IoT as basis for value creation in real estate

As the CEO of MCS Groups KOEN MATTHIJS is the driving force behind the implementation of new technologies and the integration of sensor data (IoT) in FMIS software. The rapid digitization has far reaching consequences. He is an avid advocate of an integrated approach to real estate, workplace and facility management.

“Smart buildings are the basis of a citywide IoT-network.”

The MCS Group offers software & advisory services in real estate, workplace and facility management. Their technological knowledge and domain expertise means the Antwerp company is a potential partner in helping prepare the city of Antwerp for its transition to an IoT infrastructure. Smart buildings that currently function as autonomous islands will in time become the links for a broad application of IoT throughout the urban fabric. Antwerp is investing resources at an accelerated pace in order to facilitate this transition. CEO Koen Matthijs explains his vision on how drastic the effect can be when smart buildings become hubs in a broad, urban IoT network.

“We were awarded the MIPIM Innovation Award in 2015,” says Koen Matthijs. “More specifically we were awarded it because we approach the smart building concept in a concrete and practical way, making it attainable. Smart buildings are strangely enough still largely a theoretical concept. The adoption rate is still quite low. We feel it doesn’t need to be that way and that the possibilities are enormous. A lot of trendy buzzwords are thrown about, creating a lot of unnecessary vagueness and white noise. Yet it’s often about technology that has been around for twenty years or more: just think about the sensors in a parking garage. The potential value creation is nowhere near clear and tangible to everyone.”

A smart building as the basis of a citywide IoT network.
Matthijs: “People ask us ‘Where is the actual added value of the sustainable building of the future and how does it place in the context of a smart city based on IoT?’ We want to make that link. What is currently seen as ‘innovative’- read: ‘difficult to achieve’ - will soon become obvious. You notice that a search like ‘smart building’ is a lot less popular on Google than ‘smart city’ or ‘internet of things’. Even though there are an awful lot more smart buildings than smart cities.”

What determines and increases the value of a building today?
Matthijs: “It’s no longer as simple as making a building passive and energy efficient. That creates a profit of no more than 2-6% compared to a non-passive building. It’s quite a powerful new insight that ‘passive’ makes very little difference to the actual resale value. So what does? There are a number of parameters you want to take into account. You don’t need to go far for most of them. Firstly your user needs to be satisfied: it goes without saying that this makes it a lot easier to find tenants or buyers. Your building has to offer people quality of life: the boundaries between work and personal life are fading and this needs to be architecturally and systematically translated into your design. Additionally you need to enhance user experience. Isn’t it a fascinating thought that people would like to spend more time in a waiting room or at a ticket window, a place they want to leave as quickly as possible now?”

You enjoy spending time in a building that you see as a buddy.
Matthijs: “Correct. Most of the questions regarding IoT in buildings relate to convenience, but ideally you want to utilize it to enhance experience too. It’s an entirely different reasoning. A building that knows what is happening in the smallest of details - availability of space, temperatures, length of queue … anything really - makes life a lot easier. You can make a building your buddy that tells you what to expect at any given time through your personal assistant on Skype or Messenger. A waiting room becomes obsolete in that context. A building that works like this is attractive and therefore valuable.”

“Antwerp is currently laying the foundations
in order to come to a coordinated Smart City.”

Value creation also lies in ultra-precise facilities management and therefore cost savings.
Matthijs: “You need to be able to manage operational costs: the intrinsic building cost is lower than the total operational cost of a building by a factor of five. When you can accurately predict that this operational cost will remain low you increase the value of a building. By continuously measuring environmental factors from which you can then distil certain trends, IoT helps you achieve these goals. This allows you to respond predicatively and proactively. You are better able to plan and can keep your costs down as well as offer users predictions. If you enter into a public-private partnership and have to guarantee a set cost - maintenance, management - as a developer, then systematically profiling your building is a huge asset as it lowers risk. Building a long term vision becomes attractive whereas building cheaply no longer offers a guarantee on investment.”

A building as virtual power station becomes the real disruption.
Matthijs: “Urbanisation is happening in the energy sector too. Traditional energy producers want to be able to predict and influence use as much as possible. With the rise of renewable energy sources and their fragmentation - wind, solar, biomass – you no longer have to try to predict usage, but production instead: a lot more spikes and drops are generated in a building that uses individually tailored energy. The potential value creation lies in the fact that producers can decide when energy is produced, stocked and released to a building. Whomever manages the energy production and use for buildings holds an important value leverage. Buildings become virtual power stations that are regulated by ESCO’s – Energy Service Companies - that align energy supply and demand so that property managers or owners can purchase flexible energy supplies. By having multiple buildings under one portfolio an ESCO essentially holds the keys to a massive virtual power station. This makes it interesting for financial institutions to take on the role of an ESCO and finance a large scale retrofitting of urban properties. This creates urban renewal where buildings are made ready for a clean energy future. The local economy and employment in the construction industry get to ride this wave and energy producers gain leverage to help reduce unwanted peaks in demand. Altogether this forms a huge value that is currently left latent in buildings. Sustainability comes forth from less energy use, which follows from utilising buildings as a virtual power plant, not by halting extra efforts in passive building.”

Antwerp has laid the foundations that will help make these changes possible.
Matthijs: “Sensors and IoT need to be approached in an integrated manner. The local government plays an important role in this. They have multiple objectives. Which is what makes the implementation of IoT affordable. A broad approach offers a better business case and ROI. Antwerp is currently laying the foundations to bring together like-minded parties around IoT in order to come to a coordinated smart city. In property development buildings are currently being made smart ready. This way any scenario can be anticipated. The city can play an important role in facilitating data accessibility. That willpower and attitude are very present in Antwerp."