As others have noted, CRE has been slower than some others to recognize the tremendous advances in technology to assist in due diligence, design and building facilities management. I am working with companies who have developed completely automated systems to due diligence sites and buildings. They can put a underwater drone into the water to inspect a bulkhead, a aerial drone to get a topo of a site. And a robot to go into a building and map out everything in that building from walls, to pipes, furniture, and all systems, all within hours. In each case the drones feed data to a processor and humans who then provide 3 D graphics of what ever it is and reports and the data can be manipulated in a variety of ways depending on the need. Saves time and cost and provides better graphics and data. Other technology is now available to provide sensors in any space to measure and analyze energy, occupancy, security, water, or whatever is required on a 24/7 basis and then to control the various mechanicals with little to no human help.
We are just at the beginning of these various systems which will alter how due diligence is done, the output for the decision-makers and also how buildings are managed. These systems are run by AI which allows the user to know much more about the site, or the building he is acquiring, and at far less cost and time. So for example we are developing a large parcel which is on the water, has 70 year old piling, and needs up to 1 million tons of clean fill. These AI systems can map and inspect the bulkhead, and tell us what needs repair and what kind of repair so we can cost that out. It provides a topo and underground mapping of pilings so we can have a detailed topo from which we can have the engineers determine a fill plan and the architects can do their site plan with better information. There are existing old buildings on the site needing demo. We can in a couple of hours determine all aspects of those buildings and devise a better demo plan since they are old fortress like concrete and brick and not easily demolished.
In the field of facilities management, there are now systems of wireless sensors that can be easily installed with little to no disturbance of the existing walls and ceilings, and these then constantly record data from which the AI processor can determine when spaces are occupied and when not so the AC or heat can be adjusted. Water flows can be controlled. Air quality is measured and can be adjusted as needed. Use of lavatories can be tracked to know how often cleaners should be scheduled. Spaces that are infrequently used can be better determined so space allocation and energy use can be modified. All sorts of security monitoring and entry control can be implemented. All with little human input needed.
The point of all this is CRE needs to ramp up its embrace of AI and systems that control and forecast problems in spaces you may infrequently enter. If used properly they can enhance the tenant experience and garner higher rents through lower operating costs so lower CAM and for NNN tenants, lower operating space costs. There is a real change coming with AI being employed in some of the newer systems which means a savings on building management and maintenance labor costs in office, warehouse, hospitals, hotels and all sports of spaces.
The views expressed are the author's own.
As others have noted, CRE has been slower than some others to recognize the tremendous advances in technology to assist in due diligence, design and building facilities management. I am working with companies who have developed completely automated systems to due diligence sites and buildings. They can put a underwater drone into the water to inspect a bulkhead, a aerial drone to get a topo of a site. And a robot to go into a building and map out everything in that building from walls, to pipes, furniture, and all systems, all within hours. In each case the drones feed data to a processor and humans who then provide 3 D graphics of what ever it is and reports and the data can be manipulated in a variety of ways depending on the need. Saves time and cost and provides better graphics and data. Other technology is now available to provide sensors in any space to measure and analyze energy, occupancy, security, water, or whatever is required on a 24/7 basis and then to control the various mechanicals with little to no human help.
We are just at the beginning of these various systems which will alter how due diligence is done, the output for the decision-makers and also how buildings are managed. These systems are run by AI which allows the user to know much more about the site, or the building he is acquiring, and at far less cost and time. So for example we are developing a large parcel which is on the water, has 70 year old piling, and needs up to 1 million tons of clean fill. These AI systems can map and inspect the bulkhead, and tell us what needs repair and what kind of repair so we can cost that out. It provides a topo and underground mapping of pilings so we can have a detailed topo from which we can have the engineers determine a fill plan and the architects can do their site plan with better information. There are existing old buildings on the site needing demo. We can in a couple of hours determine all aspects of those buildings and devise a better demo plan since they are old fortress like concrete and brick and not easily demolished.
In the field of facilities management, there are now systems of wireless sensors that can be easily installed with little to no disturbance of the existing walls and ceilings, and these then constantly record data from which the AI processor can determine when spaces are occupied and when not so the AC or heat can be adjusted. Water flows can be controlled. Air quality is measured and can be adjusted as needed. Use of lavatories can be tracked to know how often cleaners should be scheduled. Spaces that are infrequently used can be better determined so space allocation and energy use can be modified. All sorts of security monitoring and entry control can be implemented. All with little human input needed.
The point of all this is CRE needs to ramp up its embrace of AI and systems that control and forecast problems in spaces you may infrequently enter. If used properly they can enhance the tenant experience and garner higher rents through lower operating costs so lower CAM and for NNN tenants, lower operating space costs. There is a real change coming with AI being employed in some of the newer systems which means a savings on building management and maintenance labor costs in office, warehouse, hospitals, hotels and all sports of spaces.
The views expressed are the author's own.
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Joel Ross
Joel Ross began his career in Wall St as an investment banker in 1965, handling corporate advisory matters for a variety of clients. During the seventies he was CEO of North American operations for a UK based conglomerate, and sat on the parent company board. In 1981, he began his own firm handling leveraged buyouts, investment banking and real estate financing. In 1984 Ross began providing investment banking services and arranging financing for real estate transactions with his own firm, Ross Properties, Inc. In 1993 Ross and a partner, Lexington Mortgage, created the first Wall St hotel CMBS program in conjunction with Nomura. They went on to develop a similar CMBS program for another major Wall St investment bank and for five leading hotel companies. Lexington, in partnership with Mr. Ross established a hotel mortgage bank table funded by an investment bank, and making all CMBS hotel loans on their behalf. In 1999 he formed Citadel Realty Advisors as a successor to Ross Properties Corp., focusing on real estate investment banking in the US, UK and Paris. He has closed over $3.0 billion of financings for office, hotel, retail, land and multifamily projects. Ross is also a founder of Market Street Investors, a brownfield land development company, and has been involved in the acquisition of notes on defaulted loans and various REO assets in conjunction with several major investors. Ross was an adjunct professor in the graduate program at the NYU Hotel School. He is a member of Urban Land Institute and was a member of the leadership of his ULI council. In 1999, he conceived and co-authored with PricewaterhouseCoopers, the Hotel Mortgage Performance Report, a major study of hotel mortgage default rates.
