Despite Impressive Advances, its Total Potential is Far From Fulfilled
CRE professionals have known for quite a while that the advent of 5G technology was going to make for big changes in the industry. For example, as far back as 2022, Cushman & Wakefield’s Xuan Pham, Senior Director for Vietnam, noted in an article on the Cushman & Wakefield website titled “ Why 5G is More Important Than Ever for Commercial Real Estate”: “Being better connected via 5G will become the new standard for commercial real estate.”
“To put it simply, 5G is an advanced level of wireless technology,” noted The Plaza Companies in the article “How 5G is Impacting the Future of Commercial Real Estate,” at about the same time. “It has transformational capabilities for commercial properties and businesses that depend heavily on wireless communications.”
Apparently, both predictions were on the mark — to a certain degree. “It’s made a big impact,” asserts Tim Vi Tran, SIOR , president of The Ivy Group in Fremont, Calif. “It’s faster, more stable.” Geoffrey Kasselman, SIOR, CEO of Evoke Partners in Chicago, adds, “5G technology is revolutionizing data collection and business operations, thanks to its advanced features, like higher speed, lower latency, and greater connectivity.”
5G will not just support trends in commercial real estate. It could transform how the industry works.
Still, the transformation is far from completed. Verizon, which should know a thing or two about 5G, recently claimed that “5G will not just support trends in commercial real estate. It could transform how the industry works.”
The Verizon post cited, for example, Internet of Things (IoT)-enabled building management systems as transformational technology. Eventually, Verizon predicts, building managers will be able to make their buildings more energy-efficient (i.e., by predicting things like elevator maintenance needs), and enable more efficient use of technologies during construction — like remote operations of heavy machinery. What’s more, it is likely to influence tenant demands. And even now, the company claims, “5G is driving decisions in commercial real estate.”
Kasselman does not disagree. “With 5G, data can be processed closer to where it is generated (a.k.a Edge Computing), reducing the time it takes to get insights and enhance the ability to make real-time decisions,” he states. “Likewise, 5G supports a massive number of connected devices, significantly enhancing the entire IoT ecosystem, leading to greater real-time insights and improved risk management.”
Within an industrial facility, Kasselman adds, “5G’s low latency and high reliability drive automated systems and robotics, leading to increased efficiency and reduced operational costs, while also enhancing real-time tracking and monitoring of goods throughout the supply chain. This in turn improves inventory management, reduces losses, and improves delivery accuracy.”
5G, adds Tran, is a “game changer” when it comes to IoT. “Right now, say you have ten, twenty, thirty devices on a network; a typical router is not able to handle that,” he notes. “When you have 5G, you’re able to handle thousands of devices.” When you use IoT to monitor things like temperatures, sound, or performance, he continues, “That becomes a profound change for a building owner to decrease their cost and build efficiency. And it makes the tenant a lot more comfortable.”
The age of ubiquitous computing is upon us, supporting remote work or work from home, or work from an Airbnb — anywhere there is Internet connectivity.
NOT QUITE SO FAST
Despite the impact it has already had, experts agree that 5G may have only begun to scratch the surface of its potential — particularly when it comes to real estate transactions. For example, Tran notes, “We have had tenants where they were concerned about having high speed, but they’re not demanding it at this stage.”
Kasselman agrees. “To date, we are only seeing 5G being referenced in a lease agreement by a few of the largest portfolio operators,” he observes. “That said, as more tenants require 5G in their spaces, and their workforce becomes reliant on 5G, we expect to see the need for much more 5G attention in lease agreements by all parties.”
“The reality of 5G is that there are still a lot of hurdles,” says Tran. “We looked at one building that wanted to get Verizon 5G in there. They came and looked, and said the way the building was built, line of sight would not work.”
And what about salability? “We’ve not seen a building where it impacted salability, but maybe that’s because I’m in an area of low vacancy,” says Tran. “5G is not a deal-breaker, but I’d say if you put two buildings next to each other and everything else being equal, the 5G building would generate more activity.” In other words, he summarizes, it would give a seller more leverage. “At the end of the day we all want the best amenities,” he asserts.
Kasselman notes that data is the new ‘oil.’ “So the effective real-time management of data throughput at scale is essential in all large commercial spaces moving forward,” he states. “Thus, the logic is those buildings that have IoT infrastructure in place will almost certainly be worth more and have greater market fungibility with longer run-time.”
TEAM MEMBERS WILL LOVE IT
For members of your real estate team, using phones, tablets, or laptops on 5G will only be good news, notes Tran. “We feel it will give us the capability of having a better user experience,” he says. “We do a lot of zoom training, and when everyone’s together in the conference room and on the same network and we all log into CoStar, for example, it has actually slowed down. Having 5G would help us have a better user experience — not, ‘You go, then I go.’ Little minute things like that make a big difference.”
With a significant number of remote workers perhaps a permanent part of the workforce picture, Kasselman says the impact there may also be considerable. “The age of ubiquitous computing is upon us, supporting remote work or work from home, or work from an Airbnb — anywhere there is Internet connectivity,” he observes. “Tethered workers and corporate mandates to physically occupy expensive offices subject to long-term leases is ultimately a broken, unsustainable business model. That said, workers and colleagues coming together regularly remains an important part of training, advancement, and company culture.”
5G is not a deal-breaker, but I’d say if you put two buildings next to each other and everything else being equal, the 5G building would generate more activity.
Still, he continues, “An untethered but connected workforce is free to innovate and collaborate in new and exciting ways, leading to enhanced productivity and greater overall results!” Tran agrees that however impressive the technology becomes, it will not replace human interaction. “We can use high speed and be more efficient and better, but at the end of the day clients want to see us, and shake our hands,” he asserts.
WHERE DO WE GO FROM HERE?
So, what, then, does the future hold? Will 5G replace Wi-Fi? Plaza Cos. seem to think so. “The reality is that 4G/LTE technology is slowly phasing out over the next four or five years,” they assert. “As this happens, 5G will replace these systems and the communication tech space will become more reliant on 5G capabilities.”
Tran follows up: “I think it will be good to replace Wi-Fi technologically, but whether it can happen is a different matter. Verizon came to our office and said, ‘You’re stuck with Wi-Fi for now.’ But if we ever get to point where we can rely more on Bluetooth, 5G is really the way go; I would personally like to see that happen.”
“Interestingly, many technology experts now question whether 5G will ever hit its full potential via infrastructure deployment as AI hits a stride and other disruptive technologies begin to hit scale in their own right,” notes Kasselman. “5G’s rollout has been longer than projected, and new technologies including 6G are already on the horizon. And AI and quantum computing are on the cusp of being additive to everything as well, so it is likely that for the time-being, Wi-Fi and 5G will co-exist and complement each other in various large-scale deployments, before ultimately giving way to new and improved technologies.”
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