart Building Collective. How did the whole thing start?
Nicholas
I personally came from the corporate sector doing large scale IT transformation projects, we were attacking these from the human perspective, really change management, trying to help people maximize the usage of of tech, and getting the most out of it. And what was always quite disheartening was the corporates would kind of roll over their people in that process, which was was quite painful to watch.
I thought there needs to be a better way, there needs to be a more engaging way, a healthier way to do these kinds of transformation programs.
So I left the corporate sector, and I teamed up with a woman by the name of Elizabeth Nelson, and she was doing research into burnout and human performance. I came more from the practical side of working with leadership teams and working in corporate space to make things better.
impact of the built environment on physical and mental health
Then we got this amazing opportunity with CBRE to do a research study on the impact of the built environment on people.
They built a ‘living lab’, the cost was probably about 250,000 euros to build then they started changing all of the things in the office environment, from the plants to the food, air and light over the course of 10 months.
They would do cognitive tests on people to see what the impact was. So the results were amazing. And then when we left, Elizabeth was asked to do it again, with booking.com. And we did a huge research study here in Amsterdam, that dictated their new headquarter plans, which was really quite cool.
Same thing happened, you know, it took a long time to build, expensive and the research results were amazing. The Living Lab collapsed after the research study was done, which looking back is completely logical that that happened.
Then we did it a third time, this time for GSK in the UK - GlaxoSmithKline. After that it was, okay, is there not a better way to do this? Where is there a standard? And this was around 2018 -2019. Where is there a standard that we can just plug into and do research more effectively, more efficiently and more collectively.
Developing a smart building standard for real estate
We came across the smart readiness indicator, which was the EU's approach to a smart standard but for the rest, nothing else existed. So we started to think about doing it ourselves. And that's kind of what we did. And we launched in 2020 The smart buildings certification.
green buildings, healthy buildings and smart buildings - whats the difference?
Matt
Okay, so let's go a level deeper, because I think a lot of people will have heard perhaps the term a green building, which is essentially a building that's designed to minimize its environmental impact, so externally oriented while a healthy building is a terminology more oriented internally thinking about the impact the building has on its occupants.
You just used the term smart building, it's in your brand. It's in your name to the core of what you do. So how does a smart building fit into that spectrum of green buildings on one side and healthy buildings on the other?
smart tech in buildings for real time management efficiencies
Nicholas
For us, you know, smart building is about technology, it's the digitization of real estate, it's an enabler. It's nothing more than that it shouldn't be a goal in itself to make a smart building, it's about the results that we're trying to achieve with that asset, and then working back to think about, okay, how can we make that more efficient and easier to do and more real time.
So it isn't essentially a tech component on both sides - on the healthy building scene, if you're not measuring it and monitoring it in the long term, you can't effectively justify the upfront investment that you put in, you need to keep an eye on what's happening.
You have sustainability, you have health and wellbeing in real estate. But there's also efficiency gains through the management and maintenance of your asset, creating a better user experience, which isn't just about the health of occupants, it's also about human performance and culture and community and building a way for people to connect with each other. And with the asset, you also have kind of new business models that are emerging from the enablement that tech provides.
I think we all have heard the pressure that the commercial real estate is under with the changing of work, flexible working and so on, with a smart building we have the ability to see what's working versus what's not working, I think you're in a much better position to make rational decisions as an owner or developer.
the smart building framework
You've created essentially your own framework that gives some structure to how you think about smart buildings. I think that's such an important piece of of how you communicate your position and the your, let's say, view of the real estate industry.
So it's clearly at the core of what you're about, perhaps you could just give us a quick overview of those component parts that make up your framework.
Nicholas
Yeah, sure. So the smart building certification, where we always are saying is founded in research, and practice, and we're constantly optimizing it with our community, we actually made a change from the smart building certification to the smart building Collective, we did that last year in August. And the reason for that is that as we were certifying buildings, we see that not a single one of them is similar. They're all completely different.
So the certification really is being informed by the collective, the smartest buildings we find and the smartest solutions we find are informing the benchmark and constantly changing it. So in a way, you can start to think about it as a bit of a web 3.0 approach to certification in the sense that it is dynamic, and it is moving and and we're learning as we go.
But in essence, the certification that we have created, starts with the results, right? Like what are we actually trying to do with these assets? And then works back to the technology of how do we get to that result. And that result is broken into a number of different modules within the certification.
Smart building usage data, performance and indoor environment
So the first module is building usage, you know, how does one have kind of overview and control over how the assets are being utilized - from occupancy, to how amenities are being used, these types of things.
What kind of technology do you have in place to understand how your asset is being used, the next module is building performance, then you can really think about your sustainability aspects, your energy consumption, your water consumption, how the asset is actually performing against the goals and against the promise.
We have a module on building environment, which is thinking more about your health and well being. And it's really about your indoor environment being sound, light, indoor air quality, these types of things.
How do we use technology to make sure that the environment is healthy and in state for people to use it in a good way. We also have a module on safety and security, of course, which is both physical security, but also digital security. As you put more smart building more technology into a building, we need to keep it safe, we need to keep the cybersecurity at the forefront. But it's also about physical security and Disaster Mitigation.
The last module is user behavior and collaboration. So how can people find each other? How can they interact with the building? How does community get created?
Integrative design in smart buildings
And then all of those modules are actually brought together by a module we call integrative design, which is how can we actually with the least amount of technology, maximize the value in the results and all of those different areas? Instead of having a technology for each piece? How can we make sure that the technology becomes an aspect that adds value to all those different areas?
governance and real estate esg in smart buildings
One of the things that really sets us apart is we have a huge emphasis on governance, process, access to data, do the right people have access to the data to do something with it? And is the organization structured in a way that actually can do it? Because I think, you know, a smart building without actually using that data is you could argue, is that smart?
Matt
Perhaps for anyone who's not aware of some of the intricacies of how that works, then you're effectively looking at the facilities management, the building management company that's looking after the building, we're talking a fairly large scale, say mixed use or office development on behalf of the tenant or on behalf of effectively behind that the investor? Or is it the tenant themselves who has some role and wants access to that needs to be involved.
Nicholas
Well, you know, ideally, it's a communal effort, the whole idea is to break down silos and to be working together, to forge better relationships between the owner, property manager, tenants and all the different suppliers that are in there. I think where the industry is, right now, which is challenging is that all of those things are being done in silo, every single one of those different stakeholders is dealing with their piece of the puzzle, which in the end, makes it quite a quite challenging.
Ideally the stakeholder map would be doing this together. But what we see in practice is that it's coming from different perspectives, like we will do a certification for a tenant that is interested in understanding what their building is capable of doing for them from a tenant perspective, and they can use it to then work with the landlord to say, ‘hey, from my ESG perspective, I need to have better energy consumption or at least better insight into my energy consumption’, these types of things.
We also do it from a building owner perspective that says, ‘Hey, I've laid in an incredible tech stack for my potential tenants and my property managers. How can we help them?’ So with with your certification level, and with your communication and your training, how can I improve it? How can I make it better?
real estate ESG and the role of smart technology in buildings
Matt
It's tapping into this rising tide around awareness of ESG. I see it coming from above in terms of pension funds and investment groups coming in, then applying pressure on the investors or the building owners, but also from below, sometimes from the employees themselves, and oftentimes from tenants of the building.
Nicholas
Yeah, and you know, where we're at right now is just meeting people where they are, right, like, we have some of the most, you know, the smartest developers in the world, who, on one side, want to help tell the world that they've created something really spectacular, and something really special.
At the other side, they want to say, Okay, where are my holes? Where are my gaps? What am I not thinking about yet, so that I can, you know, push push the envelope for, for this development, or my next development? And then you have people who are like, well, what is smart? Like, how do I even how do I even start?
How do I even where do I begin, and that was one of the main reasons we pivoted to the smart building Collective is that, you know, we're not here to say, this is how you build a smart building, the collective is informing this certification, and then there's a ton of people in this community that are there to help, you know, from all different walks of life, but different culture different, you know, views, different ways of supporting, and so you can find the solution when you when you're looking for it.
size and scale in smart building certification projects
What is the minimum size that you're noticing in the market, in terms of buildings, and developers coming to you with an interest in in going deeper into this, you know, oftentimes, you might see smaller developers, smaller building owners, smaller tenants who have increasingly aware of this ESG angle and want to get into it, and then look at the breadth of a big healthy building certification such as WELL for example and just even to go for one or two elements of that looks like a big undertaking. We don't have the manpower, we don't have the budget? How does smart fit in? Is there a bespoke approach that one can adopt, as you say, just to kind of get started? Or is it all or nothing? And therefore, is it a certain size of building that makes more sense?
Nicholas
No, it's definitely not all or nothing, it's, start, wherever you are, start small, start getting a little bit more control in different areas. And, and, you know, what's so exciting about the benchmark system that we've created is, is that it's, it's moving, you know, it's rolling, but it's also applicable to whichever asset class whatever size, you know, whatever type of property in whatever country, because what we what we are doing is actually starting to build some benchmarks, right.
So if you are a building of 5000 square meters, which is, you know, not that big. Let's compare you to other 5000 square meter buildings. And we get the we get the question, you know, should I have a user wrap? Well, it depends, you know, it depends on the context that depends on what you're trying to do. It depends on the value cases you're after, what are you trying to accomplish with your property. And in that sense, you should really be compared to like minded buildings, and not to, you know, all of them.
Smart app technology in building management
So a user app would then be a smartphone integrated user face where you can see what's going on around you in the building in terms of key data points and metrics, from air quality to light usage and electricity usage. Is that essentially what it does?
Nicholas
Yeah, they come in all different shapes and sizes. A lot of user apps focus on the community aspects of a building, you know, what kind of workshops are happening today? What kind of events? What run happening this afternoon with a group of people. Some of them go beyond the building itself and connect you to the community in the smart city space, you know, what's going on in the neighborhood. But you also see them as being utilitarian where they start to become the key to doors or the light switches.
To get the utilization up of those apps, you start with the utility piece, if you can't open the door without it, then you're going to start using that app. And then growing into that community aspect, we also see the app becoming kind of the financial backbone of the building that it manages everything from room booking to amenity usage.
So sky's the limit as to what you can do with that functionality. That's a big one.
peer reviewed smart building certification and accredited professionals
And around the the actual smart building certification process itself and your accredited professionals or your “APs"“, how does that network function?
Nicholas
Our certification comes from the world of academics. So when you research and you write a publishable paper, it always gets peer reviewed. A scientific paper doesn't get published in the market until it's been peer reviewed. So we thought, you know, Shouldn't that be how we assess buildings? So we built a peer review model, where you have independent assessors who are looking at this building, and those assessors come from different cultures different, you know, parts of the world, and they look at your building. And then what we have in the certification process is we have quantitative data, and we have qualitative data. The quantitative data is very much based on, you know, do you have the technology?
Do you have the functionality, the coverage, you know, is it there, and that's quite black or white, right? It's either there or it's not there. The qualitative data is much more the grays that are going on in buildings, right? It's like your governance structure. How are you organizing yourself as a building, your integrative design?
You know, how did you decide to build your smart building? Did you use a one massive supplier for the whole tech stack? That's, you know, really been around for 30-40 years? Or did you use a bunch of startups and scale ups and have them work? Together? Right? There's no kind of wrong answer there.
You just make different decisions for different reason. And so there's definitely a qualitative piece that needs to be taken into consideration of a this is what we see in buildings, this is the pros, this is the cons. Maybe this is something you should think about, you know, moving forward.
And that peer review model has been hugely successful in the sense that these assessors get to, you know, assess buildings all around the world, and they get to see the different cultures and the different ways that they're built. And it's become a really, really incredible community of people who not only are working together daily to find good solutions for their own work, but but also helping inform the collective to improve this certification improve what we do.
Matt
Is there a particular building or case study that you've been involved in that could be representative of where things are going or where things are at today in terms of smart building excellence?
a leading example of a smart building
Nicholas
One that we just certified that is amazing is the Hausmann’s Hus in Oslo. It's a family office that built this incredible building from an altruistic perspective, they said, it's not about building a smart building, it's about building the best building we possibly can. And it just happens to be digital.
They created these smart grids throughout the building, which allows them to configure the building any way that they want, for however big or small a tenant would be, and give that space its own smart infrastructure, its own energy metering, its own light metering, completely self contained. A traditional building will take the energy of the building and divide it by the amount of square meters, and send a bill to the tenant based on that calculation.
This is a completely more sophisticated way to do it. And then it's just the most beautiful high quality building. They also have open, transparent contracts with their suppliers, where they say, we're gonna guarantee you your margin, but we're going to discuss the cost. And they originally thought that the budget of the smart building was going to be significantly higher, because of all this smart tech but by managing it in an open and transparent way with their suppliers, they've actually been able to create a building that's the same cost, which I think is something we all need to learn from. It makes good business sense.
Matt
Where do you see your growth over the next three to five years?
Nicholas
I think part of our role is that we need to get these success stories and these stories out. We need to write these cases, and we need to make them quantified, and share how impact is being made. I think we're gonna get to this point of - what is the right level of technology for buildings, and what's too far? The emergence of having buildings be larger than themselves, I guess, being part of a community and not just stand alone.
buildings become part of a community
We’ll also see that with co-working spaces and you know, community spaces, these kinds of things. I think that's going to be a huge component in the future. We just certified a building in in Finland that has its own geothermal energy plant that they built under the building. And it is now feeding the energy to the entire grid around that building. There's something to be said about being a global citizen with your project!
I have the strong belief that out of challenging times, which the commercial real estate is definitely in right now, comes some incredible opportunities. And I think the emergence of cultural, experiential type places, is emerging. I'll be very curious to see how that evolves as it becomes a completely different asset class, not a museum, not a concert hall, not an office or a hotel but something new.
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