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Buildings are undergoing transformative changes worldwide, particularly in commercial real estate. Since we spend ~90% of our time indoors, buildings from hotels and offices to healthcare and retail are pivotal in shaping human experiences. The evolution is driven by three overarching trends spanning several building types.
Trend 1: Increasing focus on sustainability and decarbonization
Buildings contribute to 37% of global carbon emissions, and 50% of existing buildings will still be used in 2050. This presents a crucial opportunity to prioritize decarbonization for retrofits and new builds. Stricter environmental regulations and energy efficiency reporting obligations require nearly 50,000 companies to disclose energy and carbon data, with another ~70% of surveyed companies reporting adopting environmental, social, and governance (ESG) commitments.
Trend 2: Growing emphasis on operational efficiency and cost management
Volatile energy prices, carbon costs, on-site labor, and/or skilled labor shortages drive operational costs across the entire buildings sector. Presently, only 13% of enterprises collect data on an ongoing or real-time basis using advanced analytics– but this data is crucial to evaluating current performance and identifying actions that will have tangible effects. In 2024 and beyond, maximizing operational efficiency will need data integration and artificial intelligence (AI).
Trend 3: Shifting expectations from building occupants
How people now use space directly influences building design and functionality. With greater demands for connectivity and personalization and the demand for flex space forecasted to reach 30% by 2030, organizations must prioritize spatial utilization data to optimize staff scheduling and wait times and enhance business operations and customer satisfaction.
Impact on key building segments
These trends uniquely impact different types of buildings; my subsequent posts will dive deeper:
Healthcare – The COVID-19 pandemic exacerbated challenges in the healthcare sector, particularly infrastructure development and modernization investments. Greater emphasis on adaptability, virtual solutions, and patient-centric care models pressure hospitals to find new ways to optimize systems, processes, spending, and resource allocation to combat persistent staffing challenges. Additionally, the healthcare sector, contributing ~5% of global greenhouse gas (GHG) emissions, must prioritize sustainability to reduce environmental impact and associated financial penalties, helping ensure a healthier society.
Hotels – The focus on sustainability is growing in the hospitality sector, with 53% of travelers seeking accommodation, balancing comfort expectations with innovative sustainability features. Meeting global green standards and achieving green certifications (e.g., LEED®, WELL®) helps create differentiation, enhance hotel brand appeal to more eco-aware guests, and boost property values.
Retail – 60% of retail companies are prioritizing sustainability. Despite inflation, rising energy costs (especially for food retail), and reduced consumer spending impacting bottom lines, customers still have high expectations about their shopping experiences that retailers struggle to meet. Sustainability can offer short-term benefits like operational improvements (e.g., increased energy efficiency or more automated inventory control systems that reduce overhead costs) and a long-term competitive by bettering connecting with shoppers in demonstrating how retailers meet (or exceed) expectations for environmental stewardship.
Commercial real estate – As with other sectors, the commercial real estate (CRE) market was heavily impacted by the COVID-19 pandemic and is in flux. Firms grapple with ESG challenges, tightening regulations, a shifting capital markets landscape, and evolving investor and tenant demands. But these challenges also offer CRE companies a huge opportunity: by investing in the latest advanced technology across their portfolios and the entire asset lifecycle, they can reduce waste, optimize energy consumption, eliminate carbon emissions, and, as a result, create higher returns and more satisfied stakeholders and investors.
Design firms – Architecture, engineering, and construction (AEC) firms are at the forefront of improving building sustainability. As new energy usage tracking and reporting regulations emerge, they can shepherd collaborative information sharing across all stakeholders to ensure project decisions prioritize the end-user experience, not just the budget. They can also recommend new tools and systems to help building owners, managers, and tenants access and analyze data to track, manage, and report embodied and operational carbon levels.
Responding to trends with electrification and digitalization
Becoming more electric and digital across the building lifecycle is crucial to capitalizing on these trends. Electricity, especially from renewable sources, is the greenest form of energy, and digitalization drives efficiency by providing visibility and actionable insights on energy usage and system operations. This ultimately helps everyone understand how energy is consumed and helps deliver improved sustainability, resiliency, efficiency, and building design.
If you are a building designer, developer, manager, or owner who wants to join the shift toward a better future for buildings, let us help. Schneider Electric can provide a full range of digital technologies and services to unify disparate systems and help your organization do more with less while hitting your ESG and operational targets. Contact us today.
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