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March 15, 2023

Sustainability as an Opportunity for the Real Estate Industry


Magdalena Sturm

The issue is not new: Buildings are responsible for a significant proportion of energy consumption in Germany and worldwide. The energy-hungry building stock in particular is one of the main emitters of climate-damaging carbon dioxide. It is not only the recent natural disasters in Germany that have put the issue of climate protection at the center of public awareness. Voluntary commitment to more sustainable actions in companies and investments is increasingly demanded by buyers, tenants, but also owners. Environment, Social, Governance (ESG) are the buzzwords of the industry.

Along the building life cycle, there are numerous levers that can be turned toward more efficient use of energy and resources, especially with the help of digital tools. The awareness is there in the industry, the players are sensitized. You simply have to do it now - and see sustainability as an opportunity.

The Four Categories of Sustainability Measures in Buildings

The adjusting screws on the way to a CO2-neutral building can be divided into four categories, from which a package of measures can be put together for each portfolio.

Category 1: Intelligent Energy Procurement

Category one includes the final energy sources used in the building. Ecological electricity and gas tariffs are numerous. The future also belongs to flexible prices. When renewable generation in Germany is high, prices fall and purchasing energy becomes cheap. The building's own photovoltaic (PV) system also makes particular sense if as much of the electricity generated as possible can be consumed directly in the building itself. This category already reveals why sustainability is also an opportunity. If the building is intelligently managed so that a lot of energy is purchased at times when prices are low and the carbon footprint of the electricity mix is low, the saving of CO2 also becomes a saving of costs. For example, intelligent storage management and control of flexible loads enable this influence on energy purchases. Research has shown in many projects what is possible. Now the measures have to be put into practice.

Category 2: Structural Measures on the Building

The second and third categories concern the efficiency of energy conversion and use in the building. Here, the second category includes the constructive measures: Installation of thermal insulation, replacement of inefficient heat generators or installation of a new lighting system are just a few examples. The constructive measures are often a not inconsiderable investment, on the one hand for acquisition costs, and on the other hand due to the intervention in the operation of the building during retrofitting. The manufacturing industry in particular shies away from such interventions due to the risks of production downtimes.

Category 3: Minimally Invasive Electronic and Digital Upgrades

Therefore, although the third category is closely related to the second and the goal of greater efficiency in the building, it represents a much smaller investment. It includes measures that make the existing infrastructure more efficient. These measures can be achieved in particular through the existing building automation system and minimally invasive retrofits of electronic components. Rooms can be preconditioned to meet demand if the time of use can be determined from room booking systems and schedules. Flow temperatures for sluggish component activation can be adjusted based on the weather forecast so that rooms are not overheated. Once again, this shows why sustainable operation should be seen as an opportunity: if rooms are not overheated, they are more comfortable for their users. Tenant satisfaction increases, also because they are usually the ones who bear the costs for unnecessary energy losses.

Category 4: Compensation Measures

The fourth category includes compensation measures. Not all of the aforementioned measures can be sensibly implemented in every building. All the more reason, therefore, for a real estate portfolio that is being expanded with new buildings to pay attention to particularly future-proof planning of the new buildings in order to achieve a good climate balance for the entire portfolio. It is not surprising that the complexity of energy systems in new buildings in particular is increasing. Heat pumps, geothermal energy, a multitude of sensors and, in many cases, links between the systems are used, for example, the coupling of building automation and a mobile application for the building users, who can now operate the room automation with their smartphone. This complexity becomes manageable when the right tools are used. Digital operator and management tools in particular make it possible to keep an eye on the systems.

The four categories mentioned above each include ways to simultaneously increase sustainability, profitability, user satisfaction and ultimately the value of entire real estate portfolios. Sustainability, then, is not just a duty, whether self-imposed or required by policy such as the EU Taxonomy Regulation, but a catalyst for progress in the real estate industry.

Another lever exists in terms of influencing user behavior. By informing and sensitizing users, the CO2 emissions of buildings can also be influenced in the long term. Retrofittable feedback systems, for example in the form of an energy-saving display in the entrance area of modern office buildings, can point out incorrect user behavior and raise awareness of the fact that comfort is an energy service.

Digital Tools as the Basis for Sustainability Measures

The four categories all have one thing in common: they all require digital tools to make the measures applicable and, above all, operable. It is more and more about data. Only if you know the actual demand and consumption can you deduce where optimization and savings can be made. Transparency is the key word here. To become more sustainable, our buildings must become more transparent. So data collection and data availability are key to a more sustainable building. To ensure the necessary connectivity between the trades and to make the data from the individual systems available, there are various options. One simple and secure option is to establish connectivity via software that supports both field protocols and communication protocols suitable for secure transmission over the Internet. Installed on a central edge device, for example, this can then be connected to the building technology in a plug-and-play manner and then sends data, ideally in real time and redundantly secured, to a cloud platform where it is processed and visualized. If a manufacturer-independent cloud platform is used, the operating data can be enriched with additional external data, such as weather data or room booking systems, via open interfaces. This creates a holistic, transparent operating picture.

The next step after establishing data availability is data-based operational analysis. What often had to be laboriously evaluated manually in the past can now be filtered and analyzed using artificial intelligence. Based on the data analysis, the cloud platform derives recommendations for action to optimize operations and reduce consumption. In this way, operators and FM teams are supported, for example, in the form of an automatically generated action plan, so that this only has to be put into practice. The market offers a large number of solutions here, so that in case of doubt, the circumstances and requirements must be examined individually in order to decide on an appropriate offer. If you want to go one step further, you can rely on intelligent, cloud-based plant control, which uses artificial intelligence to automatically optimize plant operation in a self-learning manner. With the help of machine learning and mathematical optimization, the optimum operation of the plants is run at all times and the greatest possible energy savings are achieved in line with actual demand.

Conclusion: Acting Instead of Just Talking - Simply Making Buildings More Sustainable

The transformation from an energy-guzzling existing building to a modern, sustainable asset is within reach. A great deal can be achieved here with just a few measures and the support of digital systems.

Those who act now and take measures for more sustainable assets can still position themselves as pioneers in their industry and reap the benefits in the long term. With a comprehensive database and an efficient optimization tool, ESG guidelines can be achieved quickly and permanently. You just have to do it.