CREJ

October 2018 — Property Management Quarterly — Page 19 www.crej.com Halkin Aerial Services An industry leader since 1982, Halkin Aerial Services has been providing its clients superior data enabling them the power to manage and market themselves with increasing profitability. Utilizing state of the art drone (UAV) sensors and imagery/infrared technology, Halkin Aerial provides comprehensive inspection services for numerous industry sectors. Our highly experienced analysts and inspectors compile vast sums of data that is used to deliver a product that reduces capital and operational expenditures, increases operational efficiencies, and enhances profitability for our clients. Our work in the sky streamlines yours on the ground Halkin customers receive • Exterior equipment inventory and full detail of facility • Identification of energy inefficiencies • 3D scale rendered models of facility with rooftop, envelope and equipment reports and conditions • Infrared analysis of entire facility • Precision measurements of all building dimensions, including windows, equipment, curb caps, etc. t/ If you would like to experience operational efficiency, increased profitability and marketability, and higher standards of safety, contact us today at 866-425-5416 (866-Halkin1) or visit us at our website http://halkinaerialservices.com/contact/ A s automation and smart technologies are taking the economy by storm, it only makes sense that commer- cial real estate is poised to become a prime adopter of internet of things technology. IoT technology refers to a system of interconnected computing software and mechanical hardware devices that automatically translate data and give orders without the watchful eye of a human systems manager. In the case of commercial real estate, it means that many aspects of property management and tenant interaction can be automated.The technology is becoming a necessity in larger Class A office markets across major cities. Memoori, a technology research firm based in Stockholm, Sweden, found that as of 2017, more than 1.32 billion devices in offices have an integrated IoT computer system, according to the firm’s “The Internet of Things in Smart Commercial Buildings 2018 to 2022” report. By 2022, Memoori predicts that this number could easily reach 3.33 bil- lion in devices across all markets and property types. So, what does this mean for the growing Colorado office market? It could mean that the market will be more attractive for the millennial workforce, will improve property man- agement roles and will have investors leveraging the features to ask for a higher rent rate. Downtown Denver’s office market vacancy has been on the decline (cur- rently standing at 15.5 percent, down 56 basis points from the previous quarter) and the asking lease rate has been steadily increasing (currently at $34.94 with a 3.4 percent increase from the previous year), according to CBRE’s second-quarter report. Smart build- ings can help these trends accelerate with an increased demand for office space in Denver once they adopt these convenient features. This may be more important than some realize, as 44 percent of employ- ees surveyed for Dell and Intel’s 2016 FutureWorkforce Study said that they felt their workplace was not “smart” enough and that efficiency was lack- ing. For Colorado, an increase in smart buildings can be a talent-attracting trait that brings experienced employ- ees and high-profile companies in from around the country to contribute to a booming economy. Additionally, these automated build- ings can lower operating expenses by lowering natural gas and electricity usage by implementing a computer system and data analytics to deter- mine energy usage, automatic window- shading systems, motion-sensor lights and featuring climate-controlled spac- es to maintain set temperatures. As far as energy efficiency goes, smart tech- nologies can greatly reduce a building’s electricity bill using automated sensors and climate stabilization.The average U.S. office building spends nearly 29 percent of its operating expenses on utilities, according to “Managing Energy Costs in Office Buildings” report pub- lished by theWisconsin-based utility company Madison Gas and Electric. The company also reported that the majority of electric- ity consumption in the average U.S. office is held by lighting (39 percent), followed by heat- ing, ventilating and air-conditioning cooling (14 percent) and other general outputs (13 percent). These costs can be offset using smart technologies. It also can make the property manager’s job much simpler by having automated processes and help to develop a bet- ter relationship with the tenant when their needs can be met immediately. IoT technology is not a one-size- fits-all solution, however.There are some potential challenges in adopt- ing smart building technology, such as the implementation costs for hardware. Buildings magazine cited a $250,000 price tag for an installation in a 100,000-square-foot office building (approximately $2.30 per sf). It also can be initially disruptive to move from a traditional office environment to a high-tech software system.The initial investment is likely going to be worth it for the amount of money the prop- erty owner will save in utilities costs down the line. However, as the technol- ogy gains footing in national markets, the costs are likely to decrease and a feature that was once considered “nice to have”may quickly become a “have to have” characteristic in order to stay competitive with other Class A office markets. Denver’s downtown office market has been reporting strong figures in 2018 with a lower vacancy rate, a steadily increasing lease rate, an increased net absorption (175,797 sf as of the second quarter) and a large amount of office properties under construction (1.35 million sf), accord- ing to CBRE’s Denver report. Smaller Colorado-based markets like the Colo- rado Spring office market also have reported solid numbers in CBRE’s anal- ysis, displaying a vacancy rate of 9.4 percent and a lease rate of $12.47 per sf, according to its H1 2018 Colorado Springs Office Marketview report.The analysts at CBRE describe a healthy market outlook in the city with ten- ant demand being at an all-time high. If property owners and developers choose to install IoT and smart tech- nologies in their current buildings and future constructions, the market could see an acceleration in demand with more high-end tenants and a more tal- ented workforce. ▲ Increase your building’s IQ to stay competitive Technology Stephanie Hughes Business writer, North American CMBS, DBRS Edward Dittmer Senior vice president, North American CMBS, DBRS Office electricity consumption, from Wisconsin-based utility Madison Gas and Electric’s “Managing Energy Costs in Office Buildings” report.