JPM spoke to one of Yardi’s resident tech experts, Maria Solobay, Yardi Energy product manager, about where technology is headed for the industry. It’s clear that a technology strategy is now critical to real estate management. But we wanted to know—if your goal is to use tech to make building operations more efficient, what should you prioritize? Where can you get the most bang for your buck? Let’s pick up the conversation with Solobay.
What do you see as the top two or three real estate technology trends, particularly those related to operating properties more efficiently?
Solobay: Maintenance, repair and operations (MRO) expenses make up 30% to 40% of controllable expenses across a portfolio, while utilities make up around 20% to 30%.
Over the past five to seven years, the real estate industry has placed a lot of emphasis on MRO spending. We’ve seen that with our clients, too, as they’ve invested in solutions to automate their billing processes and manage vendors and work orders.
We think the next five to seven years will mark material progress in managing energy spending, the second-highest controllable expense across a portfolio. This will include automation of utility invoices, sustainability reporting such as ENERGY STAR® or GRESB, real-time energy monitoring, fault detection and lastly, fully optimizing buildings through software and artificial intelligence (AI).
What technology solution could every building benefit from?
Solobay: Every building could benefit from an energy management solution that monitors demand and consumption in real time. It’s like a Fitbit for your building—you’re able to see how your buildings are reacting to changing conditions such as weather or occupancy and are immediately alerted to any spikes in usage. Powerful weather normalization and forecasting technology can even alert you to a demand spike up to 48 hours before it happens. Having access to this data across your portfolio allows you to benchmark your properties and see at a glance which buildings require more attention.
What cautions do you have about the adoption of a particular technology solution that is presented as resulting in cost-saving operating efficiency? What do property managers need to look out for, or how can they verify those claims?
Solobay: Visibility into energy usage is key to identify opportunities and quantify savings. Having access to your utility invoices is the first step toward this exercise, but without reliable real-time demand and consumption data, you are unable to benefit from more granular insights. We always recommend getting this visibility across your portfolio first, then using the data to identify which buildings would benefit from a more intensive fault-detection or building optimization solution. For those buildings that are good candidates, look for solutions that include measurement and verification (M&V) analyses on your buildings to verify savings over time. This is typically done following ASHRAE guidelines*.
What are your thoughts on how COVID-19 has put technology and automation even more at the forefront of everything we do?
Solobay: As the COVID-19 situation has unfolded globally, it has impacted each industry and completely changed the way many businesses operate. Retailers have either reduced hours or temporarily closed locations. Large events have been canceled or postponed. Companies are enforcing mandatory work-from-home policies for their employees. This has resulted in unprecedented vacancy in commercial properties, and potential rent deferrals are leaving owners at risk of huge losses of income. Suddenly, it is becoming critical to cut operating costs wherever possible to stay afloat for as long as possible.
As a result, there has been an unexpected urgency for an energy strategy during the COVID-19 pandemic. Even as cities reopen, there will likely still be guidelines for a long time on physical distancing and office capacity. As we get back to a new normal, more flexibility and agility will be needed to manage load and schedules effectively at these properties. This will accelerate the need for having real-time visibility across portfolios, as well as automated fault detection and scheduling tools that can be managed remotely.