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TECH READY BUILDINGS
Smart Building Journey:
Buying & Selling Assets
Let’s explore how smart technology affects the buying and selling of commercial real estate assets. We’ll discuss how smart building features influence valuation, buyer interest, and marketability, giving you the insights needed to make informed investment decisions. When buying a commercial real estate building, technology due diligence is a critical aspect of the process. This assessment evaluates the existing technology infrastructure, its condition, and its capacity to support future needs. Once this baseline assessment is completed, then a plan can be established on what repairs or upgrades are needed to support the new owner’s goals. Here’s what goes into a technology due diligence assessment and how it can impact the deal:

Planning and Installation
Current Building Technology (Physical Layer Assessment)
Examine the building’s current IT infrastructure with a focus on the conditions, capacity, and layout of physical components such as cabling, racks, and IT equipment, ensuring they are operational and compliant with current standards. Assess whether the infrastructure supports current technology and can handle future upgrades. Check the compatibility of existing systems (e.g., HVAC, lighting, security) with modern smart technologies. Ensure that these systems are integrated effectively with a Building Management System (BMS) if applicable. Well-integrated systems increase operational efficiency and can be a selling point. Poor integration may necessitate costly retrofits.
Smart Technology Readiness (Digital Readiness Assessment)
Assessing the smart technology readiness of a building involves a systematic evaluation of several key factors. Begin by examining the existing infrastructure: ensures that the digital infrastructure can support current and future smart technologies, including data analytics, cloud computing, and IoT integration. Evaluate the building's connectivity capabilities, including internet speed and reliability, crucial for supporting smart technologies. Consider the scalability and upgrade potential of existing systems to accommodate future technological advancements. This includes examining the capacity of network infrastructure to support new systems. Engage with tenants and property management, if possible, to understand their experiences with current technologies and gather insights on potential improvements. Review any sustainability or Smart Building certifications, as smart technologies contribute significantly to both. This comprehensive assessment will provide a clear picture of the building's readiness for smart technologies and inform strategic decisions during the purchasing process. Buildings that are future-proofed can attract higher offers and quicker sales. Buildings lacking scalability may face lower offers or require additional investment. What is the biggest advance is smart tech? AI – sifts through all the data faster and makes intelligent decisions
Smart Building Features To Positively Influence Valuation

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Due Diligence Checklist
A thorough technology due diligence checklist for purchasing a building should encompass various aspects to ensure comprehensive assessment and mitigate risks. When evaluating the existing IT infrastructure, examine the reliability and capacity of internet connectivity.
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This checklist should cover the previously mentioned smart technology integration and readiness. This includes identifying existing smart building features such as HVAC automation, smart water/electric metering, lighting controls, occupancy sensors, and other energy management systems. Note the condition of the devices and systems. Also, consider whether these technologies align with industry standards for sustainability and energy efficiency, as they can significantly influence operational costs and market appeal.
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By addressing these aspects in a technology due diligence checklist, prospective buyers can make informed decisions that align with their strategic objectives and mitigate risks associated with technological infrastructure in CRE office buildings.
Cyber Security and Vendor Management Risks
Cybersecurity and technology vendor management can greatly impact a building transaction, especially when addressing compliance standards for various laws and certifications. When addressing the security aspect of a building’s IT infrastructure, examine components such as network architecture, data storage practices, and access controls. Assess the presence of firewalls, encryption methods, and backup systems to safeguard sensitive information. This helps identify vulnerabilities and compliance issues with cybersecurity standards and regulations. Understanding how IT systems protect daily operations and tenant requirements is crucial, as any weaknesses or vulnerabilities could impact operational efficiency and tenant experience.
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Evaluate existing technology vendor contracts and relationships to understand service levels, security protocols, and potential liabilities. Evaluate vendor performance history, incident response capabilities, and ensure contractual agreements include robust data protection clauses and contingency plans. If possible, engage with current tenants and property management to gather insights on past security incidents, technology support responsiveness, and overall satisfaction with IT services provided. This holistic approach ensures a comprehensive evaluation of cybersecurity risks, facilitating informed decisions during the transaction process.
Valuations
When assessing building technology valuation during the acquisition of a new building, it's essential to adopt a multifaceted approach. By addressing the above listed sections, this should provide a comprehensive approach to capturing the correct data for a proper building technology valuation. How do these findings impact the deal and overall building valuation?
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Well-maintained and future-proofed technology can increase the property’s market value and attract higher offers. Transparent and comprehensive technology assessments can streamline the buying or selling process, leading to quicker and less stressful transactions. Properties with advanced, integrated technology systems and strong cybersecurity measures can stand out in the market, as they contribute to long-term operational savings and market competitiveness with greater tenant retention.
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Asset with below standard technology infrastructure can greatly Negatively Impacts the deal in various ways. Discovering significant issues with technology infrastructure can lead to additional costs for upgrades or repairs, impacting the deal’s financials. Assess the cost-effectiveness of the existing systems. Lower operational costs can be an attractive feature for buyers, while high costs can reduce the property’s appeal and potentially lower the sale price. Buyers may negotiate lower prices if significant technology issues are uncovered, or they may require substantial discounts to account for the cost of necessary upgrades.

Tech Ready Buildings Solution
A thorough technology due diligence assessment is crucial for both buyers and sellers. It helps identify potential issues and opportunities, influencing the overall value and appeal of the property. Addressing these factors proactively can lead to a smoother transaction and optimize the deal outcomes, for all parties involved.
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