Smart Building Insight - January 2024

Aamidor Consulting continues to provide insight to smart building innovators in this section. This month, we've included an interview with Ben Myers of Boston Properties.?We speak with Ben about his use of technology and perspectives on the market and future trends. This is a bit longer than our typical interviews, but it is well worth it!

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Q: To start, can you give us an intro on your background and role at BXP?

Ben Myers, BXP: I grew up in an old farmhouse in western Massachusetts where we had our own chickens and were taught the virtues of frugality and resource conservation. The ethos of 'a penny saved is a penny earned' was fully embraced by my parents who composted, reused, and stretched the useful life of everything from produce to our Peugeot station wagon. My life was changed by a high school internship in a local architect’s office, where I sorted files, taught the office to use Adobe Photoshop and became fascinated by the design process. I was inspired to pursue a degree in engineering. As a civil and environmental engineering student at UMass, Amherst, my senior design project was the design of a LEED certified green office building. After years of theory, analysis, and proofs, designing better buildings and building systems that minimize environmental impact while prioritizing the health and well-being of occupants was a creative thrill.

My interest in a better built environment was galvanized after college. During a period living in the Ningxia region of China, I witnessed first-hand the negative impacts of mining and coal-fired power plants. I became more committed to the clean energy transition. In need of experience, I returned to the US to work for a developer building 40B affordable housing, where shortcuts were used to fast-track low quality construction with little regard for the environment. During this time, I felt lost in my career and started networking and searching for like-minded individuals that loved buildings and were also interested in sustainability. I was reading Ray Anderson, Bill McKibben, E.O. Wilson, Amory and Hunter Lovins, and discovered an incredible community of sustainability professionals focused on the built environment in Boston.

Around the time of the 2007-2008 financial crisis, I made the decision to go all in on green buildings and I was extremely fortunate to join a team working internally at Harvard University on the implementation of Harvard’s Green Campus Initiative. It was a dream job with a tremendously talented and passionate team. After earning a master’s degree in urban environmental leadership, I joined BXP and got to work building a leading program as the company’s first dedicated head of sustainability.

Q: And, for those of the readers that aren't familiar with BXP, can you share some details on the firm?

BXP is the largest publicly traded developer, owner and manager of premier workplaces in the US. The company is a real estate investment trust, concentrated in six regions: Boston, New York, Los Angeles, San Francisco, Seattle and Washington, DC. The company's portfolio includes a mix of office buildings, retail spaces, and residential properties. BXP is known for developing and managing high-quality, Class A properties in prime locations such as the Prudential Center in Boston, Embarcadero Center and Salesforce Tower in San Francisco, and the GM Building in New York.

Q: BXP tends to be an innovator when it comes to utilizing technology and deploying it across your portfolio - can you provide some background on your process and examples of some of your more successful projects?

I would describe our approach to technology deployment as pragmatic and hype resistant. BXP aspires to be at the cutting edge, not the bleeding edge. We pay less attention to trends and more attention to how we can leverage technology for commercial success. When we evaluate technology, we organize an interdisciplinary diligence team involving senior members representing diverse perspectives. Through the diligence process, we develop a business case with the buy-in of end users and operators. What we don’t do is top-down technology deployment. Our process is bottom-up and middle-out. It usually begins with a problem we’re trying to solve. Through industry networks, partners and peers, we identify potential solutions and then commence an engagement process with a working group that represents competency experts and end users. End user buy-in through early engagement has been critical to our success.

Three sustainability-related demonstrations of this process have been:

1. Portfolio Manager Utility Bill Manager Integration – Working with Enel, our IT team linked our utility bill pay platform to EPA Portfolio Manager. The connections at the meter level facilitate ENERGY STAR certification and push data to Measurabl, which we use to check, assure and disclose high quality environmental performance key performance indicators.
2. Realtime Energy Management – We have had a longstanding relationship with the team originally at EnerNOC, then Enel, then spun-out as Hatch Data, and now Measurabl Asset Optimization (AO). The AO platform and realtime energy data across around 250 commodity meters including electricity, gas and steam provides performance visibility for our operations teams, enables grid-responsiveness (demand response), and more recently is being used to track onsite solar energy generation and building consumption at a property where we are verifying net zero performance.
3. IAQ Monitoring – As the importance of indoor air quality (IAQ) became central to our client engagement through the pandemic, we went to the market looking for IAQ monitoring solutions. We partnered with Attune (formerly Senseware) to roll out dashboarding and alerting using 500 monitoring devices at 40 buildings. IAQ attention is less central to client engagement these days, but IAQ excellence remains a feature of premier workplaces. For that reason, we continue to monitor indicators like PM2.5 and CO2, which help us understand the efficacy of our filtration and ventilation systems and their performance given variable outdoor air conditions, as we saw with the wildfires, or physical occupancy.

The challenge in today’s world is the abundance of opportunities and solutions seeking owner-buyers. This is particularly true in the climate/proptech space. We are eager to deploy proven decarbonization technologies to meet our sustainability goals. To help filter the noise and cultivate winners, we’ve partnered with Energy Impact Partners, a VC firm investing in revolutionary energy technologies. Since 2022, we’ve been working with them to identify impactful growth-stage built environment decarbonization solutions.

Q: Similarly, BXP is very advanced on the sustainability front. Is there anything you can share about your activities here?

I’ve always believed that when you keep scoreboards, people play differently. Scoring systems have been central to our decision-making when prioritizing where to focus limited resources. Scoring systems also get the attention of the individuals from the chairperson to the chiller plant. I’m excited this year for EPA’s NextGen certification system, an update to our climate risk scoring approach, and a series of summits with regional leadership where we review a set of environmental performance and establish asset-level and regional targets for energy, emissions, water and waste.

Q: You and the team look at a lot of interesting technology offerings - any newer categories of technology or general innovations that you are taking a deeper look at in 2024?

These are my top 3 for 2024:

1. EV Charging Portfolio Management – We’ve had another record year of passenger EV adoption. We will be focused on EV charging station deployment, utilization and cost recovery through technology and vendor partnerships.
2. Advanced Heat Recovery – Much of the low hanging fruit has been picked. The new low hanging fruit is heat recovery. We are monitoring performance of existing heat recovery systems and installing new heat recovery systems to improve efficiency.
3. Green Concrete – Concrete is the most abundant manmade material by volume on earth and is responsible for up to 8% of global emissions. There are a range of exciting companies electrifying cement production, from CMU block to cast-in-place applications. Lifecycle emissions measurement and the low-carbon materials are beginning to get the attention they deserve.

Q: And, any bold predictions for the real estate technology market in the coming year?

In an era of high interest rates and capital constraints, the winners are going to be the technologies that clearly address the challenges and opportunities of the day. There is less room for puffery in 2024.

I’m betting on the technologies that:

• support an orderly transition and end the fossil fuel hegemony. This is a broad category that includes technologies for grid modernization and GEBS (grid- interactive efficient buildings). Energy storage, for example, is starting to pencil in more markets. Short duration storage behind the meter makes buildings less peaky and grid-interactive. Long duration storage front of the meter increases the reliability of a clean grid and mitigates the intermittency risk of renewables. Real estate solutions that affordably shrink the energy demand-side and clean the energy supply-side will be more attractive to mindful owners and developers that see where the puck is going.
• integrate sustainability performance management into conventional building management systems used by operators. There is an unmet need to replace and augment old building management system functionality to provide operations with an understanding building system performance alignment with enterprise and asset-level environmental objectives. Owner-operators that have not been satisfied with legacy providers will find new providers that understand the needs of their customers.
• use water, not air. In many cases, efficient electrification will involve heat exchange between the ground and water. Ground source heat pump drilling and delivery models are starting to take off and I’m hopeful that policies and incentives (see IRA) unlock the potential of ground source heat pumps that has been realized in Sweden.
• result in significant decarbonization – I remain skeptical of technologies purporting to capture CO2 in lobbies and from boiler plant flue gasses that are claiming they are contributing to material greenhouse gas mitigation. It will be interesting to see how and when people start sounding the greenwashing alarm on some of the vendors in this space.

With sustainability, the learning curve is seemingly infinite, and the goal posts continue to move. One prediction is certain: by the end of the year, we’ll be working on something that isn’t in the cards today.

Aamidor Consulting works across the smart building industry, supporting startups, capital allocators, and industry incumbents throughout their journey, from the early stages of customer discovery to being on a rapid growth trajectory. Specifically, our firm supports startups on product and market strategy, investors as an independent advisor during diligence, and real estate owners/operators as they develop plans to deploy technology. See a?summary of our past projects?and also a?description of our consulting services?for more details on how we can help. ?