Unlocking Hidden Value in Commercial Real Estate Systems

In the ever-evolving landscape of commercial real estate, the ability to unlock hidden value within your portfolio often boils down to one simple truth: "If you don't own your data & digital infrastructure, your vendors do." This core insight serves as the foundation for our Peak Property Performance® podcast series, where we unravel the complexities of data and digital infrastructure in commercial real estate. In this episode, we delve into the first C of our PPP 5C™ framework: Clarify. It's about knowing exactly what systems you own, where you might be missing out on value, and what your building’s data is truly worth. So, let's dive in and explore how a little curiosity can lead to significant savings and open up new revenue streams.

Understanding the Power of Clarification

Every commercial real estate owner or operator is faced with the daunting task of managing numerous systems within their buildings. From HVAC to lighting control, each system is a potential goldmine of data. However, without clarity on what you own and control, you might be leaving money on the table. As Bill Douglas aptly put it, "Imagine stepping foot into one of your properties and seeing all the systems that keep the lights on, the HVAC running, and so forth. Each has some control unit, and each generates data that you should own and control."

Too often, building owners find themselves in the dark about the full capabilities of their systems. Consider the story of a building engineer who discovered an unused lighting control system. "He saw something hanging on the wall in a data closet and asked, 'What is that?' That simple question led to the discovery of a system that, once activated, saved the building over $56,000 in the first year alone," shared Drew Hall.

This example underscores the importance of being inquisitive. By simply asking questions and seeking to clarify, you can uncover hidden assets that dramatically impact your bottom line. It's about moving from unknown unknowns to known unknowns, enabling you to take strategic actions that enhance the value of your property.

The Role of Data in Modern CRE Systems

Data is the backbone of modern commercial real estate operations. Yet, many owners still view digital infrastructure as an expense rather than an investment. This mindset needs to change. As Drew explained, "The more modernized these systems have gotten, the more granular the data becomes. Imagine the decisions made in real-time across every system in your building—knowing why an air conditioner turns on or off can lead to more informed decisions."

"How many networks are in your building that you don't own, or how many are there that you think you own, but the vendor is taking the data and they get to monetize it?" - Bill Douglas

By clarifying your ownership and control over these networks and data, you can shift your perspective. View your digital infrastructure as an investment that should yield returns comparable to traditional real estate assets like facades and flooring. Embrace digital as a strategic value driver for your property and portfolio.

Case Study: Unlocking ROI Through Clarification

Let's revisit the story of the forgotten lighting control system. For years, this system sat dormant, costing the building unnecessary expenses. Once discovered and activated, it not only saved money but also provided valuable data that allowed for more strategic energy management and lease adjustments.

As Drew highlighted, "They went over seven years without exploring this system. Once they did, the ROI was positive within 15 months. This was achieved simply by asking, 'What is that?' and pursuing the answer." This case study illustrates that the path to unlocking value starts with a willingness to question the status quo and investigate the potential of existing systems.

Being inquisitive and taking a proactive approach to clarify your assets can lead to significant financial benefits. It's not just about fixing problems; it's about uncovering opportunities that were previously hidden from view. As we prepare to explore the next C, Connect, remember that clarity is the first step toward a more efficient and profitable real estate portfolio.

For a deeper dive into the conversation, listen to the full episode.

Case Study: Unlocking ROI Through Clarification

Consider the journey of a building owner who stumbled upon an unused lighting control system long after its installation. It was a system that had been quietly collecting dust, installed but never activated, effectively invisible in the daily operations of the building. "The building was five years old at this time," Drew Hall noted, "and the system was out, it wasn't used for five years."

When the system was finally turned on, the financial impact was immediate and profound. By the 15th month of operation, the ROI was positive. The hidden potential of this system was unlocked simply because someone took the time to ask, "What is that?" and pursued the answer with diligence. As Drew emphasized, "They found $56,000 from a review because of one bind, because they just didn't know it was there."

This scenario is not unique but rather illustrative of a common issue in commercial real estate. Systems, once installed, should not be left dormant without periodic reviews. If you don't own your data & digital infrastructure, your vendors do. It's critical to conduct regular audits and ask the right questions to ensure you're not missing out on hidden value.

Maximizing System Potential through Investigation

In the realm of commercial real estate, stagnation often stems from assumptions about limitations. Owners and operators may believe they have reached the extent of what their systems can do, but this mindset can hinder growth and innovation. "Don't allow yourself to be hindered by assuming that something is not possible," Drew advised. "Even in that example we were just talking about with the lighting system, we know for a fact that the assumption up to that point was, I'm limited in what I can do."

The key is to remain open-minded and curious. By investigating deeper, exploring what a system is truly capable of, and reaching out to manufacturers for insights, new possibilities can emerge. This process of investigation can reveal not just cost savings but also new revenue opportunities.

In one case, a building adjusted its lighting program to accommodate a church renting space on Sundays, leading to further monetization of common areas. As Bill Douglas put it, "Rather than turn the whole building down on weekends, they know they're gonna have occupancy on Sunday. They're further monetizing their common areas. It's a beautiful model for everybody."

Preparing for the Next C: Connect

As we continue to explore our PPP 5C™ framework, the next step is to Connect. This involves ensuring that all systems within a building are not only operational but also integrated into a cohesive digital infrastructure. Many systems, like the lighting control example, are installed but not connected to a backbone that allows for full data utilization.

"That system wasn't actually connected in terms of that backbone that we talked about," Drew remarked. "It was connected in terms of being able to do some control to the lighting system across CapEx, yes, of course, but it was not connected in terms of data into, again, I'm going to use the word backbone."

Connecting systems effectively allows for more than just control; it enables data collection that can inform strategic decisions and enhance property value. As Bill suggested, "It's worth it to be inquisitive. We're not talking about how to solve the problem yet. We're just saying, get a lay of the land."

Actionable Takeaways for CRE Owners

In summary, the journey to Peak Property Performance® begins with clarity. Start by taking inventory of your systems and asking the right questions. Are they generating data? If so, who owns it? Utilize the tools and strategies outlined in our Peak Property Performance® book to conduct your own audits.

Remember that each system in your building is a potential asset. By investigating and connecting these systems, you can unlock significant value and transform your property operations. The journey doesn't stop here. Join us on the Peak Property Performance® Podcast as we continue to explore the next steps in our framework.

Embrace curiosity, challenge assumptions, and take control of your data & digital infrastructure. The potential for growth and innovation is immense, but it starts with asking, "What is that?" and pursuing the answer with determination.

About OpticWise: OpticWise provides owner-controlled data & digital infrastructure for commercial real estate — from PPP Audits to portfolio-wide intelligence. See how we operate or read customer outcomes.