Insights

Seeing Beyond the Technology

Seeing beyond the technology – Smart Building: A Technology Project or a Business Decision?

The question is already the problem!

A smart building is not simply a technology project. It is a decision about how an asset earns, how it is financed, and how exposed it is to ever-changing regulations and constantly evolving occupier expectations.

Get it right, and the returns are commercial, operational, financial and human: shorter voids, higher rents, lower energy costs, insurance premiums and MEES exposure, access to green debt, and space that attracts and retains the best talent.

Most smart building conversations start in the wrong room. They begin with the technology or facilities team, with a platform, a vendor shortlist and a budget line under IT or operations. That framing decides the outcome before anyone has asked what the asset actually needs to achieve from a business and financial perspective.

The technology is how the decision gets carried out. It is not the decision. The distinction matters because the two framings produce different sponsors, different measures of success and different ideas of what failure is.

Most smart building decisions involve two people who rarely sit at the same table. The person responsible for financial performance (the revenue generator) asks what the smarter building might earn. The person responsible for technology and building performance asks how it will work. One holds the budget, the other controls delivery, and neither can succeed without the other. So ask of any smart building proposal: who is paying for it, and who is accountable for the return?

If the person paying has no say in how it is delivered, or the person delivering has no stake in the return, you have found the problem

The Business Decision

The market has already made the decision for the revenue generator.

  • Space is currently working harder. Global office utilisation has risen from 49% in 2024 to 56% in 2026, still short of the pre-pandemic 61%, and 62% of organisations now require fixed in-office days [1].
  • Tenants pay for quality. Grade A space accounted for 73.6% of Central London office take-up in 2024 [2], and BREEAM Excellent and Outstanding offices commanded rents 15% above lower-rated or unrated space [3]. But the level of quality an owner promotes is a marketing decision, not a technology one, and there is no clear, widely accepted standard for what makes a building smart [4]. The technology delivers and evidences the promise.
  • Debt is selective. All-in debt costs rose 70 to 100 basis points in three months, and a stabilised City office drew 15 bids while a weaker asset drew two [5]. Rising rates are derailing the property recovery as buyers recut deals, and investors are holding assets for longer and refurbishing them to drive rental performance [6]. However, green bonds trade about 4 basis points tighter on average, and only where the label is externally reviewed [7]; for listed real estate, the premium shrank from about 11 basis points in 2014 and 2015 to about 2 in 2022 [8].
  • Regulation is closing in. In June 2026, the Government confirmed its intention that privately rented non-domestic buildings over 1,000 sq. m in England and Wales reach EPC B from 2031, where cost-effective. The 2027 EPC C milestone was dropped, and the change remains subject to secondary legislation [9][10].

The uplift is not paid for smart alone. It is paid for the certifications that digitalisation helps make achievable and provable: offices with advanced digital infrastructure command an average 4.1% rental premium in Central London [11], and BREEAM-rated prime offices sell at around a 10% premium [12].

So the proof has to be built from your own portfolio, measured against your own baseline. None of this is a pure technology outcome. It is how the asset earns through digitalisation.

The IT Decision

The person responsible for technology and/or building performance is right about what the revenue generator ignores: the return does not deliver itself.

  • Savings are uncertain. The UK BCIA puts the savings from advanced building controls anywhere between 20% and 50%, depending on building type and system integration, which makes a short payback hard to guarantee and approval harder to win [13]. A review of 89 studies reports 20% to 40% efficiency gains from AI and IoT systems, but most are simulations or small pilots [14].
  • Nobody owns performance. The UK Government’s own research on rented non-domestic buildings found no consistent approach to allocating energy and heating costs, so those who pay, those who operate and those who benefit are often different parties [15].
  • Integration is the barrier. The lack of standard interoperability and the difficulty of integrating legacy systems are recurrent limitations in the research [14].
  • Data is not intelligence. Space data accuracy is now the second-highest corporate real estate priority, and 73% of organisations have data governance programmes in place [1]. Even a large US retailer found its biggest challenge was the time and expertise to use all its data [16].
  • Operations decide the savings. Condition-based maintenance costs 8% to 12% less than preventive and 30% to 40% less than reactive, but it needs training and a firm commitment from management [17][18].

These are not technology failures. They are governance and business-case failures.

Conclusion: The Missing Piece Is Governance & a Business Case

The revenue generator holds the case. The person responsible for technology and building performance holds the systems and the delivery. They rarely share a common language: some organisations close the gap by appointing a liaison to sit with the energy team but who reports to finance, translating savings into financial terms [16].

What is missing is not another platform. It is two things together: governance, with clearly defined roles and agreement on who decides, in what order, and who answers for the result; and an underpinning business case, one set of numbers the revenue generator trusts and IT and Operations can build to.

Putting this thinking into practice requires a structured diagnostic that maps a portfolio’s exposure, quantifies the financial impact, and prioritises the response before specifying any technology. The aim is to enter the technology conversation knowing what it needs to deliver. Exposure and financial impact give the revenue generator the case. The sequenced response gives IT and Operations the brief. Both agree it before a procurement starts. That is governance made practical.

LMG’s view is that the decision should be led by the person accountable for the asset’s financial performance, with IT and Operations holding the authority over delivery. Whatever your role in the chain, as owner, adviser, designer, cost consultant, delivery lead or supplier, we value your challenge. Where does this decision sit in your organisation today: with the people who run the systems, or the people who answer for the asset?

LMG has the tools to address each asset and the portfolio as a whole: the earnings, the benefits, the investments needed and the roadmap. Its evidence-driven decision model simulates investments and returns, so asset owners can allocate their digitalisation budgets with confidence throughout their portfolio.

Today, the person who pays asks what the building will earn and is handed a platform and a vendor shortlist. The person who delivers asks what the building is meant to achieve and is handed a budget line. Neither question is answered. Put the investment, the return and the roadmap on one page, and both are: the finance director sees what every pound of digitalisation buys, while the IT director, facilities director or head of operations knows what to deliver, in what order and how it will be judged. The person paying and the person delivering finally want the same outcome, measured the same way.

That is what seeing beyond the technology looks like.

References

  1. JLL, Global Occupancy Planning Benchmark Report 2026 (19 May 2026): 84 organisations, 716 million sq ft, global. Utilisation, fixed-day requirements, data accuracy and data governance figures. Drawn from JLL’s client base, not a random sample of the market.
  2. BNP Paribas Real Estate, Central London Offices Update, Q4 2024 (January 2025): Grade A was 75.2% of Q4 2024 take-up and 73.6% across 2024. Central London: deals over 1,000 sq ft.
  3. Savills, Central London Office Market Watch Q4 2024: rents on BREEAM Excellent or Outstanding buildings 15% above lower or non-rated buildings. Savills’ own analysis; it does not state its controls.
  4. Digital Buildings Council, Lessons learned: 6 common mistakes MSI contractors see in smart building projects (Smart Buildings Magazine, 12 December 2024): four members of the Digital Buildings Council steering committee, including LMG. Experience-based, not measured.
  5. RICS, Property Investment Forum, June 2026 mid-year review: debt costs and the bid example. A summary of contributors’ views at the forum, not a dataset.
  6. Julie Steinberg, Financial Times, Rising interest rates derail property recovery as buyers recut deals (19 October 2026): the holding-and-refurbishing point is one adviser’s comment (Avison Young).
  7. Pietsch and Salakhova (ECB), Pricing of green bonds, SUERF Policy Brief No 487 (December 2022): euro area issuers, 2014 to 2021. The authors’ views, not the ECB’s.
  8. EPRA, Estimating a green premium in listed real estate bonds (22 December 2023): 19 bond pairs from 11 companies. The same study found no statistically significant green premium by September 2023.
  9. Jones Day, Non-Domestic MEES: UK Government Confirms EPC B Target (8 September 2026): legal commentary on the Government’s interim response of 18 June 2026.
  10. Mayer Brown, UK Government Announces Changes to Minimum Energy Efficiency Standards (23 June 2026): legal commentary; EPC B from 2031 is subject to secondary legislation.
  11. Cushman & Wakefield, The Smart Premium (2025): a decade of Central London leasing data and WiredScore certification records; 4.1% average premium, up to 5.1%.
  12. Knight Frank, Green building value (29 September 2021): 10.1% to 10.5% sale price premium for BREEAM Very Good and Excellent prime Central London offices, about 1,500 sales, 2010 to 2021.
  13. Building Controls Industry Association (BCIA), Comfort, Efficiency and Health: The Untapped Potential of Building Energy Management Systems, reported by Voltimum (11 March 2026): UK industry body analysis; savings of 20% to 50% depending on building type and system integration.
  14. Akbulut et al., A Systematic Review of Building Energy Management Systems (Energies, 12 December 2025): 89 peer-reviewed studies, 2019 to 2025.
  15. Department for Energy Security and Net Zero, Allocation of heat and energy efficiency related costs in rented non-domestic buildings (DESNZ Research Paper 2024/019, 7 February 2025): survey of 600 tenants and 37 interviews with landlords, tenants and leasing experts, December 2021 to May 2022. Research dates from 2021 to 2022.
  16. ACEEE, Smart Buildings: A Deeper Dive into Market Segments (December 2017): US market, 2012 CBECS data. The retailer and liaison examples. Dated and US-based.
  17. US DOE FEMP, O&M Best Practices Guide, Release 3.0, chapter 5: savings figures come from older industrial studies.
  18. Reliable Media, Predictive Maintenance ROI Benchmarks (9 June 2026): secondary review that rates the DOE 8% to 12% figure among the most defensible.