Study Ties Cities’ Smart Grid Use To Economic Drivers For CRE Health
A “Connected City” study by Jones Lang LaSalle revealed a correlation between municipal investment and application of smart grid technologies and three key economic indicators of the health of the commercial real estate (CRE) industry: strong employment, GDP growth, and positive office market occupancy. When Jones Lang LaSalle’s researchers compared “Connected City” smart grid cities with North American averages, they found that connected cities have an annual GDP growth rate that is 0.7% higher, an unemployment rate that is a full percentage point lower, and office occupancy rates 2.5% higher than less advanced cities.
“Cities that invest in smart grid technology and infrastructure, and that implement programs to enable energy-efficient corporate operations, are winning the competition for new businesses and job growth,” said Dan Probst, chairman, energy and sustainability services, Jones Lang LaSalle. “This correlation speaks to the value of strong relationships between public sector infrastructure custodians and power suppliers and the responsibilities of private businesses to be smart users of energy and to work together to drive productivity improvements at both the city and individual corporation level.”
A smart grid is a power delivery system that uses advanced information technology to improve the effectiveness and sustainability of energy production and distribution, as explained by Jones Lang LaSalle researcher Christian Beaudoin.
To evaluate the impact of smart grid investment on economic performance, Beaudoin compared the economic performance of connected cities with North American averages. He began with a list of Smart Grid Cities from U.S. News & World Report, identified according to a combination of regulation, financial commitments, time-of-use tariffs, reverse billing options, and smart metering that enables companies and residents to manage energy usage more effectively. The 10 cities (pictured in the chart below) were then compared as a group with national averages for employment, GDP growth, and office market occupancy.
“The Smart Grid Cities were chosen on the basis of their investments in smart grid technology,” according to Beaudoin, Jones Lang LaSalle vice president and director of Americas Corporate Research. “Their collective strong economic performance should be of interest to corporations locating new operations, as well as municipalities considering an investment in smart grid technologies.”
But what is a smart grid without a smart user? The vast majority of a city’s urban fabric comprises buildings owned or leased by private entities. To realize the full potential of smart grid technology, a new approach to building automation and integrated facilities management has emerged where data is aggregated across an entire portfolio to provide insights into achieving optimal performance. Remote, continuous monitoring of facility energy use provides the ability to leverage connectivity effectively with a smart grid to reduce energy cost and carbon footprint.
In this way, on-the-ground service and automation technology offered through programs provide a strategic interface with municipal smart grid technology. Integrated facilities management systems that enable real-time energy use monitoring can make it possible for corporations to manage their use of the public grid better, achieving cost savings and carbon footprint reduction by proactively optimizing the power drawn off the smart grid. These systems make it possible to extend the benefits of the smart grid beyond the public infrastructure and into privately held real estate. These benefits are already widely anticipated.
In its recent Corporate Real Estate 2020 research, CoreNet Global experts predict that, by the year 2020, buildings will be contributors to the grid, not just consumers of energy. Both smart grid infrastructure and efficiently managed corporate facilities will be required to achieve that synergy.