FROM PREMISES TO SERVICE:
The ROI of the World’s Smartest Building
Smart buildings, real estate technology and the use of information derived from it is a hot topic. How can the fragmented data of design, construction and operation phases be made to truly add value to the property owner and users? Are smart buildings with their technological solutions expensive and even worth investing in?
The climate impact of the construction sector is large, with up to 38% of greenhouse gas emissions from energy consumption coming from the use and construction of buildings(1). As a developer, builder and lessor of business premises, YIT is committed to the SBTi initiative to limit global warming to 1.5 °C, in accordance with the Paris Climate Agreement. The agreement unites all companies and partners operating in the EU region. Intelligence and technology are needed to achieve this goal, but it will also bring great business benefits, which we will elaborate next.
“In 2021, the Smart Building Certification community awarded Workery+ Vallila a platinum-level Smart Building certificate (2). The property also received the Smartest Building Award 2021.”
NEW INTELLIGENT TEST ENVIRONMENT WORKERY+
YIT developed a new, innovative business concept, which was implemented in the Workery+ Vallila office site renovated by YIT. The new business concept took inspiration from airline pricing and high-quality services.
“We renovated an old bakery property built in the 1930s, which was modernised into an industrial-style office. The building was not demolished, but the way it was used was completely re thought. Materials and furniture were recycled (3), and the property and its services were developed from the customer perspective. A new intelligent building and Workery+ Vallila office concept were born, the premises of which function as a service. Various smart building solutions were also combined with the building.”
– Juho Siitonen, Vice President, Strategy and Development, YIT
The building was fully renovated to create an experimental environment, Living Lab, for YIT’s own premises for examining and verifying what hybrid work is now and what it could be in the future. Smart technologies are tested in the premises - various solutions and sensors that have been combined according to the Smart building concept developed by YIT. The data on the building and its use are constantly analysed and the model is developed based on the results obtained. In this way, it is possible to create customer oriented facilities for the future that are good to work in and that are scalable and cost effective. Workery+ Vallila is a great example of how properties, including old ones, can be upgraded throughout their life cycle, which increases their value. There is also a willingness to pay more for low-emission buildings due to both their responsibility and lower operating costs.
In this publication, we take a closer look at what we have learned about the development of smart buildings and a new office concept. The goal is to explain what the return on investment (ROI) is based on and why it is gaining attention globally.
2 https://www.yitgroup.com/en/news-repository/press-release/yit-workery-vallila-awarded-the-first-platinum-smart-building-certification-in-finland 3 https://www.yit.fi/en/workeryplus/news/how-we-created-workery-vallila
THE SMART BUILDINGS INDUSTRY IS EVOLVING
In the future, smart buildings will affect all industries in one way or another. The development is comparable to the development of cities, where various intelli- gent solutions have been introduced to an increasing extent. Developments have already been seen in the past when responsibility related indicators were integrated into buildings. Now, the trend for intelligent solutions is advancing rapidly.
As a major player in the construction industry in Finland, YIT wants to develop the entire industry into a new direction. We want to make buildings better, both for users and the environment. The basis for a profitable business model is therefore not only the company’s own interest, but also the interest of the industry as a whole, which is also of interest to the market.
“The situation regarding the standardisation and certification of intelligent buildings now seems to be similar to the situation regarding sustainabilty in the past. Different areas of sustainability have been certified and regulated and this work is being done at different levels all the time. However, owners and landlords need clarity so that they can build and rent the right kind of product for the future and meet future demand, while tenants and end users want transparency and confidence for the building to meet their needs. However, it is still unclear which standard and certificate is the most valuable. Then you have to decide which of the certificates is the best and for whom. Is it BREEAM, LEED, WELL, or something else?”
– Alex Edds, Head of Sustainability, Europe, LaSalle Investment Management.
Some of the technologies mentioned in this white paper and found in this building:
CONSTANTLY EVOLVING BUSINESS CONCEPT
YIT’s innovative, smart building business concept has transformed the product oriented way of thinking into a very flexible and customisable high quality service. At the heart of everything is the customer’s need and high quality customer service, combined with intelligent real estate and a versatile service offering that allows customers to customise and optimise their working methods according to constantly changing conditions.
“The future of work is changing fundamentally and hybrid work has come to stay. We cannot force people back to the office, but rather we must attract them there. The office should be an attractive magnet with a better setting than at home.” Property Development Segment, YIT.
The concept is based on the understanding that there is no returning to the past and that people cannot be forced to return to the office. Most tasks can also be handled perfectly well regardless of the location. Because especially brainstorming and development work, as well as strengthening corporate culture, are often best accomplished in face-to-face encounters, a company’s office solutions need to be so attractive that people also want to come to the office. In addition to high quality and well designed facilities, the result is a wide range of services that make work and life better. From the range of services, different options can be introduced according to changing needs. The idea arose from pricing models in different industries. For example, airlines have been able to improve occupancy rates through overbooking practices, and sports companies have a variety of time based arrangements that allow people to use gyms for longer, even around the clock.
YIT built a flexible service / pricing model that considers different factors from the perspective of business premises according to customer needs: usage time (e.g. according to hours, days, weeks, months and years), time of use (e.g. length of days or evening use), overbooking, strategic space utilisation forecasting,
as well as optional but luxurious amenities. The service model solution makes it possible to meet the needs of all stakeholders.
UTILISATION OF THE WORKERY+ CONCEPT IN THE DEVELOPMENT OF THE BUSINESS MODEL
In the development of Workery+ Vallila, starting point was to find out, whether the old property can be repaired in such way that the outcome is better for both users and the environment. The end result was a model that challenged not only the way the building was built but also the way to work in it, without forgetting the role of the end user. Users were constantly kept at the center of development work.
The constantly evolving business concept is based on the data obtained from the use of Workery+ Vallila, to learn and continuously optimise processes. The data collected is standardised, which allows for its excellent
Buildings are made for people. We want to create the best possibilities and conditions for people with the help of data and optimisation, but also to provide first-class services when they are needed.
– Juho Siitonen, Vice President, Strategy and Development, Business Premises Segment, YIT.
usability, as opposed to fragmented data that is difficult to utilise. Based on the analysis of the data, a few important observations have been made. When premises had a limited time of use, their utilisation rates were often lower than hoped for, opportunities for creating additional returns were more limited and their usage was irregular and difficult to predict. This discovery provided many additional opportunities to develop the business model.
THE IMPORTANCE OF USER EXPERIENCE IN DESIGNING THE SPACES
Traditional office space usually offers its owners a reasonably good return, but there is often much room for improvement in customer satisfaction. That is why
we looked at what people actually want and what attracts them to the office. The only way to continuously improve the facilities from a customer perspective was to explore user experiences and satisfaction in more detail. Based on this, it was possible to implement a building designed to make it feel better to the user. The air is fresh and cool, high in oxygen and low in carbon dioxide. The airflow in the building has been calculated and planned according to daily, weekly and monthly use. The building is safe and environmentally friendly. Its functions have been calculated precisely, even to the minute, to create a thriving and ever-changing ecosystem of working and living.
DATA STANDARDISATION
An intelligent building is not a new invention. However, the highly demanding integration of numerous systems is one of the biggest challenges in the industry. Many companies are waiting for integrated models to appear in the market before investing in smart buildings. The industry has been moving towards more open APIs and application interoperability for some time, but the change will take time
The launch of the collaboration between Microsoft and YIT was a major breakthrough that led to the development of an open source version of the RealEs- tateCore ontology(5) for smart buildings using the Azure Digital Twin(6). This open-source ontology helps implement seamless integration, but the common language can also be used in future solutions. This revolutionary solution has become a global standard for Microsoft that is changing the entire construction industry.
Building’s digital twin and standardised APIs can be made available to all partners in the value chain. Instead of each technology and building using their own language, there is now one common language in use that can be optimised. All parties can benefit from the updates and optimisations. The technology chosen provides a clear view of how work should be organised also in the future.
Thanks to the system, building owners and users get a ready-to-use building with a digital ecosystem. They can choose the technologies and services they want for their property and add or remove them over the building’s life cycle, rather like building blocks.
The systems are also constantly being updated, much like a software update in a smart car (e.g. Tesla), and new versions are being introduced. More is constantly being learned about smart buildings, making it easier to develop them to meet future needs. This is an approach to a future-proof property and operating model.
4 https://facilio.com/blog/smart-building-success-needs-a-new-improved-system-integration-model-heres-why/
5 https://github.com/azure/opendigitaltwins-building
6 https://techcommunity.microsoft.com/t5/internet-of-things-blog/realestatecore-a-smart-building-ontology-for-digital-twins-is/ba-p/1914794
YIT’S SMART BUILDING PLANNING GUIDE
An essential part of the business model for intelligent buildings developed by YIT is the smart building design guide developed by YIT, which is based on a standardised way of processing and utilising data at all stages of the property’s life cycle.
The goal of the smart building design guide is to improve the comfort, productivity and environmental friendliness of properties by adapting the data of the building’s technical systems to a common platform, where the information is standardised for easy use by those who need it. The benefits of smart buildings are thus made available to property owners, maintenance and users.
The guide covers the entire life cycle of a property, from design, supplier selection and construction up to the operation and maintenance phase. It can be used to take care of the maintenance throughout the property life cycle as agreed. With the help of the guide, our partners are able to deliver separate, comprehensive solutions for the construction project in accordance with the concept.
The Smart building concept with its design instructions is in use at Workery+ Vallila. In addition to data related to building automation, energy consumption and conditions, separate sensors collect information on, for example, the use of meeting rooms and the movement and routes of people within the office.
With standardised information, the property owner can optimise space usage, forecast restaurant serving rates, plan human flows in the building, save energy, create pleasant indoor conditions (including heating, cooling and air conditioning) and order cleaning based on need. Information also makes it easy to create new services.
On the other hand, the user of the premises can, among other things, book workstations and meeting rooms, find suitable routes, find information and colleagues more easily, and obtain access rights to the premises. In Workery+ premises, everything is handled conveniently with the help of a mobile application.
With partners they make it happen:
ENSURING FUTURE-PROOF SOLUTIONS
Ensuring future-proof solutions means anticipating the future and developing methods to reduce the impact of sudden changes and risks caused by future events. Being future-proof is very much related to climate change mitigation and adaptation planning, as well as to the impact of EU taxonomy and funding opportunities. The development of intelligent building technologies has taken future proofing to a new level.
THE IMPACT OF MILLENNIALS ON FUTURE WORKING LIFE
Millennials entering the labor market will play a key role in the future. They are taking a new approach to work and the workplace and will make up 75% of the European workforce by 2030. Millennials yearn for more flexibility and a comfortable working environment offering experiences to which they can also choose not to go to.
The way millennials are able to live a life according to their way of thinking is to own (7) as little as possible and work as flexibly as possible. A Harris study (8) found that 78% of millennials would spend money on experiences or events rather than property.
The consumer experience consists of both products and services, whether they are physical or digital, so the premises of the future must equally consist of the same things.
7 https://medium.com/the-forge-institute/the-experience-economy-millennials-paving-a-new-way-forward-for-marketing-fc508483e80
8 https://eventbrite-s3.s3.amazonaws.com/marketing/Millennials_Research/Gen_PR_Final.pdf
ESG - ENVIRONMENT, SOCIAL RESPONSIBILITY AND GOOD GOVERNANCE
ESG stands for Environmental, Social and Governance. It refers to issues related to the environment, social responsibility and good governance.
Responsibility has become a very important theme, as construction and the use of the built environment account for about half of the world’s natural resource use and about 40% of energy consumption (9). Interest in ESG based investments has increased. Health safe facilities are becoming more interesting than before due to the corona pandemic. Energy efficiency is becoming the norm.
Vinjeru Mkandawire, real estate correspondent for The Economist, wrote (10) that “One-fifth of the world’s 2000 largest companies have announced a goal to achieve zero net emissions by 2050. It also requires reducing CO2 emissions from buildings.” Reducing emissions from offices does not happen in an instant, but smart buildings can partially meet this need.
YIT is the first Finnish construction company to be officially committed to and to seek approval for its goals from the SBTi organisation. SBTi requires companies to reduce their emissions both in their own operations and in their value chain.
Commercial tenants consume on average 40–60% of the total energy consumption of a building. Various energy reduction programs have been put in place to better and faster achieve short and long term sustainability goals. The carbon footprint of built environment comes from both operating the buildings as well from construction materials. Reducing emissions requires focusing on both of these aspects. Unless the construction industry takes action to reduce the carbon contained in the construction materials, by 2050 the emissions caused by this carbon will be equivalent to those of the industry as a whole, taking into account new construction over the next 30 years (11).
For investors, responsibility measures are an integral part of asset management responsibility. It includes fiscal policy constraints, critical infrastructure investment, repairs and replacements, and the degree
9 https://www.yitgroup.com/en/news-repository/investor-news/yit-commits-to-science-based-targets-initiative-as-the-first-finnish-construction-company 10 https://www.economist.com/the-world-ahead/2021/11/08/commercial-propertys-biggest-challenge-is-not-the-pandemic
11 https://americas.uli.org/210119sustainability/
of commitment needed to improve resilience. Investors also offer better conditions for responsible projects.
Reducing energy consumption and waste is part of the responsibility of buildings. While the most visible and costdriven models may have the greatest impact on actions, responsible solutions are critical to all stakeholders of smart buildings. Alex Edds, Head Of Sustainability, Europe, LaSalle Investment Management, has outlined key elements related to ESG and sustainability issues as follows:
“Smart buildings are much more than ESG and sustainability issues, and it is important to send a clear message. Sustainability may well be one of the key value promises of an intelligent building, but so are improving the customer experience, cybersecurity and physical security, and more efficient property management.
Smart buildings and the data they generate provide an opportunity to assess the performance of an asset (and portfolio) with a broader set of metrics and real-time metrics. Custodians get a better idea of what should be improved and how to value it better. This in turn opens up opportunities for new business models and revenue opportunities exploiting market gaps, inefficiencies, unmet needs. This value can only be unleashed through better understanding, and truly intelligent buildings provide just the information you need.”
– Alex Edds, Head of Sustainability, Europe, LaSalle Investment Management
VALUE TO INVESTORS, TENANTS AND USERS (ROI)
Smart buildings are interesting, desirable, and future-proof, but not designed to be consistent. Companies that can make intelligence comfortable and easy to integrate into processes and the tenant experience are one step ahead in improving stakeholder satisfaction. They can also get higher returns and profits.
INVESTORS
More attention has been paid to smart buildings in financing, as there is a desire to increase the value of property and the industry is, along with the growth of green finance, increasingly targeting real estate loans at responsible and smart buildings. Headquartered in Amsterdam, ING told in an interview with Smart Building Collective about its strategy to identify asset growth and provide better loan terms for smart buildings.
“We see the value of smart buildings and have been working for some time to incorporate related issues into our own process. Solutions such as Smart Building Certification can help increase the value of real estate by assigning monetary value to the added value associated with the building.”
– Hein Wegdam, Head of ING Real Estate Finance
But how to build a model that not only constantly meets the needs of all stakeholders, but also takes into account the aspirations of the right demographic group? The answer lies in flexible services that consist of parts similar to building blocks.
The value of the global smart building industry is estimated to be 12 265,37 billion USD by 2028 and the annual growth rate (CAGR) is estimated to be 21.6% between 2021 and 2028.
The European Commission’s Macroeconomic and Other Benefits of Energy Efficiency report states that a smart building can be 12% more profitable to its owner during operation and 5-35% more profitable when sold (13). Smart buildings also have lower tenant turnover.
Once we have information on how the facilities have been used, it can be utilised in pricing and in determining what changes should be made in the building. With the help of intelligent technology, the spaces are not left idle. Intelligent solutions can also increase well-being, thus reducing staff absenteeism.
TENANTS AND USERS
Many tenants value smarter and more responsible buildings and are ready to pay more for them (13). Smart buildings offer many benefits to tenants, such as attractiveness, measurability and responsibility. Smart facilities increase the attractiveness of employer companies in attracting skilled employees (14). Measurement and monitoring can make the experience of employees and customers smoother. A landlord can better support their tenant when they gain a better understanding of the tenant’s needs. Data can also be used to better guide or test financial models. Predictive technologies (15) allow for better use of facilities, but they can also increase safety and accountability. In particular, buildings where air quality can
be monitored are in demand due to the COVID-19 pandemic.
Millennials value responsibility, health, well-being, flexibility and technology integration (16) even more than pay. They want flexibility in the workplace and an open work culture where work can be done anywhere. They are more likely to rent a flexible space, such as a co-working space.
FINALLY
There is a lot to learn about smart buildings and it is worth continuing to build and continuously develop them on the basis of what has been learned.
Market factors and sustainability targets are constantly putting more pressure on companies to comply with regulations and requirements, but they also offer a wealth of new business opportunities. The development of business models, intelligent buildings and facilities, and technologies requires continuous research, measurement, and optimisation. Careful analysis of data and performance is the only way to get information and move forward strategically. By taking into account future trends, the wishes of users, tenants and investors and combining them with a flexible and constantly evolving model, it will be possible to develop futureproof smart offices.
YIT’s Smart building concept and design guidelines enable a simple modular solution that can be utilised in both new and old properties. The solution allows owners and tenants to choose the level of intelligence and responsibility for the property that meets their needs, and at the same time it enables everyone to do better business. By accumulating user experience and developing the model continuously, service delivery and targeting can be further improved.
Smart buildings already are a part of our daily lives.
12 https://www.globenewswire.com/en/news-release/2021/07/21/2266321/0/en/Smart-Building-Market-to-Hit-USD-265-37-Billion-by-2028-Increasing- Investments-in-Sustainable-Smart-Buildings-to-Augment-Market-Growth-Fortune-Business-Insights.html
13 https://ec.europa.eu/energy/sites/ener/files/documents/final_report_v4_final.pdf
14 https://www2.deloitte.com/content/dam/Deloitte/nl/Documents/real-estate/deloitte-nl-fsi-real-estate-smart-buildings-how-iot-technology-aims-to-add-value-
for-real-estate-companies.pdf
15 https://www.weforum.org/agenda/2022/05/age-of-prediction/
16 https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-millenial-survey-2016-exec-summary.pdf
Partners
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Nuuka
Nuuka, a Finnish Proptech Company, helps major real estate owners and whole cities to deliver great indoor climate, reduce energy and operating costs, and cut emissions, to maximize building lifetime value. Nuuka does this by diagnosing and optimizing buildings HVAC and energy systems with Artificial intelligence. Nuuka can diagnose and optimize across old and new buildings alike, and has been proven in connecting 8M sqm to cloud across 8 countries. With constantly evolving diagnostics and optimization solution, Nuuka helps to save the planet, one building at a time.
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Genano
Genano is an air decontamination technology company focusing on making indoor air climates safe and better in built environments. We provide services and solutions for MedTech, HealthTec and IAQ customer segments, among also other air related solutions for industry and process technology. Genanos patented technology is one of the few in the world which has proven record of eliminating living virus and bacteria from the air, while filtering particulate matter down to 3vnanometer size, and also taking off harmful gaseous compounds from the indoor air climate. We have a 22 year long experience, more than 10000 installations in approx. 50 countries, where we daily help thousands of persons enjoy a clinically hygienic medical environment, a healthy non-polluted indoor air climate and safe working climate.
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ProptechOS
Idun is a software company dedicated to making the world’s buildings ready and able inhabitants of the smart cities of the future. Idun’s innovation platform, ProptechOS, collects real-time data from buildings, harmonizes it and makes it available to building stakeholders. ProptechOS enables data-driven building management using ProptechOS’ ecosystem of third party and our own applications. Our ecosystem’s vibrant set of integrated applications, based on the open source semantic language RealEstateCore, enable property owners to transform their real estate portfolio into a platform for innovation, analysis, and optimization.
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Naava
Naava focuses on creating human-friendly indoor spaces with nature and forest-grade indoor air. People can experience the power of nature indoors with the help of carefree design furniture with living plants. When there is a growing need to attract people back to the office, co-working spaces such as Workery+ need to stay ahead of the game in providing elements that do just that. If you ask people about their favorite place to go when they wish to feel good, recharge, or be creative, most of those places will be in nature or near nature. It makes sense to bring elements of nature to spaces where you wish to attract people.
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Smarten Spaces
Smarten Spaces offers an end-to-end solution for workplace safety and flexibility on a single technology platform to help businesses navigate the new hybrid workplace. The SaaS technology simplifies Desk Booking, Digital Workplace experience, Space Management, with its most recent flagship product - Workplace Scheduling for Hybrid Work - creating a workplace experience breakthrough by bringing the workplace and workforce together. Smarten Spaces is trusted by Fortune 500 companies and is being deployed to over a million users in over 100 global cities in 20 countries including New York, Chicago, London, Sydney, Helsinki, Moscow, Australia, Singapore, and more. The Smarten Spaces platform is fully integrated with Microsoft, Kone, Idun, and more than 80 global complementary workplace solutions. Smarten Spaces was recently honored with Two Stevie® Awards at the 2021 American Business Awards®, recognized for Artificial Intelligence Innovation & Entrepreneur of the Year, along with the Urban Innovation Champion in Cities of the Future hosted by HSBC Women's Championship and the COVID Management of Year - IT Services at SBR Management Excellence Awards by Singapore Business Review 2020 for their Hybrid Workplace technology for a safe and flexible workplace. Smarten Spaces was named as Top 3 Hottest Startups in Singapore by Singapore Business Review 2020 and as one of the Top 5 Most Innovative Startups Making Offices Secure by BusinessWorld. Other industry honors: Top 25 IoT Solution Providers 2018 by APAC CIO Outlook & Top 5 PropTech company by MIPIM in New York City 2018. We are proud of our strong GTM network. Our partners include NTT, Singtel, Optus, Ingram, and many more. We are also a global Microsoft co-sell partner.
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Microsoft
Our mission is to empower every person and every organization on the planet to achieve more.
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Ubiqisense
Ubiqisense's occupancy & footfall sensors collects data on the way people use and interact with spaces. The data is completely anonymous and it facilitates the optimization of any given space. It helps create a better work environment adapted to people’s real needs, and it provides valuable insights that can contribute to a more sustainable workplace. The sensor can easily integrate with other smart energy-saving solutions, this way reducing your carbon footprint can become an automated process.
Get in touch to learn more
Author: Elizabeth Nelson
Co-Founder & Head of Research & Innovation
+31 642683161