Can you imagine buying a new car without having reliable information about its mileage or fuel efficiency? It sounds laughable, especially with gasoline skirting along at $4 per gallon. Yet this situation faces practically anyone buying a home or commercial building today. For most U.S. real estate, there’s no “mileage sticker” detailing a building’s energy use.
This fall, New York City will become the lead U.S. municipality to roll out new rules aimed at gathering data on buildings.
New York’s “Greener, Greater Buildings Plan” requires annual energy efficiency benchmarking that will be disclosed to the public, and mandates a set of cost-effective energy efficiency upgrades and evaluations of the city’s largest buildings, both public and private.
By focusing on 16,000 of the city’s largest properties, which constitute roughly half of citywide square footage, it is claimed that the Greener Greater Buildings Plan will reduce citywide energy costs by $700 million annually by 2030 and help to create roughly 17,800 construction-related jobs over ten years.
Dozens of U.S. municipalities and states are set to follow New York’s lead, including San Francisco, Seattle, Austin, Texas and Washington D.C. These disclosure and energy rating programs will collect and disclose data about building performance. Simply by making this information more transparent, early examples suggest, higher-efficiency buildings will appreciate in value.
The coming wave of performance data is a kind of raw material that smart landlords, tenants, and energy services companies will be able to mine. But data has little value without understanding. Computerized analytics will help market players compare and crunch building performance data to make more profitable decisions, from better judgments about the return on efficiency investments, to revealing opportunities about mis-priced properties.
The push to improve disclosure of building performance has gained momentum from a growing body of evidence showing that high performance buildings deliver better returns. A 2009 study by the University of San Diego found that Energy Star buildings — which rank among the most efficient in a pool of similar buildings — attracted 13 percent higher rental rates than the market average, with vacancy rates running about 3.5 percent lower.
Turning data into information
The building industry, while no stranger to technology, hasn’t yet faced the sort of data deluge that will emerge as buildings become smarter and start transmitting more information about their performance. In New York, for example, 16,000 buildings are slated to begin collecting performance data. Automating the collection of this deluge of bits, and converting those bits into analysis, offer other opportunities for efficiency gains.
The technology and infrastructure for this sort of conversion is mature. The real estate sector, by adding sensors and interconnecting its building systems and buildings is following a trail blazed by the airlines and banking sectors decades earlier, and can benefit from plummeting costs of technology.
Cities beginning to record information from their buildings will benefit from decades worth of technology improvements, from cheaper computing power to better software infrastructure. Most of these disclosure efforts, for example, are collecting data using a set of standards devised by the DOE’s Energy Star program. And of course, the Internet provides low-cost way to transmit this data. By tapping into public pools of building performance data, it’s only a matter of time before new business models emerge: from benchmarking real estate, to rapid analysis of efficiency investment potentials, and more.
The marriage of improved building performance disclosure with smarter computing promises to radically improve the way cities operate.
Dr. Jane L. Snowdon is a Senior Manager and Research Staff Member in the Industry Solutions and Emerging Business Department at the IBM T. J. Watson Research Center in Yorktown Heights, NY. In this role, she is responsible for developing strategies and driving research efforts worldwide to create innovative solutions for smarter buildings.