While what constitutes a smart building has more to do with how internal systems and their devices monitor a building’s characteristics, analyze and share data, and generate insights to optimize efficiency and operations, the location of a smart building can have an impact. Where a smart building is geographically located can affect a range of key objectives and factors, ranging from cost, value, and sustainability goals, to the type of systems and technologies deployed.
User and connectivity considerations
Most proponents believe that there is a case for smart buildings in virtually any location since the concept is more about the efficiency of the building itself, but location can certainly play a role when considering a building’s intended use and tenants.
“For existing buildings, the mindset is more about how to make the building as smart as possible where it is currently located—virtually no one is changing location based on a smart building initiative,” says Ryan Garner, director of national accounts for RYCOM, a provider of end-to-end smart technology solutions that enhance the value of and enable long-term success for properties and portfolios across North America. “But when it comes to greenfield deployments, location can become a significant factor, especially depending on how the building will be used and who will be using it.”
According to Garner, real estate developers have somewhat different goals compared to long-term building owners. Real estate developers primarily implement smart building technologies to maximize value, occupancy rates, and rental incomes, while building owners are focused more on efficiency and lowering cost of operations and maintenance. “For large residential mixed-use projects, there is a push to focus on metropolitan and downtown hubs that offer the connectivity to support smart building technologies, as well as the transportation, services, and culture that make it a place where people want to live—especially tech savvy millennials,” he says.
Broadband availability is definitely a key consideration for high-tech facilities, and metropolitan areas have a stronger service provider presence and 5G initiatives that can better support emerging converged technologies not just within a building, but within the broader community as well—retail, public transportation, parking, events, and more.
“The deployment of 5G and who can get edge data centers deployed the quickest will be a significant determining factor in which cities end up at the forefront for smart building development,” says Kevin Donnelly, director of project management for Regional Economic Development Initiative (REDI) Cincinnati that serves as the first point of contact for companies considering the 16-county, three-state Cincinnati metro region as a place to locate and grow. “Those investing in a smart building typically want to be part of a larger smart city or smart community that is already embracing this technology.”
External factors at play
While commercial, residential and mixed-use construction is targeted primarily to metropolitan innovation hubs, there are other external location factors aside from connectivity that can impact site selection and the smart building technologies deployed.
“Location can play a role in what smart building security systems look like. The level of threat in a given location could require more advanced security systems and the use of artificial intelligence for better access control, loitering detection, safer parking, and even parcel management,” says RYCOM’s Garner. “And if a smart building is going to be in an area with higher occurrence of natural disaster, ensuring maximum redundancy becomes a concern.”
Economic development professionals point out the fact that the whole smart building experience is more than just the building itself and needs to consider accessibility, land use, and occupant needs. Developers may even need to consider regional climate and how a building is situated on a site to determine impact or opportunity from factors like wind patterns, sunlight, and water runoff.
“What do the roads and transportation systems look like? Does the surrounding area have a smart feeling, or is it dated? What is the cost of living for employees? What is proximity to suppliers and customers? What are the environmental zoning requirements? These are all questions to ask,” says Andrea Pinho, manager for site selection and real estate at REDI Cincinnati. “Talent is also always a consideration. If a company is going to invest in a new smart building, they need to not only consider the ability to attract talent, but also the availability of local talent and the skillset to support the technology.”
The local power source can also have an impact on site selection, and cities already primarily powered by renewable energy or working to transition to clean energy can be more attractive to companies that are more concerned about their environmental impact and energy consumption. “Municipalities like the City of Hamilton, Ohio that owns and operates its own electric utility system, including three municipally owned hydroelectric plants with two 970-kilowatt (kW) generators, have the ability to provide clean, reliable, and affordable energy that is attractive to companies,” says Pino.
Garner, however, acknowledges that clean energy could be a deterrent for some. “Smart building owners that locate their facilities in areas with dirty power can deploy technologies that allow them to offset their carbon footprint by a greater amount versus areas that are already running on clean energy.”
The role of incentives
While local tax breaks and other financial incentives are rarely a primary decision factor for selecting a smart building site, and REDI Cincinnati’s Donnelly points out that “A financial incentive is not going to make a bad deal good,” they can potentially help close a deal when all else is equal. Incentives can also impact the decision to build new versus selecting an existing site for a deep retrofit.
“Deep retrofit projects can present more obstacles and cost more, but local incentive programs like JobsOhio Revitalization Program Loan and Grant Fund in our region provide funding for redevelopment of existing sites, which can help reduce risk,” says Donnelly. “These are sites that are functionally obsolete but not necessarily useless, and funding is available to bring them back into use—everything from windows and roofs, to environmental remediation and building systems. From a smart building perspective, that could mean funding to increase ceiling heights for example.”
Minimizing development of open space and choosing to reuse an existing building is often a “passion project” that aligns with a company’s sustainability mission and desire to showcase their revitalization efforts. However, the current economic situation may also be pushing some to select existing sites for a deep retrofit rather than greenfield sites to build new.
“In the past, the trend was around 80:20 for new construction versus brownfield, but we’re starting to see that shift. Building materials like steel and wood are at an all-time high, and those rising costs have more companies looking to retrofit. For office environments, the Covid-19 pandemic has also caused many to rethink the need to expand or move to new facilities. There is a lot of conversation about what an effective office space is going to look like and a greater focus on how to leverage existing space,” says Donnelly.
While state and local policy typically trails behind industry demand, economic development professionals like REDI Cincinnati are seeing more companies asking about incentives related to green technologies and sustainability.
“As more companies ask about incentives related to smart and green building construction, we need to continue to push that up to the local and state government level,” says Pinho. “There is a lot of conversation happening around this topic, and it takes partnership across the entire economic development and local business community, as well as good relationships with real estate developers, to make sure it stays on our radar and can continue to attract high-tech companies to our region.”
