It’s 1994: I finish my Bachelor Degree in Construction Management and I can’t wait to do things differently in the construction sector–an industry plagued with inefficiency and declining productivity. It’s 1997: I graduate from Delft University with a degree in Real Estate Development and Project Management–with a focus on changing how we design, build and finance real estate. It’s 2002: I graduate again (last time, I promise), this time with a degree from Harvard University on the impact the Internet will have on real estate investment management. Three years later, I join Cisco because I believe they may be in the best position to make much-needed transformation come true. In 2008, we sign a first-of-its-kind collaboration agreement with EllisDon, a Canadian construction company that wants to build intelligent buildings. In 2010, we bring the Internet of Things in buildings to life as we collaborate with Delta Controls and launch the first-ever IP-based and PoE HVAC controller in the world. In 2015, we signed the first agreement with Philips Lighting, one of the companies Cisco is working with as part of the evolution of LED lighting to IP-based and PoE LED technology.
Today it’s 2016: It’s done. This is what it all was about. Brace yourself…we ARE changing the face of real estate.
Ever wondered what it looks like above your ceiling in your workplace?
The construction industry is one of the largest sectors in the world. The Global Construction 2030 report reveals that the volume of global construction output will grow by 85% to $15.5 trillion worldwide by 2030. This is annual spending on retrofitting and construction of new infrastructure, industrial installations, and buildings–the physical foundation for our society. Commercial and institutional real estate accounts for approximately one third of the global spending (residential development and renovations, infrastructure like roads and bridges, and industrial installations being the other 2/3).
Commercial and institutional buildings account for almost 25% of total energy consumption. A little over 30% of this energy is consumed by HVAC systems and 25% by lighting. Inefficiency in system utilization has shown that almost one third of all this energy is unnecessarily wasted. We have trillions of square feet of existing commercial real estate that needs to be heated, cooled and lit. Much of the existing real estate is reaching its functional obsolescence due to the rapid changing expectations of future users.
Today, we are retrofitting and building new commercial and institutional real estate at a rate of nearly $2.5 trillion per year and the percentage spending on systems and automation is growing at a rapid pace as buildings include more technical capabilities to accommodate changing needs and heightened required comfort and security. In this large and fragmented industry, more than a quarter of the construction spending is known to be squandered due to antiquated processes, inefficient design, unnecessary redundancy, and waste of resources.
The construction industry today, typically, still deploys more than 12 disparate networks to support the many digital systems such as security, media and signage, lighting, and HVAC, not to mention the additional networks that support the businesses and workforce that are end-users of the buildings. Each network infrastructure is most often proprietary and typically serves only one or few purposes – this is the legacy of the building automation industry. Building redundant and single-purposed infrastructure while not taking advantage of digital connected capabilities is no longer sustainable in today’s day and age.
Finally, the fourth industrial revolution is putting an end to this, and digital transformation has the ability to shake up one of the oldest and largest industries in the world.
Things in buildings become instrumented, connected, and increasingly intelligent. Software platforms allow for integration and interoperability of systems that historically weren’t able to communicate with one another. The convergence of these disparate systems is providing opportunities that reduce construction and operating cost; improve utilization and productivity for real estate; enhance physical and cyber-security of people, assets, and performance in buildings; reduce environmental footprints through the use of advanced analytics; and allow for personalized and customized experiences that appeal to workers from all generations. The Internet of Things in buildings is becoming table stakes, and the stakeholders in the industry are quickly embracing the business outcomes this innovation can generate.
With the latest technologies and building system innovations, and with help of an innovative and all-encompassing industry eco-system, Cisco has moved into what is now one of the most connected and digitally advanced buildings on earth. All systems are converged and integrated on a Digital Ready Network by Cisco that has future-proofed the building for generations to come. Applications and cutting-edge experiences can simply be programmed, deployed and launched across all building systems and functions.
Bringing “digital” into the built environment, and creating buildings that are hyper-connected, efficient, and technically astute to the needs of future users and tenants (while offering amazing workplaces for the more mature generations) may still sound daunting to those in the construction and real estate industry. Cisco has made it easy, as we launched the Digital Ceiling framework and set of solutions earlier this week at Cisco Live in Berlin. Read more on the solution, the expected business benefits, and architectures, diagrams, and specification language in the recent blogs from John Baekelmans (CTO of the smart building solutions) and Tony Shakib (Cisco VP of Internet of Things).
Remember the big game changers in the real estate industry: indoor plumbing (1829)–increased hygiene and eliminating need for the outhouse–, electrical lighting (1880)–bigger footprints away from windows–, electrical elevators (1882)–introducing high-rise construction–, modern electrical air conditioning (1902)–building comfort in colder climates–, CCTV video surveillance (1942)–increased building security–, and now hyper connected buildings with digital ceilings (2016)–moving from “bricks and mortar” to digital experiences–. This is the beginning of the Uberizing, AirBnB’ing, or Alibabing of the construction and real estate industry…and I promise…we haven’t seen anything yet.