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Harnessing Technology and AI for Sustainable Commercial Real Estate (CRE) Practices

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In an era defined by climate change, resource scarcity, and social responsibility, the integration of Environmental, Social, and Governance (ESG) principles has become increasingly imperative across all sectors of the economy. Within the realm of Commercial Real Estate (CRE), the adoption of sustainable practices also presents compelling financial opportunities and risk mitigation strategies. In this blog, we explore the role of technology and Artificial Intelligence (AI) in advancing ESG objectives within the CRE industry.

 

Understanding ESG in CRE

ESG considerations in CRE encompass a broad spectrum of factors, including energy efficiency, carbon emissions, waste reduction, occupant health and well-being, community engagement, diversity, equity, and corporate governance. These considerations are not only relevant for new construction projects but also for existing buildings undergoing renovation or retrofitting efforts. By prioritizing ESG principles, CRE stakeholders can reduce operational costs, enhance asset value, attract tenants, and foster long-term sustainability.

 

Leveraging Technology for Sustainable Development

Technology and AI play a pivotal role in driving sustainability initiatives within the CRE sector. From building design and construction to operations and maintenance, technology offers innovative solutions to optimize resource efficiency, minimize environmental impact, and enhance occupant comfort and productivity. Let’s explore some key areas where technology and AI are transforming sustainable practices in CRE:

 

Building Design and Simulation: AI-powered design software and simulation tools enable architects and engineers to optimize building layouts, facades, and systems for energy efficiency, daylighting, and thermal comfort. By simulating various design scenarios and performance metrics, designers can identify opportunities to reduce energy consumption, minimize carbon emissions, and improve indoor air quality while maximizing natural light and ventilation.

 

Smart Building Automation: IoT sensors, smart meters, and building management systems (BMS) enable real-time monitoring and control of energy usage, HVAC systems, lighting, and water consumption. AI algorithms analyze data streams to identify patterns, anomalies, and optimization opportunities, allowing building operators to fine-tune performance, predict maintenance needs, and optimize resource allocation based on occupancy patterns, weather conditions, and utility tariffs.

 

Energy Management and Renewable Integration: AI-driven energy management platforms help CRE owners and operators track, analyze, and optimize energy usage across their portfolios. By integrating renewable energy sources such as solar panels, wind turbines, and geothermal systems, buildings can reduce reliance on fossil fuels, lower utility bills, and contribute to decarbonization efforts. AI algorithms optimize energy generation, storage, and distribution, ensuring seamless integration with grid systems and maximizing return on investment (ROI) for renewable energy assets.

 

Predictive Maintenance and Asset Management: AI-powered predictive maintenance solutions leverage machine learning algorithms to analyze historical data, sensor readings, and equipment performance metrics to anticipate equipment failures, optimize maintenance schedules, and extend asset lifecycles. By proactively addressing maintenance issues, CRE stakeholders can minimize downtime, reduce repair costs, and improve tenant satisfaction while maximizing operational efficiency and asset value.

 

Occupant Engagement and Wellness: Technology-enabled wellness platforms and occupant engagement apps empower building occupants to monitor and manage their environmental comfort, productivity, and well-being. From indoor air quality sensors and ergonomic workstations to personalized wellness programs and virtual fitness classes, these solutions enhance occupant satisfaction, retention, and productivity while promoting a culture of health and wellness within the built environment.

 

Overcoming Challenges and Embracing Opportunities

While the integration of technology and AI holds immense potential for advancing sustainability in CRE, it also presents unique challenges and considerations. Data privacy concerns, cybersecurity risks, interoperability issues, and upfront costs are among the key barriers to adoption that CRE stakeholders must navigate. Moreover, addressing systemic issues such as social equity, affordable housing, and community resilience requires holistic approaches that go beyond technological solutions alone.

 

However, despite these challenges, the momentum towards sustainable development in CRE continues to accelerate. Forward-thinking developers, investors, and occupiers recognize the inherent value of integrating ESG principles into their business models and investment strategies. Governments, regulatory bodies, and industry associations are also implementing policies, standards, and certifications to incentivize sustainable practices and foster market transformation.

 

Conclusion

In conclusion, technology and AI have emerged as powerful enablers of sustainable development within the CRE industry. By leveraging data-driven insights, automation, and predictive analytics, CRE stakeholders can optimize resource efficiency, enhance operational performance, and mitigate environmental risks while delivering superior experiences for occupants, investors, and communities. As we navigate the complexities of a rapidly changing world, the integration of ESG principles and technological innovation will be instrumental in shaping the future of commercial real estate.

Environment Earth Day In the hands holding green earth on Bokeh green Background, Saving environment, and environmentally sustainable. Save Earth. Concept of the Environment World Earth Day

Commercial, Industrial Building Planning Highest In Over A Decade

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Good read from Ted Knutson at Globest.com

““The signals provided by the Dodge Momentum Index continue to suggest that construction activity will improve in 2022—and, more importantly, that this growth will be more balanced than what was seen in 2021.”

Planning for commercial and industrial buildings reached 13-year and 14-year highs, respectively in the Dodge Momentum Index.

Throughout the year, the overall Momentum Index increased 23%, the strongest annual gain since 2005 despite the lingering risks of COVID-19 and low demand for some types of nonresidential buildings, said the Dodge Construction Network, which prepares the index.

“The signals provided by the Dodge Momentum Index continue to suggest that construction activity will improve in 2022—and, more importantly, that this growth will be more balanced than what was seen in 2021. However, the ever-present risks of the pandemic and tight labor force will work to counter these trends, leading to moderate growth over the new year,” DCN forecasted.

December, though, saw some backsliding.

The Index fell 3% in the last month of the year to 166.4 (2000=100), down from the revised November reading of 170.7 with commercial planning down 4%, and institutional planning slipping 1%.

In December, a total of 21 projects with a value of $100 million or more entered planning, according to DCN.

The firm said the leading commercial projects were the $300 million OKANA Resort in Oklahoma City, OK, and the $200 million Project Tarpon Amazon distribution center in Daytona Beach, FL with the leading institutional projects being the $250 million University of Michigan Detroit Center for Innovation in Detroit, MI, and a $150 million laboratory in Lexington, MA.

The December decline followed a falloff in November, the company’s research showed.

Total construction starts fell 14% in November to a seasonally adjusted annual rate of $867.8 billion.

The short-term outlook remains cloudy due to continued escalation in material prices and labor shortages, said Richard Branch, chief economist for Dodge Construction Network.

He added that while construction should see some reprieve in 2022, these challenges will restrain the industry’s ability to fully capitalize on both the large number of projects in planning and funding resulting from the infrastructure package. The result will be moderate growth in construction starts over the near-term, according to the report.

Nonbuilding and nonresidential building starts bore the brunt of November’s decline, falling 30% and 21%, respectively, after seeing sharp increases in October as three large projects broke ground. Residential starts gained a modest 3%. Without October’s large projects, total construction starts in November would have increased by 5%.”

Facebook to build $1 billion data center in eastern Henrico County

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Facebook to build $1 billion data center in eastern Henrico County

Facebook Inc., the California-based social media and networking giant, will build a $1 billion data center in eastern Henrico County, according to multiple sources familiar with the project.

More details on Facebook’s $1 billion data center in Henrico County

The project would create thousands of jobs during construction and more than 100 full-time jobs in a data center of more than 970,000 square feet that represents the first phase of the company’s plans for property in White Oak Technology Park, the sources said.

Gov. Terry McAuliffe will make the announcement on Thursday at the state Capitol with state and local lawmakers.

The technology park, about 4 miles from Richmond International Airport, is home to a 1.3 million-square-foot data center operated by QTS, which acquired the former Qimonda computer chip plant in 2010.

The park, now owned by the Henrico Economic Development Authority, was created in 1996 for a $1.5 billion joint venture by Motorola Inc. and Siemens AG to build a plant to manufacture memory chips for semiconductors.

The plant became part of Infineon Technologies and then Qimonda, but closed in early 2009, laying off thousands of workers.

The Henrico Planning Commission voted last month to approve a development plan for a data center at White Oak of up to 2.5 million square feet, but the details were shrouded under the code name Project Echo.

It would be built in phases, with the first being a 1 million-square-foot data center on a 328-acre site on the northeastern and northwestern corners of the intersection of Technology Boulevard and Portugee Road, the Richmond Times-Dispatch reported in mid-September.

Future phases would include three buildings totaling 1.5 million square feet.

The planning documents do not indicate who the user of the facility would be for Project Echo. The developer is listed as Scout Development LLC and the project engineer is Northern Virginia-based Christopher Consultants.

The occupant would have 100 employees and contractors in the first phase and about 240 at full build-out, according to Henrico planners.

The county has taken steps this year to attract other data centers by dramatically reducing its tax rate on computers and equipment related to data centers, which store and process vast amounts of digital information.

In April, the Board of Supervisors cut the tax rate by nearly 90 percent — from $3.50 per $100 of assessed value to just 40 cents per $100. The new rate went into effect July 1

mmartz@timesdispatch.com

(804) 649-6964

Staff writer John Reid Blackwell contributed to this report.

NAI Dominion is joining other great sponsors at the Chesapeake Wine Festival.

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Looking forward to joining other great sponsors for the 2017 Chesapeake Wine Festival.  Organized by the Chesapeake Rotary Club for local charities, giving back over $1.2 Million in 6 years.  Come out and join us on October 14, 2017 – Chesapeake City Park.

Do Designations Matter When Choosing A Commercial Real Estate Broker?

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Chad Griffiths, a partner with NAI Commercial Real Estate in Edmonton, Canada, looks at the benefits of obtaining a CCIM or SIOR designation.  Many Agents and Brokers in NAI Dominion and our affiliate firms in NAI Global have one or both designations.  We would highly recommend working towards obtaining the designation right for you as it will only help you and your clients and customers.

“Commercial real estate transactions are some of the most important deals that a person or business can make. Finding the right commercial real estate can make or break a business venture. That is why people want the best professional commercial real estate broker available to guide them through the process.

But how can you separate the best professional real estate brokers from the rest?

Degrees And Designations

Most other important professions have a degree or designation that any practitioner is required to have by law. Lawyers have the J.D., doctors the M.D., engineers the P.Eng and so on. Yet there are no professional designations that are required to practice as a commercial real estate broker.

Fortunately, commercial real estate broker associations have created professional designations that allow you to identify those practitioners who have gone above and beyond to become masters of their craft. While anyone who has met the necessary licensing requirements for their jurisdiction can become a commercial real estate broker, these professional designations help the best stand out from the rest and give you the peace of mind that you have found someone that you can trust to guide you through these important decisions.

What’s In A Degree Anyway?

A degree or professional designation signifies that the holder has the necessary education and experience to safely practice their profession. These designations are designed by professional associations to represent at least a bare minimum of knowledge and experience that every practitioner needs to do their job effectively and to a minimum standard of performance expected by their professional peers. Anyone who meets these standards can be relied upon to make the right decisions when practicing their craft.

Commercial real estate designations signify knowledge in relevant areas of law and finance, as well as the customs and ethics of the commercial real estate industry. These professional designations also signify a commitment to ongoing education and regular participation in the professional community and industry events.”

Tips When Negotiating Your Commercial Lease

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When you get to the contract stage of the office space leasing process, you should never be content to settle with the document that your soon-to-be-landlord presents you as-is. Negotiation is expected, and it’s possible to leave the table with a much more favorable deal if you approach things correctly. Following these tips will help to give you an edge during negotiations.

Have an Ally at the Table

A tenant rep is a major asset during lease negotiations. With their knowledge of the market, they know what’s fair and what’s not and can provide valuable input during talks. Best of all, their services won’t cost you a dime, as your landlord pays their fees.

Envision What You Want

You can’t negotiate effectively if you don’t know what you’re fighting for. Before you head into talks, carefully peruse the contract and have key members of your team such as your tenant rep, attorney and accountant do the same. Identify areas of the contract that need to be changed for the document to be acceptable. Then, create a prioritized list of things that you would ideally like to have added, changed or eliminated. Be prepared to give up less important items.

Know What’s Negotiable

Knowing where there is flexibility in contracts can help you create the aforementioned wish list. The following are some of the most common points of negotiation for commercial leases:

  1. Base rent rates. You can often negotiate a lower rental rate by extending the length of your lease.
  2. Tenant improvement allowances. Landlords may be willing to spend more on improvements to customize or enhance your space, especially if they will increase the value of their property.
  3. Rent increase caps. If there is no cap on the amount that your rent can increase at renewal, argue for one. You can also ask to have an existing cap set lower, especially if it is out of line with the average increase rate in your area.
  4. Right to sublease. Having the ability to lease all or part of your space to another company can help to future-proof your lease.
  5. Multiplying factor. Ask the landlord to explain how the multiplying factor is calculated. This figure determines how you are charged rent for the shared square footage in the building, and it can often be negotiated.
  6. Rights of first refusal and first offer. Adding these clauses to your lease ensures that you’ll have a chance to lease any new space in the building that becomes available and that you will have the opportunity to renew your lease before your landlord offers it to a new tenant.

Do Your Homework

Having facts and figures about the commercial real estate market in your area at the ready can give you leverage at the negotiating table. Find out what the average rental rate is for your area and what types of terms similar companies are given. It’s also helpful to know what amenities and perks competitor buildings offer.

Don Catalano of REoptimizer outlined these tips for negotiating a commercial lease.

 

Why NAI Dominion and NAI Global?

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I am often asked why we partnered with NAI Global to expand out brokerage services. The link below helps to outline a few of the reason we partnered with NAI Global to grow our opportunities and success for our clients, customers, and tenants.

Check out the link below and let us know what you think.

NAI Dominion – NAI Global Opportunity Video

Why Use a Tenant Broker

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Don Catalano of REoptimizer recently discussed the benefits of using a Tenant Broker.

You have a lot to do when you’re searching for commercial real estate to rent. The last thing you want to do is add something else to the list, but finding and enlisting the help of a tenant rep broker isn’t something you should skip. Tenant rep brokers are invaluable when you’re securing office space to rent. Here are just a few of the reasons why:

1.  You Don’t Want to Pay More Than You Have to.

Getting the perfect office space isn’t enough. You need to get the perfect office at the best possible price. Having a tenant rep broker by your side can ensure that you do. With their knowledge of the market in your area, brokers can tell you when a deal is fair, overpriced or a steal. They can also know best how to negotiate with landlords to improve terms and rental rates. As a result, you’re sure to get the space you want at the right price.

2.  You Might Only Think You Know What You Need.

You likely have a vision of what you’re looking for when it comes to your new office space, but are you certain that the office you’re envisioning is the best thing for you? Tenant rep brokers are experts in all things commercial real estate and can help you consider what your true needs are. Brokers think of things that prospective tenants do not and no know how to balance potential future needs with current ones to ensure that an office continues to be ideal for tenants.

3.  Commercial Real Estate Is Complex.

When you’re leasing office space, you’ll be introduced to a whole new lexicon of complicated terms. Not fully understanding what they mean puts you at a disadvantage when you’re comparing properties and negotiating lease terms. Tenant rep brokers can take the mystery out of the process by explaining unfamiliar terminology and breaking down complex concepts in ways that you’ll understand. This way, you can be empowered throughout the process and able to assess deals for yourself.

4.  The Best Office Might Be Secret.

Not all available office spaces will turn up when you do an Internet search. Often times, spaces in the best buildings are snatched up long before there is a need to advertise them, meaning you never have a chance to see, let alone lease, them. Tenant rep brokers keep their ears open to find out when landlords in highly sought areas are expecting vacancies. This means that they can get you in fast and help you discover properties you otherwise wouldn’t have access to.

5.  There Is Zero Cost for So Many Benefits.

Hiring a tenant rep broker won’t impact your bottom line or make your deal more expensive. Prospective tenants don’t pay tenant rep brokers at all. Instead, the landlord covers the cost of brokers’ services. Since there is absolutely no cost to you to reap all of the benefits above, the question really isn’t why should you have a tenant rep broker, but why wouldn’t you?

 

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2001 Old Greenbrier Road, Suite A
Chesapeake, Virginia 23320
757.343.4666

NAI Dominion – Richmond

7110 Forest Ave. Suite 103
Richmond, VA 23226

804.346.5000
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