Letter from the CEO of BuildingMinds

The world is undergoing profound changes on several levels: social, environmental, economic and technological. And the real estate sector must find appropriate leadership responses to these disruptive shifts.

The absence of the normal is the new norm

The pandemic has changed the way we look at buildings. Maintaining employee health and people productivity reinforced the need for a precise understanding of workspaces and how people interact with it. Agile workspace strategies are becoming the cornerstone for investors and owners to remain resilient in times of crisis and protect their businesses from operational risks.

"Half by 2030, by 2050 all"

This phrase from the Intergovernmental Panel on Climate Change leaves no doubt. Today’s priority number one is understanding and managing the factors that contribute to creating and reducing emissions of real estate portfolios. It is an open secret that the real estate industry bears a huge responsibility: buildings account for around 38% of energy-related carbon dioxide emissions. And "the world is already built." At least 80% of today's buildings will still be in use in 2050, and about 75% of the world's building stock is currently energy inefficient.

Do you know the "stranding moment" of your assets?

Take an office property in Berlin, built in 1980 with a floor area of 2,000 square meters. This building could incur additional costs of over €180,000 by 2050 unless adequate decarbonization measures are taken to reduce or avoid emissions penalties. This “climate change penalty” corresponds to just under 3.1% of the market value (€6 million) of the property used in this example. The penalty imposed on the building is based on the scope of the fines contained in the recently enacted New York Climate Mobilization Act. Even if one only applies the penalty for fossil fuel emissions defined in the German Fuel Emissions Trading Act, the building still faces additional costs with a present value of around 1.3% of its market value. Anyone with a rough idea of the returns that can be generated by our sample property would break into a cold sweat when reading this.

Transparency as a "need-to-have"

Companies are becoming increasingly aware that future-proofing their portfolios against climate change, pandemic risks and other anticipated crises requires informed decision-making based on consistent data. However 71% of real estate companies see the lack of transparency and quality of their data as a major challenge. Creating transparency about every bit of information in and around every single building, its stakeholders and multiple life cycle stages is the essential foundation. In a nutshell: We have to fuse the physical with the digital to ensure the highest level of organizational intelligence.

The "D" in decarbonization stands for data-driven

Data-driven analytics can uncover underlying trends and new potential not identified by traditional methods. For example, comparing the energy use of one building to that of another similar building in the same zip code area can reveal a new metric for improving ESG goals. Elevator usage analysis, for example, can reveal where the focus of human movement is and where, or how, resources could be reallocated. Such insights can give any building or complex an edge in highly competitive real estate markets. McKinsey estimates that nearly 60% of predictive power can come from non-traditional variables. Smart AI implementation is key to processing vast amounts of data and gaining critical insights from previously unrelated data points.

Do the right things and do them right

Smart real estate stakeholders make decisions that protect the safety and health of all employees, tenants and other end users of space. The smartest players are also thinking about how the real estate landscape might permanently change in the future and changing their strategy.

At BuildingMinds, we believe that holistic, data-driven real estate management is the key to enabling sustainability in both senses of the word – meeting environmental and ethical requirements while maintaining and building resilient businesses.

I look forward to exchanging views and learning how your company is dealing with these challenges. Feel free to drop me a LinkedIn message!“

Yours sincerely,

Jens Mueller
CEO BuildingMinds
https://www.linkedin.com/in/jensmueller/
www.buildingminds.com

As CEO of BuildingMinds, Jens Müller oversees the daily operations of the company and the work of senior executives. Before joining BuildingMinds, Jens Müller was Vice President of Corporate Development & Innovation at the IoT startup relayr and Senior Manager in several areas at Cisco.

BuildingMinds transforms the way building portfolios around the world are managed. Providing an unprecedented scope of relevant business KPIs in one central depository, the SaaS-platform enables advanced data-driven real estate management. It caters to both strategic and operative roles along the entire building lifecycle and multiple management areas: operational efficiency, business value generation and risk management, sustainability, people productivity and well-being. 

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BuildingMinds is a Strategic Partner of the Sustainable Investment Forum Europe in April, bringing together asset owners and managers, ratings agencies, banks, UN and Government policymakers, investors, development banks, think tanks, and NGOs committed to driving forward the sustainable finance agenda. Register your place for free here.