The Right Metrics for Successful Building Operations with Cloud-Based Technology
“Smart” buildings are the only path forward for reimagining the commercial real estate industry. They are defined as spaces with purpose, having cutting edge technology that provide asset owners and managers with a wealth of insights to optimize building operations and improve tenant experiences. Cloud-based technology is a game changer, making it easier to collect, process, and analyze this data in real-time. But with so much data available, all data is not created equal. How do you know what metrics to use to measure the success of your building operations?
Well not all data is “smart.” Not all metrics matter.
Let’s explore the metrics that cloud-based technology can measure in smart buildings to help asset owners and managers optimize operations. It’s equally important to identify the insignificant metrics that are just noise and not relevant for decision making. We’ll explain how measuring sustainability metrics like air quality and space utilization can help asset owners and managers be more profitable in the long term.
Good cloud-based technology should measure a wide range of metrics in smart buildings. This includes buildings systems, sensors, devices installed, and human actions. The most sought-after metrics are occupancy, visitors, card swipes and when integrated properly with other technology, elevator calls, energy consumption, parking use and more. So when these metrics are combined, providing context to one another, they drive real power. Dollars are the ultimate KPI and how profitability is currently measured may not necessarily mean the building is operating as efficiently as possible.
Maintaining a holistic view of building and portfolio operations is critical, and building owners and operators are often looking at vanity metrics at best. At worst, they are using outdated or static metrics.
Smart buildings require a new set of metrics that go beyond traditional building performance metrics based on fragmented single system data. Failing to adapt to new metrics can lead to inaccurate measurements of building operations.
What’s Measured: Employee and Tenant Surveys
The well-meaning employee engagement survey aims to capture the voice of the tenant, demonstrate “we hear you,” and jump into action. However, these surveys are capturing ideal case intentions, not real time usage. What a person says they are interested in and what they use within the building can be two very different things. Of course, if offered, people would love an in-house high-definition theater. However, how many will use it?
Measure This: Occupancy and Space Utilization
With the help of cloud-based technology, building owners and managers can track occupancy levels in real-time. This data not only helps with space planning and space adaptation but also allows for more efficient use of resources (energy, labor, and water) and other investments. With better access to data, management team can enhance their benchmarks with greater precision based on the real-time context of the building. According to FM Pulse’s survey, best practice operating standards in some facility types is staffing 1 person per 50,000 square feet. But these standards were put in place when building were fully occupied. How does your building adapt to how many people are actually coming into buildings? Buildings utilizing digital tools that can monitor occupancy help building managers understand their operational efficiency data in a broader way. For example, our data reports that buildings currently are staffing 1 person to 190,000 square feet and 1 person per 15 in-office occupiers. Now that’s a head scratcher. Since people are not coming to the buildings full time, and more of a hybrid basis, the staffing model is something that owners should explore. What is the right efficiency? Measuring this efficiency relative to square feet and people in the building is more precise and actionable operating metrics, but it is rarely considered due to lack of access to the right data. With fewer people coming into buildings, higher technology adoption enables the development of new standards and smarter operating guidance for building managers.
Diving deeper, our data showed of buildings with reservable amenities likerooftop decks, 90% are not being utilized. That is a loss of profitability of space utilization and sunk capital expense. On the flip side, we’ve seen 75% adoption of digital amenities across our portfolio, which is a faster, low touch engagement that delivers more data and insights. See what parts of the building are being utilized consistently and make incremental changes, monitor the adoption, and pivot away or stay the course.
What’s Measured: Energy Usage
While energy efficiency is extremely important, it’s not the only metric that matters. Focusing solely on energy usage can lead to overlooking the bigger picture of sustainability and emissions related to space operations.
Measure This: Sustainability Metrics
Data that can drive deeper, more holistic insights about a building’s operations need to include metrics like air quality and energy efficiency and space usage.
Cloud-based technology can monitor air quality sensors that measure CO2 levels, humidity, and VOCs (volatile organic compounds). This data can provide insights into air quality issues (IAQ) and help property managers optimize HVAC systems. Indoor air quality has become an important metric to measure in smart buildings as it directly impacts tenant well-being and productivity. Even in buildings that have the best mechanical equipment, there are still pollutant spikes driven by a variety of spaces. In a matter of 4.8 minutes, IAQ can be optimized to reduce pollutant volume by 52% in one day.
Monitoring energy efficiency in real-time and alerting property managers if usage exceeds predetermined thresholds is table stakes . As ESG (Environmental Social Governance) reporting becomes more mainstream across all industries and society, having metrics that demonstrate commitment to those efforts are attractive to potential tenants and their employees as well as institutional investors. They influence key factors like tenant comfort and safety, and other hard metrics like acquisition, satisfaction, and retention. In fact, vacancy is 3.8% lower on average and 2.7% higher per sf rent for smart buildings, like those with WiredScore certification, for which Cohesion is an accredited solution. Sustainable buildings are often more energy efficient, which can lead to reduced energy costs over time. Plus, improved indoor air quality can improve employee productivity and reduce absenteeism, which can cost companies up to $2,945 per person per year. As ESG requirements become more regulated and enforced in local and state governments, measuring sustainability metrics can help ensure that your building is compliant with relevant regulations and avoid fines.
Prioritize What Matters:
To measure profitability with key performance indicators available through cloud-based building technology, here are a few steps to consider:
- Define your goals: Identify your key performance indicators (KPIs) and establish benchmarks for success based on your goals. For example, you may want to focus on improving indoor air quality by 20% over the next year.
- Align KPIs with tenant needs: Ensure that your KPIs align with tenant needs and prioritize tenant satisfaction. Some tenants prioritize wellness, so align occupancy with amenity usage.
- Analyze trends: Use cloud-based technology to analyze trends in your KPIs and identify areas for improvement. Make data-driven decisions about where to invest resources for long term returns versus instant gratification deliverables with high operational costs.
The right insights gleaned from the right data can mean a significant difference in how your buildings are managed and occupied, capturing more share and profit than has traditionally been left on the table. By using cloud-based technology, asset owners and managers can measure a wide range of metrics to optimize building operations, improve tenant experiences, and increase profitability. But most importantly, adapting to new KPIs that more accurately measure modern operational standards will differentiate smart, thriving portfolios versus dumb assets.
Sources: Cohesion proprietary data September 2023, Kaiser Permanente October 2022, WiredScore December 2022, Facilities Management Pulse Survey 2017