5G in Commercial Real Estate

By Faheem Tabassum in discussion with Ross O’Toole

Over the past 12 months I’ve been in the fortunate position of working with some amazing people on 5G deployments at our Optus Macquarie Park Campus in Sydney. We’ve established both indoor and outdoor networks to achieve some incredibly high-speed, low-latency results.

We’ve been running tests and trials on these networks, exploring network segmentation and slicing, analytics and a range of cross industry solutions, IoT devices and applications. The results have been very impressive.

When I first wrote about in-building connectivity using 5G, last July, I spoke about how 5G can transform any business with building facilities as part of its operations - factories, hospitals, logistics centres, and so on.

A year ago, McKinsey made the point that anyone in commercial real estate (CRE) who accelerated their property and portfolio digitisation would be best positioned post-COVID recovery.

To dive deeper into this topic, I turned to our Optus expert, Ross O’Toole, Head of Real Estate Technology for Optus Enterprise, to explore how he sees 5G having an impact on the commercial real estate sector, as well as the broader industry challenges and opportunities as we create new business strategies for the post-COVID future.

Faheem: Thanks for joining me Ross. First, what are the biggest impacts for commercial office building owners and managers, as we return to the workplace post-COVID?

Ross: A shift in expectations by building occupants. People now expect to be in a space that provides great amenity, a healthy and increasingly sustainable work environment, and with great connectivity. This is all underpinned by seamless technology.

We’ve seen changing priorities. There’s a stronger focus on experience - touchless, wireless, interconnected environments are expected. People are looking for meaningful, scalable interconnectedness.

They want the same experience they receive on social media platforms, reflected in the built form. This means the ability to be able to blend both physical and digital interaction.

There’s plenty of research from around the world about the future of CRE in a hybrid future. Recently, Knight Frank Research published a global survey (Your Space 2021) indicating that more than 50% of people in CRE are themselves positive  about working from home.

They’re suggesting it’s here to stay, so in the immediate term at least, working from home or remotely is the biggest competitive threat for commercial office space.

Therefore, the digital experience we have in the workplace needs to be superior to the experience we’ve established at home.

Building owners and managers are looking to make office space more attractive and are applying technology to achieve this.

Faheem: Why are these new expectations challenging for commercial real estate?

Ross: It’s those digital and connectivity expectations that are the biggest challenge for commercial property owners – ensuring their in-building wireless digital connectivity delivers as good an experience as people are having at home.

COVID-19 has changed everyone’s connectivity expectations. We invested in new devices and new connectivity - as individuals or via our employers. We’ve become comfortable with hybrid working.

People want to walk into the office and find that everything works. A prime issue for commercial property owners right now is delivering that frictionless experience.

This is where 5G IBC plays its part – being able to create flexible, next-generation connectivity, to start to replace the fixed network infrastructure that most commercial buildings still have.

The other challenge commercial real estate has, I believe, is to consider how to make their assets compelling to tenants - the enterprises they engage with, and the employees who work in those enterprises.

Faheem: How does connectivity affect the office workplace?

Ross: Connectivity is crucial for in-building experience. Connectivity directly affects my ability to undertake any workplace digital activity, from productivity to social applications.

My ability to be productive extends to how comfortable I am in a building, whether I can connect with my team, and whether I can connect with external suppliers, partners and customers.

Digital experience is directly linked to the ability to connect people and things within a space – applications to provide a great personal experience and IoT devices to manage the efficient use of the space. We’ve previously written about the importance of this technology in a recent Optus Enterprise whitepaper, Getting smart: How IoT is set to transform the property industry.

The value of space is directly linked to utilisation of that space – a full workplace space will always be more valuable than an empty one. For building owners, providing ubiquitous, high-speed wireless connectivity is a great investment. Digital connectivity will increasingly influence the value of space.

Establishing in-building digital connectivity as a foundational technology base supports and increases asset value as future, increasingly sophisticated technology is rolled out.

Faheem: How should commercial real estate asset owners make choices about new technology?

Ross: Another challenge for CRE is the technology evolution and change – both for building user experience and IoT solutions. A question we’re often asked is how to justify the investment in real estate technology, when this technology is constantly advancing. Building owners need the ability to evolve and change their solutions over time.

The truth is the biggest costs for in-building IoT solutions is cabling and equipment provisioning. The key to any property digitisation strategy is establishing a foundational network for all technology.

This is for connecting people – tenants and enterprises, all building users including visitors and contractors; and things – building controls and IoT solutions. Preferably this network provides a ubiquitous wireless experience.

Investing in foundational wireless network infrastructure provides future choice for building owners. The right digital foundation decision now provides real estate owners future options. As technology continues to improve solutions can easily be changed out and upgraded.

Faheem: How do you see the change from 4G to 5G impacting commercial real Estate?

Ross: The move from 4G to 5G is not a transition. It’s a step change. It’s as fundamental a technology change as moving from the horse and cart to the combustion engine.

A great deal has happened over the past 14 years or so that we've had 4G. Global mobile internet traffic is now over 55% of all traffic, and data increased by nearly 5,000% between 2010 and 2020.

I'd argue that the shift from 4G to 5G for in-building connectivity (IBC) is fundamental, and the story is not just about spectrum - higher bandwidth or lower latency. It’s about the change from a non-managed network to a managed network.

In-building networks will shift from being passive to being active. This means they will be smart, allowing building managers to manage networks across multiple tenants.

Active networks are a key aspect of the introduction of in-building 5G as they provide a managed network – this means, building owners can have confidence about guaranteed coverage via SLAs.

Building owners see high speed, ubiquitous coverage as a point of differentiation for their buildings and this will provide an amazing experience for all real estate owners, managers and building users.

Faheem: How should asset owners plan for this new connectivity?

Ross: 5G in commercial real estate must be planned for and installed. Building structures block 5G signals meaning a proactive approach to ensure 5G in-building coverage is required by building owners.

This is a matter of designing and installing a 5G active in-building distributed antenna system. Correctly deployed, this will provide coverage throughout the building.

A significant advantage of mobile networks is that any device or object using a SIM card can connect - both inside and outside the building. Using the mobile network to connect from our personal mobile devices, through to IoT equipment (for say, building controls) provides far more options for building owners. Devices with SIM cards can be pre-provisioned off-site, and the devices then sent to the building for simplified, cheaper installation.

Making a building smart and connected in this way opens the opportunity to use data in new ways to understand space usage, as well as manage operational needs to minimise costs and achieve sustainability targets.

With a connected building, the ability to manage every aspect of its operations expands, increasing its value through the services it offers, and the costs that can now be managed with more granularity.

Faheem: One of the exciting aspects of enterprise 5G is its ability to be network sliced, something I've written about before. What is the promise of network slicing in commercial real estate?

Ross: Network slicing is an exciting technology for commercial real estate operators, one that's being developed very quickly.

We’ve been working on our 5G stand-alone Optus network which has been designed to accommodate slicing to provide for different user types, traffic prioritisation, and user experience, within the same physical space.

In a commercial office building, for example, it will soon be possible to split the building both horizontally and vertically into network 'slices'. Buildings might be configured vertically for low-data IoT devices, and horizontally for high-data tenant activity.

What’s really interesting here is that in the future, building owners will provision the digital infrastructure that would previously have been provided by tenants. Tenants will be supported, with the building zoned by floor and occupant.

Through working with carriers, a corporate tenant may segment part of the mobile network to use as their own corporate network, allowing for a mobile first approach.

Faheem: Finally Ross, what are the main things a building operator should consider when it comes to upgrading their in-building networks?

Ross: I believe it comes down to a number of strategies:

- Consider how you plan to increase the quality of space in your buildings by creating new user experiences using 5G connectivity

- Move from a passive network to a smart network, one that allows you to offer guaranteed speeds and network coverage to your customers, quality of service agreements, one that you can manage from a single point, and one that has dynamic flexibility and programmability built into it

- Be flexible about your choice of technology, around 5G, SDN, SD-WAN and edge cloud

- Build your in-building connectivity strategy over the medium term - technology evolves, and your network needs to as well

- Look for new consumption models and new financial models: use-as-you-go, and pay-as-you-go, are new options

- Unlock new business cases, in partnership with your tenants and your carrier partners

- Work with your enterprise tenants to create new hybrid working spaces, that are compelling to them, and the employees who work for them.

Faheem: Thank you Ross.

Commercial real estate, across all of the asset classes, will increasingly seek out in-building connectivity solutions. We have already seen this in retail and entertainment spaces, with the Optus Stadium a great example.

All of the concepts and insights Ross has mentioned are transferable to other industry sectors, in particular manufacturing. As more buildings adopt smart networks built on 5G, edge cloud and other technologies, new experiences around AI, AR and VR will also be possible.

In the future, managing multiple devices connected to the Internet of Things in buildings will certainly be one of the most complex technology challenges and 5G represents a meaningful solution.