Smart buildings – imagine sprawling skyscrapers lined up along the central business districts, packed with cutting-edge technologies that operate at an unfettering pace to optimise the operational efficiency of their systems. Technological advancements have made them a reality, with just one exception: small and medium-sized buildings.
Energy savings must be top-of-mind for property and real estate owners these days. As COP26 draws close, the pressure they face to transform their portfolio into smarter, greener buildings mounts ever stronger amid calls by the United Nations (UN) for the need to make tangible progress towards the UN Sustainable Development Goals.
For those with beef in the game, many have welcomed such calls, and for good reason. Building owners and managers are cognisant of the great deal of money being spent on heating, ventilation and air conditioning, or HVAC, and lighting within their facilities – energy expenditures they can cut back on by assuming more control over usage. Climate change was simply the last straw.
Indeed, the smart buildings market has grown quickly in line with the hike in demand. In the US alone, revenue from smart building projects is predicted to rise from $731.9M in 2018 to $6.78B in 2023. As such, most building owners and managers can now look to a hefty pool of vendors and integrate a customisable, off-the-shelf solution to good effect, without much difficulty. But this remains a luxury not yet available to a sizeable number of their counterparts – those who operate predominantly small and medium-sized buildings.
As in-market solutions are primarily built for large-scale, complex buildings (read: sprawling skyscrapers), they do not adapt well to the use cases presented by small and medium-sized buildings, which often comes with a different set of considerations. One of these will not surprise you: costs.
More importantly, it is easy to forget that smaller buildings – in macro terms – comprise the majority of existing commercial real estate. In fact, a US study conducted in 2017 estimated that 98% of commercial buildings belong in the small-medium category (100,000 square feet or smaller), comprising 65% of cumulative floor area.
To get a clearer sense of the market gap in question, we had the opportunity to speak with and garner insights from Soner Hacıhaliloğlu, the co-founder and CEO of INESS, a US-based startup currently participating in our Deeptech Accelerator programme.