Letter from the Editor
Hello all - here is another issue of Smart Building Insight. We have all the M&A, investment, and product news in smart buildings. Additionally, see the end of the newsletter for interesting reports and some updates on return to work, sustainability in the built environment, and other key topics of interest for our industry.
In addition to this digest, Aamidor Consulting continues to be hard at work on a range of projects, serving large enterprises, startups, investors and acquirers. Real estate, and the tech investments that drive these assets, are at an inflection point. We continue to have great conversations with industry leaders and entrepreneurs. Please reach out if you want to chat or simply introduce yourself.
If you are trying to get through the newsletter quickly, here are a few high level takeaways:
- A range of PropTech firms raising early and late stage rounds - activity remains elevated, perhaps rebounded to pre-pandemic levels.
- We provide some insight in our new Startup News and Views section about the new normal, or the interim normal, in commercial real estate.
- At the end, we share news on return to the office, sustainability in real estate, and a couple notable product launches.
In other news, April was a busy month for events and talks. Joe Aamidor participated in an episode of Realcomm Live, which is a regular Friday webinar about smart buildings and real estate tech. He talked about the state of smart buildings in the North America with Realcomm's Jim Young and Quadreal's Thano Lambrinos. You can watch the recording here.
Joe also was interviewed by Mike Petrusky of iOffice, for his Workplace Innovator podcast, talking about returning to the office and the technologies that will enable this. It's always fun to talk to Mike, and I hope you enjoy this podcast. You'll notice that our firm is discussing similar themes across all of these talks and events.
Additionally. last month Joe was invited by our friends at Credit Suisse to give a talk about technology in real estate, with a focus on reporting buildings and improving operations. The slides from our talk are available here. There are a lot of moving parts in real estate, especially around the adoption of technology. Please reach out if you want to hear more about what we discussed.
We shared a number of key themes on the webinar. One discussion point was focused on the business models that will enable RE owners/operators to invest in more smart technology - to attract tenants/occupants, to effectively position assets - and the challenging financial position of doing so (especially if occupancy falls or continues to stay far below the mean). There are a number of business models that may support a reduction in CapEx, which should make these improvements and investments more feasible. As we've noted previously, many smart building firms we talk to have seen continued growth. However, it also seems clear that some RE firms and building operators are delaying some investments until they have a clearer picture of the return to work situation. We continue to believe that vendors and startups that figure out how to sell their solutions under this new environment will be poised to succeed. See the new Startup News and Views section for more on this. And, here is one slide from our talk.
You can access the full deck of slides here, if you are interested.
And, never worry about reaching out to have a chat or talk about a potential project - busy or not, we'd be happy to talk! Please reach out if you want to chat!
Aamidor Consulting Market Resources. We've been tracking all the key industry partnerships and M+A activity, all available on this readily available site.
As always, we look forward to hearing from you about how we might help with your product and market strategy needs. We also hope you enjoy this issue of Smart Building Insight.
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About Our Firm
Aamidor Consulting works with software and technology vendors, investors, and building owners/operators to help them understand the smart building landscape and formulate product and market strategy. See these project summaries and detailed testimonials from some of our clients that exemplify the strategic value we provide. Our work usually falls into one of these categories:
- Fractional product management for smart building software and solutions. If your firm is not able to hire a full time PM, we can provide that same benefit on a variable cost basis.
- Strategic advisory relationships with small and large firms, helping them adapt to the changing technology landscape. We routinely work with small firms and strategy/innovation teams at the largest of organizations.
- Working with investors to identify opportunities in the market and conduct commercial due diligence of potential deals. We have worked with leading VC and PE firms, in addition to technology firms acquiring startups.
Please reach out if you want to learn more. You can work with us in a variety of ways:
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Investment News
- New funding rounds and investments:
- HqO raised $60M in its Series C from existing investors and some new names, such as Cushman and Wakefield.
- NoiseAware, which makes a noise detection solution for home and building security, raised $8M from S3 and Thayer Ventures.
- Density raises another $25M for its space utilization platform, this puts Density at over $100M raised.
- Placer.ai raised $50M from a few notable angels, with Fifth Wall also participating.
- HVAC innovator Oxygen8 Solutions, which makes a ventilation/energy recovery solution, raised $4M in seed funding from Greensoil PropTech.
- Another HVAC innovator, Blue Frontier, which focuses on residential HVAC efficiency, raised a $1.1M seed round from Volo Earth.
- News on VCs and funds:
- Acquisitions:
- Johnson Controls announced an acquisition of Silent-Aire for $870M, to buttress its data center solutions.
- GE Current expands its lighting line card with its acquisition of Forum. This article also highlights some progress Acuity is making on its IOT efforts.
- Veolia and Suez announced that they have reached an agreement to merge.
- Tenant amenity app Equiem has bought Vicinitee from British Land.
- As we've shared over the past few months, here are some updates around relevant SPACs:
- Fifth Wall announced that its first SPAC (FWAA) is merging with SmartRent, in a transaction valued at $2.2B. SmartRent offers a platform that helps to integrate smart devices and deliver tech-enabled experiences to residents (typically apartments but increasingly single-family rentals, too). Related, SmartRent announced a partnership with Elevation Home Energy Solutions.
- Additionally, Fifth Wall launched a third SPAC.
- It was only a matter of time: Now there is a ranking from PERE on the top 20 proptech investors (PE and VC).
- New partnerships:
- FM leader Newmark announced a partnership with smart buidling vendor Hank.
- Brainbox announced that they would use WattTime's platform to calculate CO2 emissions and then optimize HVAC to reduce those emissions. WattTime, part of Rocky Mountain Institute, has a very valuable solution that can plug into other software solutions. This is another example of the unbuilding of the tech stack, something we touched on last month in our new newsletter section focused on startups.
- Intelligent Buildings is partnering with Tempered Networks on a cybersecurity solution for commercial real estate.
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Industry Resources
Aamidor Consulting offers a few up-to-date resources to help smart building stakeholders monitor the market:
See our homepage to learn more about our the full breadth of our offerings.
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Startup News and Views
Aamidor Consulting has added a new section to our monthly newsletter specifically focused on startups in the smart building space. This is to provide more insight to startups, and those firms working with startups, on recent developments and relevant news.
In the introduction to this issue, we shared a slide from our talk with Credit Suisse. One of the key points, which we've shared before, is that commercial real estate is seeing a decline in rents and occupancy, but will also be expected to invest more in their assets - to deliver better indoor air quality, offer more flexible spaces, and deploy technology to attract new tenants, etc. This balance could pose a challenge to owners and operators.
On one side, we see signs of difficulty ahead for real estate. Many believe this is short term, not a secular shift away from working in offices (we agree). But, in the short term, offices likely will be less full. From our presentation, we cited a few data sources: valuations are down for all but warehouse and self-storage real estate assets, and Kastle Systems reports that in-office occupancy still is in the range of 25 percent for 10 top markets (but, nearly 40 percent in the major Texas metros, and lower than average in New York and the Bay Area, for example). San Francisco has lost its crown of highest office rents to New York (both cities are down, but SF is down more) and overall SF property tax revenue is down for the first time in 25 years.
At the same time, there are many new expense line items for a corporate or commercial real estate operator. In fact, these apply to any building operator, but some asset classes, like schools, have received significant capital from the federal government. Our view is that technology-based improvements will be important to ensure indoor air quality and occupant safety, deliver a class-leading experience, and reduce energy and operational costs. (We've reported it previously, but energy in commercial buildings has declined only slightly, despite the low occupancy.) Does energy savings offer a path to cut costs and fund some of these new technology-based expenses?
We expect business models to change as we emerge from the pandemic. As-a-service offerings that guarantee energy savings could be the first step to take advantage of lower occupancy. If these energy savings can be achieved with no upfront capital, the ongoing reductions in energy cost can then be used to fund new amenities (especially those that are technology based). We will continue to monitor emerging business models and pricing trends in the market - and share our insights here.
Action item: Real estate owners and operators should consider opportunities to cut operating costs, with deployment of enabling technologies, as a means to fund the acquisition of tenant-facing technology amenities. Startups should consider partnerships that bundle these offerings together, resulting in the delivery of cost-neutral upgrades.
Aamidor Consulting supports startups throughout their journey in the industry, from the early stages of customer discovery to being on a rapid growth trajectory. See our startup services and past projects for more details on how we can help.
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Noteworthy Articles, Reports and News
- Return to the office: We continue to watch this space and share the most interesting articles. The discussion continues to shift to when the offices will reopen, not if they will reopen.
- Pitchbook had a nice write up of some of the data-focused startups working on return to work. The article also had some good data on the overall state of PropTech funding, which peaked in 2019 but still is on track to be above average in 2021.
- A short, but good twitter thread from our friend Daniel Davis about his take on assigned desks vs activity-based work in the future.
- NY Times Dealbook published more up to date survey data on back to work sentiment and interest by number of days in office.
- And, related, the NY Times continues to have good coverage of returning to the office (and the tech enabling it). This piece features VergeSense (among other firms).
- Related to the return to the office discussion, we enjoyed this Bisnow article that dug into healthy buildings, covering more detail than most articles we've seen.
- Our friends at Enertiv published an informative and complete buyer's guide for RE operations technology.
- We always enjoy contrarian opinions; this article sent over from friend of the firm David Laurence in the UK is a good review of the challenges with smart building deployments. "Adding risk we can't handle" and "the sophistication of smart technologies needs to be matched by the sophistication of the installation, commissioning, user training, and system fine-tuning after handover" - great insights.
- Sustainability in focus, as it relates to real estate:
- There has been a significant amount of funding to schools and public entities to improve HVAC systems and address potential indoor air quality (IAQ) hazards. The governments of Canada and Ontario also are making similar commitments and offering funding. Like in the US, this will drive the market forward.
- This is a topic we've discussed in the past - the impact of automation and technology on jobs. Our view is that between the shortage of facility staff (now and in the future) and plus the need for human intervention to ensure buildings operate efficiently, we'll need technology to augment employees. This article digs into the jobs and automation theme more broadly.
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Our Firm in the News
- Joe Aamidor participated in a Realcomm Live episode about the state of smart buildings in North America. A recording is available here.
- The slides from our webinar with Credit Suisse are available here.
- Joe was interviewed on the Workplace Innovator podcast from iOffice.
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