I was recently invited to be part of a World Economic Forum (WEF) committee, helping contribute to “A Framework for the Future of Real Estate.” This exciting report, which included input from the WEF global real estate community of CEOs and other senior executives, provides “a set of enablers, including accelerating digitalization and innovation to address everything from construction costs to the occupant experience.” It also features a range of case studies that demonstrate real successes.
In this post, I offer a preview of some key points from the framework, which align strongly with the Schneider Electric vision for ‘Buildings of the Future’ and highlight the important role of smart building technologies.
The commercial real estate industry needs to transform
The report notes that “real estate is a major investment asset class that accounts for 10% of global GDP” and has seen unprecedented growth in value and transaction volumes over the past decade. This growth is now facing several challenges. Of course, this includes COVID-19, which has slowed much of this development and severely affected some asset classes.
Some pandemic impacts are expected to be permanent for some asset classes, posing unique challenges for recovery. Add to this the convergence with today’s social, economic, and planetary crises, and it is clear the commercial real estate industry needs to change to continue to thrive.
Four pillars for future-proof success
The WEF CEO committee has developed a vision for the future of real estate in which buildings not only provide a comfortable and healthy environment for occupants but also support a healthy planet, while better withstanding unexpected natural or man-made events.
To support this vision, a framework has been created that offers a pathway to help the industry transition. This framework is founded on four pillars:
- Liveability. As people spend 90% of their day indoors, buildings need to be smart spaces that enhance well-being and productivity.
- Sustainability. Buildings need to be efficient spaces that support a ‘triple bottom line’ of environmental, economic, and social benefits. With buildings accounting for 40% of global greenhouse gas emissions, the industry needs to work toward the goal of net zero carbon, abating carbon throughout the entire building life cycle.
- Resilience. Buildings that are designed to mitigate risks and adapt quickly to changing consumer demand will, in turn, help future-proof cities.
- Affordability. Buildings need to not only be of high quality, but also affordable, inclusive, and accessible. “Providing both individuals and companies with fair access to quality space to live and conduct business is essential to the overall health of society.”
These pillars align with the Schneider Electric vision for Buildings of the Future. Liveability correlates with our belief that buildings need to be increasingly ‘people-centric,’ while sustainability and resilience directly match our pillars. We also believe that buildings need to be ‘hyper-efficient’ in terms of people, space, assets, and energy. Achieving this efficiency will help make buildings more liveable and will help reduce operating costs to make buildings more affordable.
Digitalization and innovation enable the vision
So, how will the real estate industry achieve these goals? The WEF framework outlines several important enablers. ‘Digitalization and Innovation’ is first on the list.
It is recognized that digital solutions “will be among the most critical enablers to usher in the new era of real estate, allowing not only the customization of spaces according to occupant needs (e.g., temperature, humidity) but also taking building operations to the next level and addressing sustainability and affordability.”
With a fully digitized infrastructure, data-driven, autonomous smart buildings become possible. Such buildings can adapt quickly to conditions, optimizing the workplace for better health and productivity. Connectivity also empowers building teams to work more collaboratively and efficiently, while connecting buildings can help optimize the supply-demand energy balance.
Enabling a smart building infrastructure with the right digital solution can result in a fast and significant payback. For example, our cybersecure EcoStruxure Building platform offers the smart devices, apps, analytics, and services to support the initiatives noted above, as well as enabling remote operations, risk mitigation, and more.
The WEF framework also examines other important enablers, including talent and knowledge, regulation support, value-proofing, and stakeholder engagement. The report then puts the pillars and enablers in the context of specific real estate asset classes, including cities, office, industrial, retail, housing, and hospitality. Each asset focus is illustrated with tangible examples and real-life case studies from around the globe.