The power of smart spaces
Unlocking new value in existing real estate
By William R. MacGowan, P.ENG., CEM
Across Canada and around the globe, property owners, investors, and tenants are facing a growing challenge. Portfolio values for Class B and C commercial real estate – solid, quality buildings that may be a little older or in secondary locations – have fallen by 20% to 35% over the last three years.
This trend affects commercial, healthcare, education, and public-sector properties alike. The common thread? Buildings are becoming stranded assets as people choose new places to live, work, and play, leaving once-vital spaces underused or even abandoned.
What’s driving the change
Several converging factors are accelerating this devaluation:
The persistence of remote and hybrid work
Shrinking physical space needs
Declining lease revenues as office buildings are converted to residential, hotel, or reimagined workspaces
A general divestment of traditional real estate assets as capital is redirected elsewhere. Many institutional investors, pension funds and REITs are redirecting their funds into more industrial properties, retail plazas and multi-family residential conversions.
Conditions such as these challenge the creativity of the architecture, engineering, and construction industry. These industries often respond with siloed, point-based solutions that miss the big picture and lack long-term integration, accountability, or adaptability.
A new approach is needed
This growing challenge requires new solutions. Organizations need to embrace 360-degree, lifecycle-based approaches that integrate systems, data, and stakeholders, from system design through ongoing operations. The goal isn’t just to build better—it’s to ensure that the asset remains useful, valuable, and relevant in the years to come.
From static assets to programmable platforms
The future of buildings lies in adaptability – driven by new technology. Rather than constructing fixed, purpose-built interiors, the new opportunities lie in designing programmable platforms—spaces that can evolve with occupants’ needs through regular software upgrades.
Now is the time for leaders to understand the opportunities of this shift. Taking a software-first approach to property design and management can future-proof your commercial real-estate investments – and generate new revenue streams by enabling you to meet customers’ evolving needs and expectations.
This shift—from physical product to digital service—unlocks new per-square-foot value and repositions declining assets as agile, future-ready resources.
What are use cases—and why do they matter?
In engineering terms, a use case is a practical, real-world scenario in which a system solves a problem or meets a need, such as reducing energy consumption, optimizing indoor air quality, or adjusting lighting based on occupancy. Use cases are the foundation of smart building strategies. They guide system design, control logic, and AI integration—ensuring that every component contributes to measurable, high-impact outcomes across comfort, sustainability, and operational efficiency.
The opportunity today is for building owners and managers to develop new functionality by extracting data from stand-alone smart systems, such as HVAC, security, lighting, and even Wi-Fi. Integrating these functions helps develop new ways to understand occupancy patterns and drive value through energy, comfort and maintenance services.
Use cases in action
When well executed, these smarter functions can turn tired old buildings into dynamic, responsive, self-adjusting environments. Consider the possibilities:
Workplaces that attract and retain talent
Offices that support community revitalization
Homes that encourage people to move back to urban centres from the suburbs
Healthcare spaces that support healing
Hotels that deliver elevated guest experiences
Assets that inspire reinvestment and reconfiguration
Each example represents ways that smarter spaces – enabled by AI and automation – can turn static buildings into more compelling, value-generating platforms.
With AI embedded in the control loop, buildings can automatically respond to variables like occupancy, temperature, and air quality, delivering smart, measurable outcomes in comfort, energy savings, and resilience. Result: energy savings of 30% to 40%, reductions in carbon emissions of between 24% and 50%, and 40% lower maintenance costs.
The time to act is now
AI-powered strategies are already proving successful across real-estate sectors. The leaders of tomorrow will be those who act today, with bold, collaborative, and future-ready solutions that transform buildings into adaptive assets built to last.
William R. MacGowan, P.Eng., CEM, is the Principal of Rowan Build, a digital building innovation consultancy.