CRE Gets Serious About Indoor Environment

CRE Gets Serious About Indoor Environment

Summary

- There is a renewed interest in indoor environmental quality solutions, but few owner-operators know what they want

- There are two things that need to happen. First, landlords need to measure transmission risk and second, they need to convincingly demonstrate to tenants that they have the situation under control 

- In the last few months, real estate technology has coalesced around 5 strategies to achieve the stated goals


After years of limited traction despite promising ROI, indoor environmental quality is enjoying its moment in the spotlight.

However, even with the heightened attention, conversations with owners and operators have all the tell-tale signs of an "early market."

There is a lot of interest, few really know what they want.

Under normal circumstances, this is where the "early adopters" would step in to take the risk of adopting new technology in exchange for the potential upside of unlocking a significant competitive advantage.

But these are not normal circumstances.

Every day that occupancy remains low, the pressure to act mounts. For an industry that has standardized protocols for investment decisions, this is an unfamiliar and uncomfortable position to be in.

Taking a step back

Anytime the situation demands stepping into the unknown, it helps to first take a step back to review the objective.

The goal here is simple: retain and attract tenants.

There are obviously many considerations at play here, but the reason for the interest in indoor environmental quality is the ongoing concern that tenants have about potential COVID-19 transmission.

So, breaking the problem down further, there are two things that need to happen. First, landlords need to measure transmission risk and second, they need to convincingly and consistently demonstrate to tenants that they have the various factors under control.

From there, the exercise is to "right size" the investment to achieve those objectives fully for the lowest cost possible.

Too hot, too cold

It's clear now that signs posted in the building and email communications about new procedures and operational changes are insufficient.

While basically free, the continued low occupancy speaks to the ineffectiveness of this strategy.

On the other end of the spectrum is pursuing credentials, such as the WELL certification or the RESET standard.

These not only prescribe a path to achieve high standards of indoor environmental quality, the certification itself is a tangible marketing asset to promote and publicize.

But, as many owners already know, certifications can be overkill, going beyond what's required to achieve the stated objectives and significantly increasing the costs in the process.

So, where can landlords turn to get similar marketing benefits for lower costs and in a faster time frame?    

Just right - the Goldilocks Zone

In the last several months, real estate technology has coalesced around a handful of specific strategies that both provide operators with the tools they need to maintain high standards and tenants with peace of mind through real-time dashboards in common areas and web apps.

  1. COVID-19 checklists in mobile apps to ensure that filter replacements and other cleaning protocols are being followed assiduously. This requires no sensors and can be deployed across a portfolio rapidly
  2. Indoor air quality measurements (CO, CO2, PM2.5, VOCs, temp & humidity) in common areas and/or tenant spaces. The main decision here is whether to pack sensors densely according to WELL standards or use them as high-level proxies for a lower cost
  3. Another approach, which could be complimentary or independent to the above, is to use a few low-cost sensors to calculate the percent of outdoor air mix in the building. The CDC has recommended 100% outdoor air, but this is impossible or prohibitively expensive in many buildings and operators are "doing the best they can," which doesn't exactly instill confidence in tenants
  4. Occupancy sensors calculate social distancing scores, wait times in choke points (i.e. the elevator lobby) and total occupancy counts. This data can be used to provide much more specific and useful communications to tenants about optimal timing
  5. Finally, targeted equipment monitoring for air handling units and exhaust fans precisely calculate the increased costs of bringing in more outdoor air and provide real-time and predictive fault detection for when these systems break down.

None of these solutions detect COVID-19 directly, but they do achieve the stated goals for a fraction of the cost of achieving a certification.

Word of warning

Of course, not every building will need to implement every one of these strategies. Some will not make sense based on the occupant type, budgets, infrastructure or existing technologies in place.

But the benefit of this approach is that it's not all-or-nothing. Each one of these strategies should be considered as stand-alone solutions with real, measurable benefits.

At the same time however, owners should be aware of falling into the "point solution" trap. 

While technology can and should be deployed modularly to meet on the needs of the moment, there are risks of diving in without due diligence. 

If landlords are not careful, they can end up with a half-dozen new vendors which means more teams to manage, variable service quality, greater security risk, contractual complexity, and technology that does not integrate with each other.

The way to avoid this is to ensure there is a platform tying all these strategies together. This means there is only one new vendor to deal with, overall costs will be lower, and the benefits of combining different datasets can easily be unlocked.

In summary, the time is ticking to demonstrate to tenants the IEQ is being taken seriously. This doesn't necessarily mean earning a credential, there are lower cost strategies that can be implemented quickly to attract and retain tenants. 


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