Whether it be student accommodation, an ultra-modern company headquarters or the latest bright and shiny airport, buildings are becoming more efficient, convenient and comfortable places to live, work and travel.

But it is not the use of the latest technology or the installation of innovative gadgets that is delivering change. According to research conducted by Osborne Clarke and The Lawyer Research Service buildings are becoming ‘smarter’ by simply better utilising data that often already exists.

Companies are exploring how their buildings can improve for a number of reasons. For large corporations, a ‘smart’ office headquarters is now essential to retain top talent and improve workplace productivity. For sophisticated real estate companies the implementation of smart practices enables higher rents to be charged.

Screen Shot 2016-09-08 at 16.25.47There are also environmental reasons. According to the Climate Change Commission, buildings accounted for 37 per cent of total UK greenhouse gas emissions in 2012 (the most recent year for which this data is available). Improving the energy-efficiency of buildings is therefore crucial if countries are to meet their emissions reduction targets.

Utilising data

How can data be leveraged in practice to improve a building? Bruno Gardner, managing director at Low Carbon Workplace, offers one example.

“Data can be used to drive behaviour change to ensure buildings are used better,” he says. “We do this by installing lots of energy sub-meters that gather granular data on how buildings are consuming energy. We also use occupancy sensors to gather data on how buildings are being used. These anonymously but accurately monitor how many people are in the building at any time. Combining these two datasets enables us to identify opportunities for our tenants to save energy. It’s not rocket science but it’s powerful nonetheless.”

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Ian Wilkinson, Osborne Clarke

But smart buildings are not simply those with better working or living conditions. They are also buildings that utilise their assets for commercial purposes. Indeed, clever building owners are exploring ways to monetise information collected about their buildings’ inhabitants.

“In principle, you can monetise building occupant information because this information is an asset,” says Rainer Nonnengässer, managing director of MPC Micro Living Development, a developer of student accommodation in Germany. “Having 3,000 young tenants all aged between 18 and 24 that are all in higher education could be a reference base for companies targeting that group to better test their products and research their new products.

“There are hurdles relating to data protection about this in Germany. But as long as they provide the data themselves or agree that it can be used for marketing purposes, it’s something that is highly relevant for technology, leisure, sport, retail and other companies.”

This is perhaps a niche example, but it’s easy to see how the wealth of information collected about human activity in buildings, be that how people work, shop or live, could be highly valuable.

The research identified many challenges to doing this. Number one on the agenda for building owners is whether this data can be monetised in a way that is compliant with data protection and privacy laws. Second is the reputational
risk around selling personal information.

In 10 years the data around the people that use the services in the building will be more valuable than the bricks and mortar”
Ian Wilkinson, Osborne Clarke

However, this risk can be mitigated if managed with care.

“Building owners and investors increasingly think that in 10 years the data around all the people that use the services in the building will be more valuable than the actual bricks and mortar,” explains Ian Wilkinson, a partner at Osborne Clarke. “Property investors are not currently engaged with this but they really should be. This is partly because they perceive there is a reputational risk, a bit like when investors were hesitant to invest in private rental properties because of the reputational impact of potentially having to evict a granny from her house. But they got around this by having great property management. And actually not doing anything with this data or letting it fall into the wrong hands could be more of a risk. Data needs to be treated as an asset, not a risk.”

Silo mentality – obstructing innovation

The research also explored the obstacles to implementing smart initiatives in buildings. The most frequently cited barrier was that decision-making power resides in isolated silos, resulting in the safest and least innovative solution being procured. A more joined-up approach might result in a more efficient solution. The most obvious example of this is in public sector procurement.

“One of the most significant challenges is the way that public procurement is typically structured,” explained Robin Daniels, managing director at Redpill Group. “During someone’s commute to work, for example, they will touch several aspects of city infrastructure and services along the way, each of which is likely to be the responsibility of a different city council department. A number of these services are increasingly likely to be outsourced.

“To avoid the deployment of unintegrated point solutions there needs to be better horizontal integration within public procurement so that when the call goes out for a specific piece of infrastructure it is delivered in the context of the broader citizen journey or experience.”

“We install lots of energy sub-meters that gather granular data on how buildings are consuming energy”
Bruno Gardner, Low Carbon Workplace

The silo mentality is not just a feature of the public sector. The development and construction of major infrastructure projects, from transport hubs to skyscrapers, involves a series of architects, contractors and suppliers, each of which have the opportunity to deviate from introducing innovative smart technology and designs, even if this has been specified at the outset.

Strong project management is therefore needed to ensure that smart aspects of buildings are not lost during construction.

“Energy-efficient products and services might not be specified in procurement packages for all sorts of reasons,” confirms Gardner. “It could be because people want to stick with what they know or perhaps aesthetic requirements trump everything else.

“And then there’s the whole procurement chain, which means that even if energy-efficient products and services are specified initially, there are multiple points where whoever is taking the decision can revert to what they know.”

Our panel of interviewees also identified obstructive procurement departments at government organisations and large corporations as a barrier to smart technology being implemented, even if the wider organisation is keen to implement smart systems.

“Procurement is highly process-driven and most large corporates have a set procurement methodology that requires certain criteria to be fulfilled to be eligible for a procurement tender or process,” explains Dominic Wilson, managing partner at Pi Labs. “Some early-stage companies might, for whatever reason, fall outside that envelope despite having absolutely the right product at that time.”

Case study: the redevelopment of King’s Cross

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Simon Hobday, Osborne Clarke

Situated in North London, the renovated and expanded King’s Cross station includes the new £550m western concourse, which houses shops, restaurants and large departure boards.

The development also features a newly created 7,000sq m square in front of the station containing upgraded tube entrances covered by a glass canopy plus granite benches, lighting, trees and areas dedicated to art.

The station redevelopment has been the catalyst for wider regeneration in the King’s Cross area. As part of this broader scheme some 67 acres of brownfield land is being converted into offices, retail space and 2,000 homes.

Why is this redevelopment a good example of a smart built environment? For a start, the building utilises renewable energy. Solar panels that generate around 10 per cent of the station’s energy requirements were installed on the 2,500sq m renovated train shed roof. A combined heat and power (CHP) plant will also provide locally generated power to businesses and homes on the site.

But as Ian Wilkinson, a partner at Osborne Clarke, explains, the redevelopment is ‘smart’ for many more reasons. “King’s Cross is not just smart because of the CHP component, it’s also the way the buildings are configured to draw people into different areas and allow them to pass each other,” he said. “It’s about how you can use your bank card to travel there, hire a bike and pay for everything in the station. With one card you can do everything. Locating the bike docking station in the main square is also smart. So it’s smart because of the overall design and joined-up thinking.”

Many stakeholders were involved in the redevelopment of King’s Cross. The land is jointly owned by Argent King’s Cross Limited Partnership, itself a partnership between property developer Argent and Hermes Real Estate, and pension fund AustralianSuper. There were three master planners, four primary contractors and more than 20 architects and design partners.

The diverse interest groups involved in the project, each with their own priorities, meant there was potential for smart aspects of the project to be watered down. But a strong governance structure where decision-making power resided with a small group meant this was not the case with the King’s Cross redevelopment.

“A core team ended up controlling key decisions over the land rather than a series of organisations,” explains Simon Hobday, a partner at Osborne Clarke. “This meant there was an integrated approach rather than atomised thinking, which doesn’t fit into the wider community. It’s dull but governance is crucial. People don’t get excited by this, but it’s critical to get this to work, whether it be a new city, a redevelopment or a single building. You need to get the right combination of clarity of purpose, the principles that underline it, your underlying design specifications and requirements early enough so that it becomes part of the DNA of the development.”

A full copy of the report can be downloaded on the Osborne Clarke smart cities microsite.

If you are interested in commissioning a piece of research with The Lawyer please contact Mark Philbrick on 0207 970 4658 for bespoke thought leadership reports and Richard Edwards on 0207 970 4672 for bespoke data projects.