As we mentioned last week, the concept of NextGen Buildings seems to be gaining popularity. In the past, if you asked ten people their opinions of what a NextGen building was you would have gotten ten different answers. Some of the names we’ve used to describe these projects have been Intelligent, Smart, High-Performance, NextGen, eBuildings, NetBuidings, and so on. This year, we have seen a continuation of clarity on the topic and what seems to be the beginning of the next chapter in the evolution of Commercial Real Estate.

One of the most noteworthy observations of Realcomm 2003 was that we saw various stakeholders in the NextGen Building marketplace begin to come together for the first time. This continued at Realcomm 2004, where it was interesting to watch as each distinct group met and began to understand that there were other groups that also felt they were defining what a NextGen building was all about. The following represents the four areas that comprise the Intelligent, NextGen Building marketplace:

Enhanced Tenant Experience -- a building that delivers digital services and redefines the traditional tenant experience. This includes, but is not limited to, wireless communications, digital signage, enhanced security and new tenant experiences.

Automated Infrastructure -- the concept of "plugging" a building into the Internet and operating everything from parking gates to HVAC, potentially being managed from a central location, therefore reducing onsite staff requirements.

Paperless Business Communications -- operating a property in such a way where the business communications between an owner/operator/tenant and service provider are seamless, real-time and paperless.

Sustainable, Flexible, Efficient Design -- with the fast pace of the world today, efficiency and energy conservation has become more and more important. Buildings will have to be designed to operate with much more flexibility and efficiency. The traditional cost structure associated with bad design will force change in this area.

The following represent the major trends that were identified at Realcomm 2004 pertaining to NextGen Commercial Real Estate projects:

• The discussion has changed from technology issues to business drivers
• More and more organizations are working on identifying the value propositions of NextGen Buildings
• Various groups are beginning to work together to define these projects
• In Asia, they are developing NextGen buildings as well as cities
• The discussion of managing Internet connected buildings via call centers has begun
• Building automation strategies will involve the CEO, COO, CFO and CIO
• The United States has fallen behind in driving innovation and needs to reverse this trend
• Broadband is the foundation and owners will own and deliver it like water and electricity
• Very large companies are entering our market to deliver next generation concepts
• Traditional operating strategies will not be able to compete with this new automated model
• NextGen Buildings will generate more cash, lower expenses and be worth more in the long run
• Many traditional Property Management job functions will be replaced or augmented with new automation concepts
• Building Automation Standards groups are getting involved in the RE industry "Data Standard" initiatives
• The Building Automation sector needs to accelerate adoption of industry wide data standards
• Corporate America is beginning to understand the value proposition of NextGen Real Estate
• Digital Signage will be important component of NextGen Projects
• Building Automation systems will one day integrate into enterprise business automation solutions

At Realcomm 2004, we saw a significant and definitive rebirth of the Intelligent, Smart, NextGen building movement. This resurgence can be attributed to the emergence of six fundamental factors that came together in 2000 – inexpensive and more powerful computers, broadband, wireless, a standard wide area network (The Internet), Internet appliances and Internet-based Integrated Information Systems (IBIIS). Ultimately, these six fundamental technologies will work together to reshape how we own, manager and operate Commercial Real Estate.