As more and more organisations take their business operations to the cloud - in other words, engage in disruption - there’s less demand for physical real estate.
Hence, those who build or own real estate are finding themselves at a disadvantage against a range of “asset-less” players.
Think Airbnb as one prime example. It’s now is worth about $USD30 billion – about the same as the Hilton and Hyatt groups combined.
According to Peter Halliday, head of building performance and sustainability at Siemens, “there’s a struggle on multiple fronts to match the new pace of business model innovation, and to reduce the capital strain that buildings place on balance sheets.”
One way to do this is to reduce building energy costs. For new builds, it’s using technologies such as prefabrication, integrated solar and sensor technologies.
For existing buildings, the picture becomes more complex. The US Department of Energy last year found that the energy consumed in residential and commercial buildings accounts for 20.1 percent of the total of all energy consumed worldwide.
In fact, building energy usage is the second largest expense on most companies’ balance sheets, accounting for 40 percent of primary energy use, with up to half of this literally going to waste.
Considering that energy represents 30 percent of a building’s entire operating costs, reducing this waste should be of prime importance to any building designer or owner.
A common pitfall is to measure success simply by looking at the cost savings or reduction in energy consumption alone. At the same time, the implementation effort for all these strategies is multi-dimensional.
Gaining transparency into how buildings perform can reduce the effort and cost of navigating through the myriad of national regulations and voluntary certification schemes for environmental compliance.
The benefits are both financial and reputational resulting increased attractiveness to customers/investors, wider choice of financing sources and even productivity improvements.
In many countries there are also incentives in the form of tax credits introduced to drive green developments and retrofits. There are also a number of other financial windfalls that come from improving efficiencies.
For example, green buildings can command up to 17 percent higher rent premiums and 23 percent higher occupancy rates – and resale values can be up to 30 percent higher – in part because efficiencies that extend a building’s life cycle can also reduce its maintenance costs.
“As the pace of disruption accelerates, organisations that fail to form the right partnerships to leverage their buildings are not just leaving money on the table, they are restricting their ability to invest in business model innovation – and to ultimately respond to this disruption,” Halliday points out.