Can The Sustainability Tech Boom Help Decarbonize Real Estate?
More companies are prioritizing sustainability tech but face challenges implementing it.
With carbon reduction deadlines looming and regulations tightening, more businesses are adopting fast-evolving technologies to measure, monitor and manage their emissions and guide future sustainability decisions.
Sustainability technologies will account for the biggest share of increased tech budgets for both occupiers and investors over the next three years, according to JLL’s survey of 1,000 companies. Over two-thirds of occupiers say tech that helps them to manage and report on their sustainability progress is a top budget priority.
Globally, 45% of occupiers and 62% of investors surveyed plan to adopt energy or emissions management tech in the coming year. Another 62% of investors are interested in tech that supports sustainability monitoring and reporting while evaluating climate risk in portfolio planning is an emerging area.
“Tech is a critical enabler for companies to better understand how they’re doing in terms of their net zero goals through from flagging risks in their portfolio to monitoring their day-to-day operations,” says Ramya Ravichandar, Vice President, Technology Platforms - Smart & Sustainable Buildings at JLL.
“There’s now a mature market to address companies’ sustainability reporting and management needs and ensure they can comply with incoming public disclosure regulations such as California’s new Climate Corporate Data Accountability Act.”
Implementing tech successfully
As more businesses invest in sustainability technologies across their real estate portfolio, they’re grappling with the practicalities of integrating them.
One hurdle to the implementation of these technologies is that many businesses lack a concrete roadmap.
“Successfully integrating these technologies into real estate is a challenge faced by companies in every industry,” says Yuehan Wang, Global Research Associate, Real Estate Technology at JLL. “Even large companies may lack a feasible technology strategy that addresses how to make procurement decisions, ensure the tech is correctly used by employees, and scale it across a portfolio.”
The number of companies adopting data science and modeling tools, which are used to analyze occupancy, energy use and financial costs across buildings and locations, for example, jumped by 14% to 40% between 2020 and 2023, JLL’s survey shows.
Yet a lack of standardized data across smart building systems remains a stumbling block for many businesses.
To extract accurate insights about their real estate’s carbon footprint, companies need to merge information from various systems, from HVAC (heating, ventilation and cooling) to waste management. However, these systems are often siloed, making it difficult to integrate data, while companies may lack the tools or expertise to gather and analyze building data effectively.
“The hardest problem for real estate to overcome is the many data silos that must be integrated for buildings to operate efficiently, especially when some buildings maybe 50 or 60 years old with outdated systems,” says Ravichandar.
Driving value from tech investments
Companies might make up skillset gaps by increasing collaborations with external partners to deliver on their technology vision, a strategy adopted by over 60% of JLL survey respondents.
However, to drive value from sustainability tech investments, companies need to clarify their objectives and how they will deliver on their targets, says Wang.
“Businesses should define what they need to achieve with sustainability technology, set benchmarks for success, and understand which products on the market are best suited to their operations and goals,” she adds.
Training is also paramount to ensure different teams correctly use and benefit from sustainability tech.
“Sustainability tech has to reach everyone from the boiler room to the boardroom,” says Ravichandar. C-suite executives for example, will focus on net zero progress while landlords may concentrate on tenant satisfaction and facilities teams want more effective day-to-day operations.
For companies that get it right, there are substantial boons to operating costs and environmental impact.
Using JLL’s AI-powered platform Hank, which dynamically optimizes HVAC systems based on real-time user requirements, a leading UK investment management firm achieved an ROI of 708% and cut energy use by 59% in their 11,600 square meter office building. This reduced carbon emissions by up to 500 metric tons per year.
Another company in financial services ran data analysis to identify energy-saving initiatives, using of data visualizations to support clearer reporting and better decision-making. These measures contributed to savings of US $664,158 in a single building that was flagged as having high energy consumption.
Such measures can equally bring additional benefits through areas such as tenant wellbeing.
“Sustainability is not stand-alone. Optimizing a building also positively impacts the employee experience and workforce health and wellbeing, creating opportunities for businesses to align multiple corporate objectives when they invest in sustainability,” says Wang.
The role of AI
Right now, AI is in its infancy in real estate, but as it continues to evolve, it will play an increasingly pivotal role in tackling the sizeable carbon footprint of real estate. Generative AI could catalyze the integration of sustainability technologies into both buildings and operational workflows, for example, by making these technologies more accessible through user-friendly interfaces that help people understand and engage with data insights.
This could accelerate the critical smart building transformation that underpins more sustainable real estate.
“In recent years, building owners have been experimenting with sensors, digital infrastructure and other smart tech. AI capabilities could bring about the tipping point by making it easier and more efficient to tap the benefits of these technologies,” says Wang.
This, in turn, would have big implications for the speed and scope of real estate’s decarbonization.
“Technology is, quite simply, core to real estate’s decarbonization,” says Ravichandar. “Today’s technology is already making a difference but as it develops and becomes integral to how buildings function, it will lower real estate’s emissions on a macro scale.”