IoT’s Transformative Role in the Real Estate Industry

Today's connected and automated world is changing industries in ways never seen before thanks to technology. This also applies to real estate, particularly considering the expanding Internet of Things (IoT) and AI technology. In this article, we are going to discuss how IoT is improving tenant experiences and transforming property management, opening the door to a more convenient, secure, and efficient real estate.

The Internet of Things (IoT) in real estate refers to a network of interconnected devices that are embedded in buildings or objects to collect and exchange data. These gadgets, which have sensors and actuators built in, enable remote automation, control, and monitoring of various processes within a property. The Internet of Things (IoT) is fast becoming a vital component of modern real estate management, in both residential and commercial properties.

According to the Deloitte analysis, sensor deployment in the commercial real estate (CRE) sector is projected to grow at a compound annual growth rate of 78.8%. This growth indicates a significant adoption of IoT technology within the industry, facilitating the collection of vast amounts of data to optimize building operations and enhance tenant experiences.

Smart Home Automation

Entering a house where doors open as you approach, the temperature changes to your liking, and the lights slowly change throughout the day. These are just a few examples of how smart gadgets enabled by the Internet of Things are changing residential real estate. Popular items include smart thermostats like the Ecobee and Nest learning models, as well as entry-level security devices like the August Smart Lock. In addition to making tenants’ lives easier, these gadgets enable property owners to monitor and control their spaces remotely, which reduces expenses and increases energy efficiency.

In 2022, the global count of IoT users in smart homes surged to around 307.8 million—a remarkable 88% increase since 2018. And the momentum isn't slowing; predictions suggest we'll see about 672.6 million users by 2027 globally. IoT's exponential rise in residential real estate highlights a fundamental shift towards smarter, more efficient living environments that are beneficial to both landlords and tenants.

Energy Management

Real estate industry leaders have been adopting sustainable practices in recent years, with an emphasis on lowering the carbon footprint of buildings. In order to increase productivity and improve tenant experiences, they have resorted to innovative technologies like IoT gadgets and AI software. BXP (Boston Properties) is an example of a company that puts these principles into practice. The company systematically prioritizes sustainability by investing in its buildings, allocating an annual capex budget for consistent technology upgrades, and aiming for net-zero emissions by 2025 through strategies like purchasing green energy offsite.

As the importance of tracking and reporting data on tenant-owned space grows, companies are embracing sustainability by focusing on reducing indirect emissions like those from tenant areas. This involves incorporating green lease clauses, such as submetering leased spaces and disclosing client energy usage. Additionally, digital twin technologies paired with IoT, create virtual replicas of buildings to track utilities usage, and smart contracts stored on the blockchain are also gaining popularity among industry leaders as they seek innovative ways to improve efficiency and sustainability.

In the near future, this technology will predominantly impact asset and property management, with a substantial portion of respondents foreseeing significant changes in customer interaction, as evidenced by 73% of executives already prioritizing IoT on their business agendas, according to PWC Real Estate Benchmarking Survey.

IoT plays a crucial role in optimizing energy usage within buildings, leading to significant cost savings and environmental benefits. Smart energy management systems, such as Schneider Electric's EcoStruxure Building, utilize IoT sensors to monitor energy consumption in real-time and adjust usage based on occupancy patterns and external factors like weather conditions. By intelligently controlling heating, cooling, and lighting systems, property owners can reduce waste and enhance sustainability efforts while providing a comfortable environment for tenants.

Research vice president at Gartner Inc., suggests that IoT can help reduce the cost of energy, spatial management, and building maintenance in large sites such as industrial zones, office parks, shopping malls etc. by up to 30%. This statistic highlights the substantial impact of IoT-enabled building management systems in optimizing energy usage and reducing operational costs for property owners.

Projected Reduction in Physical Store Demand

As e-commerce continues to expand, experts predict that around half of American malls could close their doors by 2030. This forecast isn't just about the rise of online shopping; it reflects a broader shift in how people shop and work, which has significant implications for how companies use commercial real estate (CRE) spaces.

In response, CRE owners are being encouraged to embrace new approaches, with a focus on using Internet of Things (IoT) data to stay in tune with changing consumer habits. By tapping into IoT technology, property owners can better understand what shoppers want and need, allowing them to tailor their offerings accordingly. For instance, by analyzing foot traffic patterns and dwell times within the mall, they can identify popular areas and adjust their tenant mix to better align with consumer preferences. This not only helps them stay competitive but also makes better use of their space and resources. In short, by embracing IoT-driven insights, CRE owners can adapt to changing times and thrive in an evolving market.

Security and Surveillance

In real estate, security is crucial, and IoT technologies are complementing traditional security measures with more sophisticated surveillance systems. IoT-enabled cameras, motion sensors, and alarms offer real-time monitoring and alerts, improving the safety and security of tenants and properties alike. For instance, companies such as ADT and Vivint provide comprehensive security solutions that merge IoT devices with cloud-based monitoring services. This integration enables property owners to remotely oversee their properties and promptly receive notifications of security breaches or suspicious activities.

Expanding on the example of companies like ADT and Vivint, these industry leaders offer a wide range of IoT-driven security solutions tailored to the needs of commercial real estate owners. ADT, for instance, provides integrated security systems that incorporate IoT devices such as smart cameras, sensors, and access control systems. These devices are connected to ADT's cloud-based platform, allowing property owners to monitor their premises in real-time from any location through a user-friendly interface. Vivint, on the other hand, specializes in smart home and business automation solutions, offering IoT-enabled security cameras, motion detectors, and smart locks that can be controlled remotely via a mobile app. By partnering with trusted companies like ADT and Vivint, property owners can implement robust security measures backed by cutting-edge IoT technology, ensuring the safety and protection of their assets and occupants.

Personalized Services

Property owners can create an inviting environment in their spaces by using IoT to personalize experiences based on the preferences of each individual tenant. For instance, businesses like Nest and Philips Hue provide smart lighting systems and thermostats that automatically adapt to the lighting and temperature preferences of their tenants, guaranteeing comfort and a luxury touch. In addition, features like IoT-enabled smart gyms and swimming pools can provide personalized exercise plans or leisure activities according to user preferences, enhancing the whole tenant experience and satisfaction—particularly in high-end real estate segments.

IoT is also making maintenance issue reporting more efficient. Tenants can directly report issues through smartphone apps or IoT-connected devices, streamlining the process and speeding up solutions. This user-friendly strategy not only guarantees speedier problem-solving times but also gives tenants more control to actively participate in the maintenance of their living spaces. Property owners can encourage improved communication, happier renters, and more professionally maintained properties by integrating IoT for maintenance reports.

In a recent project, we partnered with Fliko, an innovative real estate company, to enhance user experience and streamline issue reporting within their application. We initiated the process by establishing specific API endpoints, making it easier to integrate ChatGPT and utilize its AI capabilities for error recognition in text.

IoT and Data Analytics in Real Estate

The data gathered from IoT devices provides valuable insights not only into energy management, but also into tenant behavior, enabling property managers to optimize tenant satisfaction and retention. For instance, platforms like Density install sensors to track occupancy levels in common areas such as lobbies, gyms, or lounges. This data can be analyzed to understand peak usage times, identify underutilized spaces, and optimize facility layouts accordingly. Additionally, IoT-enabled access control systems, such as those offered by Kisi, collect data on tenant entry and exit times, allowing property managers to identify trends in visitor traffic, monitor building security, and tailor operational schedules to better accommodate tenant needs. By analyzing this data, property managers can gain valuable insights into tenant preferences and behaviors, enabling them to make informed decisions to enhance the overall tenant experience and improve retention rates.

Challenges and Future Outlook

IoT in real estate has many advantages, but there are disadvantages as well that need to be taken into account. The gathering and storing of sensitive data raises privacy and security risks that need to be properly managed. Moreover, problems with integration between various IoT systems and devices may make deployment challenging. Additionally, to maximize flexibility and scalability, it is critical to ensure compatibility across various IoT platforms and standards.

Looking ahead, the future of IoT in real estate holds promise for even greater innovation and advancement. Emerging technologies such as artificial intelligence (AI) and edge computing are expected to further enhance the capabilities of IoT devices, while new applications and use cases continue to emerge, reshaping the landscape of property management. For example, advancements in AI-powered predictive analytics and machine learning algorithms will enable property managers to anticipate tenant needs, optimize building operations, and deliver personalized services at scale, driving greater efficiency, sustainability, and tenant satisfaction.

Conclusion

The integration of IoT into real estate isn't just about technology; it's about transforming how we manage properties and enhance tenant experiences. By tapping into the power of interconnected devices and data-driven insights, real estate professionals can open doors to greater efficiency, convenience, and sustainability. As we embrace IoT technologies further, the horizon of real estate appears more promising than ever. Properties are not only going to become smarter and safer but also more attuned to the needs of both tenants and owners. It's a vision that's not just exciting but also deeply human-centered, aiming to make spaces more welcoming and responsive.