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"For us, it's simpler to work with applications that go on top of the BOS because we can control the information being accessed. Without the BOS, transparency is limited, which limits the number of use cases.
By adding this data layer, we're dramatically increasing transparency and the possibilities of what else can easily be added on top."
—Grigor Hadjiev
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Episode 130 is a conversation with Grigor Hadjiev, Head of Development, ESG & Innovation at Allianz Real Estate in Paris, France.
We talked about why technology increases the value of Allianz’s portfolio of hundreds of assets, we talked about the where, what, how, and when of Allianz’s smart building program, including the vital independent data layer or Building Operating System as Grigor’s team calls it.
Before we dive in, I want to remind everyone to start budgeting for the next cohort of our Foundations Course. We use this course to help people across the world level up their impact in smart buildings and you can find more info at nexuslabs.online/foundations.
And without further ado, please enjoy this episode of the Nexus Podcast with Grigor Hadjiev.
📊 A message from our sponsor, Altura Associates 📊
Altura is a mid-sized, mission-driven firm delivering impact and performance across the built environment and they’re looking for the best in the industry to join their team. From designing and implementing corporate sustainability programs, to manipulating systems in the field to achieve performance, to building the tools that support project teams, Altura is committed to solving our world's macro-level problems through tangible projects today.
If you are interested in working alongside passionate colleagues to make a lasting impact, reach out at careers@alturaassociates.com.
You can find Grigor on LinkedIn.
Enjoy!
🏢 A message from our sponsor, Smart Buildings Center 🏢
The Smart Buildings Center Education Program (SBCEP) is a 501c3 non-profit organization that believes the smarter use of technology and practices in the built environment, particularly as they relate to building operations and management, will enable a cleaner, healthier and more productive future. The SBCEP seeks to establish thought leadership for smart technologies and practices within the built environment, and pursues its objective through the following pillars of activity: delivering training programs to educate the building workforce of the future; enabling industry leading demonstration projects; and connecting the industry through hosting and participating in smart buildings events.
Check out their body of work on The Essential Role of Smarter Buildings in the Clean Energy Transition.
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Music credit: Dream Big by Audiobinger—licensed under an Attribution-NonCommercial-ShareAlike License.
Note: transcript was created using an imperfect machine learning tool and lightly edited by a human (so you can get the gist). Please forgive errors!
[00:00:33] James Dice: Altura associates is a midsize mission-driven firm, delivering impact and performance across the built environment in north America. And they're looking for the best in the industry to join their team from designing and implementing corporate sustainability programs to manipulating systems in the field to achieve optimized performance, to building the tools that support those project teams.
Altera is committed to solving our world's macro level problems through tangible projects today. If you're interested in [00:01:00] working alongside passionate colleagues to make a lasting impact, reach at careersatalteraassociates.com. That's careers@alturaassociates.com.
[00:01:11] James Dice: This episode is a conversation with Greek or hajib, head of development, ESG and innovation at Allianz real estate in Paris, France, we talked about why technology increases the value of Allianz has portfolio of hundreds of assets. We talked about the, where, what, how, and when of Allianz is smart buildings program, including the vital independent data layer or building operating system as rigorous team calls it. Before we dive in, I want to remind everyone to start budgeting for the next cohort of our foundations course, we use this course to help people across the world level up their impact in smart buildings.
And you can find more info at nexus labs.online/foundations. So without further ado, please enjoy this episode of the nexus podcast with Grigor. Hi, Jeff. Jeff.
Hello Gregor. Welcome to the Nexus Podcast. It's great to have you.
[00:01:57] Grigor Hadjiev: Thank you, James.
[00:01:58] James Dice: Uh, [00:02:00] can you start by, uh, introducing yourself and providing a little background?
[00:02:04] Grigor Hadjiev: With pleasure. So, um, I'm in charge of, uh, the designing and execution of large CapEx programs in our West European, uh, region, Italians real Estate, and I'm also leading the global innovation digitalization. Activities bringing basically, um, data asset management into the firm's expertise. And prior to joining Alliance Real Estate in 2018, uh, I was leading the French speaking Switzerland's office of a large, um, real estate consulting and project management company.
[00:02:33] James Dice: All right. And what, what's your, your background? Is it, it technology.
[00:02:37] Grigor Hadjiev: I have a, I have a degree in architecture, uh, then a little bit more specialized in engineering, uh, building topics. And then, uh, I did a business degree, so I worked a little bit also in the finance industry. So I'm a little bit between the two worlds.
[00:02:52] James Dice: All right. All right. And you're, you're in France. Are you in Paris? Where are
[00:02:56] Grigor Hadjiev: I'm based in Paris and I'm covering out of Paris for [00:03:00] a couple of topics. The West Europe region and for other topics. Uh, it's a global function. Yeah. Out of Paris.
[00:03:06] James Dice: Got it. Got it. Cool. So tell us about Allianz. Um, number of buildings. Types of buildings. Where are they? Sounds like Western Europe, maybe Eastern Europe as well. Uh, and then what's the sort of real estate investment approach? How long do you guys hold buildings or is it more transactional? Can you just take us through an overview of the p.
[00:03:25] Grigor Hadjiev: Yeah. Yeah. So, um, Alliance Real Estate is managing over, uh, 91 billions of assets on the management. Uh, to give a number of buildings. This is difficult, but in Europe, for example, we have roughly speaking between 450, 500, uh, assets. Uh, in terms of asset classes. We are covering, uh, offices, retail logistics, but also reside.
Uh, and a little bit of hospitality mixed used and, uh, student housing. Our, uh, offices are close to our assets. That means predominantly in Europe, [00:04:00] uh, but also uh, in Asia Pacific, like in Singapore, in Japan, uh, in China. Uh, and so we have also offices across the United States, uh, where we cover the local markets in those types.
[00:04:13] James Dice: Got it. Very cool. So let's talk about, you mentioned digitization, and that's kind of part of your, your role. We're gonna talk about smart building technology obviously. Can you just talk broadly about how those two types of technology initiatives. Um, improve asset value. So how does, how does Allan's the real estate company look at technology to sort of make the buildings worth more?
[00:04:37] Grigor Hadjiev: Hmm. So, um, first of all, I need to mention that we are a long term, uh, investor. You asked me that in the previous question. Uh, that means that we hold the buildings for 10 years, uh, and more. Uh, and we need to manage our buildings, our clients buildings, uh, in the best way during this period and keep them attractive, uh, because we will either sell or hold them for another period.
After this already pretty long period. [00:05:00] So innovation and technology has to support asset management decisions, uh, to ensure continued portfolio attractiveness and resilience. And therefore we use technology innovation to improve this operational efficiency that we will speak a little bit later, uh, in details.
Uh, and uh, this is also a lever first. Lower the running cost of the buildings and to optimize the energy performance. Those two builders are fundamentally important and we believe that they're generating today's or help us to, to, to keep the value of our assets. Uh, at the same time, alongside this optimized performance, we are deploying technology to create.
Better, um, workplace to that is leading to high productivity, especially in office buildings for our tenants. And, uh, this is increasing, we believe the attractiveness to tenants who prefer to work in assets that are green and productive rather than one that are a little bit less capable. [00:06:00] Uh, and in best case, we think that through technology we can eventually, um, eventually, uh, get standards that are willing.
Uh, more for this high performing product, but even if they're not paying more, our assets, uh, stay, uh, less, uh, on the market empty, which is already improving the, um, the year visa and therefore the operating income. Uh, and I will not referring to all the studies on the market that are demonstrating that, uh, assets that are.
Are, uh, showing better, um, results, higher ends, that assets that are not green, we can observe exactly in all the portfolio, the strength, but we can definitely, um, we can definitely say that we see this kind of indications, uh, on the market. Yes.
[00:06:46] James Dice: Got it. And how do you think about smart building technology? Is that different than the digitization effort or digitalization effort? The way I think about it is like there are certain technologies that are helping us run the [00:07:00] building better, but then there are certain technologies that are helping just run the real estate business better.
And those might be mutually exclusive or they might be a similar, um, you know, you might check both boxes with a sim with one technology. Do you think about those two efforts as separate or are they, or, one, one, um, in.
[00:07:17] Grigor Hadjiev: So we handle differently internally the corporate innovation and let's say the smart buildings. Uh, on the corporate innovation digitalization side, we have the introduction of a lot of tools for Ali's real estate, for example. Place to underwrite, um, to do the business plans or, uh, or software to manage the portfolio on the larger scale, but it's more on financial and let's say high level and precise datas versus on the building side, we try to stay closer to what is happening on the technology, uh, and to make sure that with the building technology, we can at the same time increase the, uh, the energy performance, the user, the user [00:08:00] experience.
We believe that the user topics are a bit, the, the building topics are a bit closer, uh, to, to, to the assets, into the operations versus our own business. We have started already a couple of years ago to, uh, put the same solutions in place, for example, SAP for the accounting globally. So I can say that, um, we first, um, baselined and, uh, worked on our corporate solutions and then we started working on, on, on the buildings.
Uh, having one size, one size fits always a little bit more difficult than on the corporate size. Even if technology is helping to, uh, to baseline and to, to put similar standards across buildings, across different geographies.
[00:08:42] James Dice: Yeah. Yeah. Makes sense. So you mentioned all the different types of assets you, you guys have under management. Um, when you talk about like the user or the occupant experience, like you talked about with office buildings, like where the office building industry is going. Do you have something [00:09:00] similar? You mentioned dormitories, multi-family, industrial, do, is there something similar for those other verticals that, um, you know, kind of speaks to the importance of technology and engaging whatever end user that is?
So if I'm a
[00:09:16] Grigor Hadjiev: Yeah.
[00:09:17] James Dice: you know, it's a university
[00:09:18] Grigor Hadjiev: Yeah. Yeah.
[00:09:19] James Dice: are there similar reasons for technology in, in those other types of buildings?
[00:09:23] Grigor Hadjiev: Um, yes. So our focus predominantly with our smart building program is, uh, definitely on office buildings. One of the reasons that we operate them directly. Um, to answer your quick question, I think that, uh, across all asset classes, we use similar technology, but the use cases are very different. Uh, if the problematic in an office building is, uh, uh, in, in residential is how to optimize the energy performance, even if you use similar technologies, ultimately the, the way that we use that is different.
Uh, we don't do the same in student housing as we do in offices. [00:10:00] Even if. Uh, from a technical perspective, the technical solutions or digital solutions are similar because I can, uh, control, um, and I can manage closely in office building the heating and the cooling. But when I, when it comes to private areas, for example, in an apartment, uh, sometimes, uh, it, not sometimes, but this is generally, uh, in within the responsibility of.
Um, of the person that's of the occupiers that lives in this apartment, and sometimes he has like, uh, this, uh, different needs than, uh, than the one that we can see for office buildings. And, uh, so focus on office buildings because we operate in, but on the other asset classes, we systematically work with specialized operators.
You have mentioned student housing and. And the dormitory housing and also shopping centers. We work with partners and we observe that they use similar technologies than the one that we are using, but just for different use cases and in a different manner.
[00:10:58] James Dice: I [00:11:00] see. I see. Okay. I think that sets the, sets the context for us. Now, let's, let's sort of, sort of start diving into your guys'. Um, Smart Buildings program. So I think a good place to start would be to say just how do you define smart buildings? Um, you know, you know, I feel like it's where a lot of people start and everybody has their own definition, but I thought it'd be good to just hear from your, like, so we just kind of set the stage for what, what do you mean by smart building?
[00:11:27] Grigor Hadjiev: I, I, I know that I have been recorded of giving 10 different explanations across conferences of what is a smart building, so this will be the 11th one. I really think that the smart building is simply a good building. Uh, which means that, um, through, obviously through technology and through exchange of data across, uh, various technical installations, uh, the performance of the BUN is really optimized, the comfort is optimized, and this is happening in an obstacle free and seamless way for the end user.
And this is when we focus on [00:12:00] specifically on the technological side. But, uh, technology is just enhancer. Uh, and if you have a bad fundamentals of the buildings, bad architecture, bad design. Bad materials. You can have the smartest building, but if the fundamentals are, but you just have a bad building that is smart.
So we cannot completely dissociate, um, the smartness from the other intrinsic qualities of the building. But I would have qualified that as a, uh, as a, this kind of, uh, data layer that comes and that makes, uh, the technical installations communicate to each other. And that is just improving the way that the people are using, uh, the building and that the building.
[00:12:36] James Dice: Got it. Got it. All right, let's dive into that. So you guys have this, this team and program and sort of, um, long term plan, I would assume, for rolling out technology in your buildings. Can you just do an overview of like, you know, how many, how many people are on your team, what's your approach, what's the status of the implementation pilot stage, rollout stage, and then sort of what's the roadmap [00:13:00] for, you know, the next few years?
[00:13:02] Grigor Hadjiev: So, um, our, uh, smart building program, uh, we call it internally as per today, the building s. Program. Um, and this is a set of, uh, set of solutions, set of technologies that we have combined from the market that, uh, uh, help us to reach this use cases that we're speaking on until now. So, improve user experience, better comfort for the tenants, um, but also optimize energy performance, uh, and so on.
So, uh, we have selected globally a set of technologies and digital solutions that we have tested locally in our, across the different region. Uh, worldwide, uh, and we found the denominators, so the solutions that are, uh, bringing value, uh, systematically in all, uh, locations. So we combined these digital solutions and technical equipments into one set, uh, into one.
Uh, we bundle them in one place and, uh, we are aiming to cover, roughly speaking 20% of the net asset [00:14:00] value of our portfolio, um, by, uh, this program. So that means that our buildings, whenever this is applicable, That will have an energy management solution, that will have, um, user experience, uh, applications, user experience solutions.
And uh, what is very important is that, uh, on those buildings, we will collect a big amount of data in order to optimize, uh, the operations. Uh, and this data will also to help us to support, uh, the local, um, the, the users, the tenants, uh, in their everyday business. For example, we are supporting them with a return to office.
We are supporting them to improve. Uh, the comfort in the building by adjusting, for example, the temperature. We are supporting them to provide this obstacle free experience with entering into the office. Uh, with my phone, with my phone, I can then book a room. Um, I can also order food. Uh, so this kind of little services that are in the interface between what the tenant can do and what the landlord can provide.
So we have combined this set of solutions. We are deploying it [00:15:00] current. , uh, in Europe we have delivered already 15 big, uh, assets. And so we have another 30 assets across the planets that are, uh, within this process of smart, uh, of smart, of great. And here I would like to mention that uh, our building signature program has.
Two big fundamental pieces. One is, uh, the, the deployment of existing buildings within the portfolio. This is difficult piece because, um, we are adding costs, but the tenants are there and we need to work with them and to add a kind of a subset of our technological solutions to the buildings to cover a subset of the challenges that we have identified.
And on the other hand, we have a very strict long policy on how to refurbish buildings whenever we have large CapEx programs. And then we. We are coming with hundreds of pages of recommendations and the guiding principles and the design principles to make sure that everything that we know the best of our knowledge is deployed and will be deployed by our network of partners, uh, mainly across Europe.
So we have [00:16:00] upgrades of existing buildings, light upgrades, and then we have this kind of, uh, holistic, agnostic, uh, deep profound, um, ization that we deploy whenever we have a large CapEx programs, uh, across the portfolio.
[00:16:13] James Dice: Makes sense on, on those existing buildings that are occupied, you know, not, they're not undergoing a huge, you know, CapEx redevelopment. How do you work through the business case with adding costs, adding, uh, ongoing costs, um, to those buildings and those tenants? How, how does that work
[00:16:30] Grigor Hadjiev: Yeah, so it, it, it's a fair point. It's a fair point. I think my, um, executive board could have asked exactly the same one, and they're doing it nonstop, by the way. So, uh, in a nutshell, uh, when we have existing buildings, the main challenge that we are currently facing, that our existing buildings are facing is, Optimization for that, you basically need to, uh, to add a artificial intelligence, energy management solution.
If you want to take the low hanging fruit through, uh, through technology and to do, uh, uh, an active [00:17:00] energy management, you need basically to put a couple of devices in the building, like people counting, like temperature meters, comfort meters, uh, in order to make sure that. Uh, decrease the temperature in the building.
You still have a kind of acceptable comfort level from the tenants. And, uh, and also, uh, if you want to cut, uh, the lighting, you need to make sure that no one is in the building. So this occupancy adjusted, uh, energy management in the building comes with a kind of set of devices. Uh, and the second big trigger for existing buildings is, uh, cyber security.
We need to make sure where the data is flowing, how the data. Uh, where the data goes. We have access to the data, uh, and we need to make sure that there's some kind of, uh, basic stuff that are done in the building. And, uh, the third aspect. around that is, but this is really, uh, discussed with the tenants. Do they want to have some kind of, uh, uh, technologies that are improving the comfort?
For example, as we already track the, the, the air quality, uh, in order to optimize, uh, the energy performance. Uh, sometimes [00:18:00] when we discuss with them, they're saying, oh, you know, but, uh, because we have already this kind of occupancy information, I want to use that in order to switch to flex. Or, um, because I'm switching to Flex Desk, can you please add also this kind of, um, uh, tenant app control, access control?
So this kind of discussions, they're really case by case based, but the two fundamentals are easy improvements and, um, and cybersecurity. And they are driving the set of technologies that we need to deploy on the existing buildings. The costs are pretty low, so we speak about something. Uh, um, five and 12 euros per square meter.
Um, additional fees, additional costs. And this is then leading to, uh, on average 20% of energy savings and a lot of data that the tenant can use in his everyday business. As I mentioned already, like the return to office or to track tenants, how, how his own area is occupied. Are the people using the same floors on the building?
What do they, why don't go to certain areas. Um, how is the food and beverage offer, for example, used within the building? So [00:19:00] we're able to provide some analytics only based on the data that, on the devices that we need to put to do our two main topics. Energy optimization and cyber security. So we add these devices for energy performance and cyber security eventually for some comfort elements.
But then we use the data, and this is what this, this is what it becomes interesting. We use, uh, the data generator from those devices to add additional services and insights for, um, for example, the office manager or for the real estate team of our tenants. And this kind of insights are valuable for them to do. Adjustments, uh, of cleaning of, uh, uh, of, uh, the, the number of desks and others.
[00:19:43] James Dice: Got it. Let's circle back. I want a couple questions before we dive into some of the details around the actual infrastructure with, you know, how you enable all of this. Um, one is I think people be, be, will be surprised when they listen to this and they hear you. You know, we [00:20:00] have several hundred assets and, but then your Smart Buildings program is only really gonna be applied to, I think you said, 20% of them.
Can you, can you walk through like, what, what makes a building, um, qualify for this program?
[00:20:13] Grigor Hadjiev: Um, so, uh, probably I did not express it correctly. So we, we are targeting 20 billions, uh, of assets in the management that needs to be upgraded. Uh, this basically covers, uh, fast, uh, almost half of our directly managed assets. So I would have said that this is covering more every second suitable assets. So now what means treatable assets?
Um, a building to be qualified for our. , it needs to be obviously, uh, beginning needs to have some technical installations there. For example, central Building Management System. Uh, it needs to have a critical size. So we target buildings that are larger than 5,000 square meters. Uh, and, um, why, why we do that?
So we take a very small, uh, residential asset in the city center of Paris with, uh, 15 apartments. [00:21:00] Um, uh, the hitting the cooling and most of the, uh, most of. Let's say the production and of, uh, um, most of the services to the, to the departments are done locally within the apartments. So we can steer, for example, the cooling central because there is no central steering.
We cannot steer the, the lighting except on the common areas. But this is minor versus in an office building where we have, for example, a single tenant with which we work, it is much more easier to be impactful. So the. We take only, uh, big buildings. We do the predominantly on office, uh, on office assets.
And I think that, um, we will try to cover, uh, almost all buildings that are larger than 5,000 square meters and almost all, uh, office assets across, um, across Europe, uh, within, within the program.
[00:21:46] James Dice: It makes sense. So it seems like the first step in your sort of rolling out the program is to then analyze all of the buildings and say, you know, where do we apply this and where do we not, where does it make sense and where does it not make
[00:21:58] Grigor Hadjiev: Exactly this is, this is exactly [00:22:00] what we did for what we did, for example, with the, let's say 450 European assets, physical assets in, in, in Europe. So we screened them and we, for example, for some of them, realized that there is just not a building management system. If the building is, even if the building is big, because it's, it's an older building and as such, building will go into a refurbishment process in two years time.
So typically such a building. As per today out of the program because we know that we will refurbish it in two years time. And as we discussed a couple of minutes ago, when we do refurbishment, we do the full set. We deploy the full set. But as this process will start in two years time, we just keep these buildings that will undergo hardcore refurbishment.
We keep that. I'm saying that it's out of the program, but in fact, um, we can say that the program is a 5, 6, 10 years program and that the entire portfolio will sooner or. Go through this process, but currently we're targeting for the next three years to go, uh, with this, uh, uh, 20 billions of facets in the management.
[00:22:55] James Dice: Got it. Got it. Okay. Two last questions on the program you have. First is [00:23:00] you have some super fans on your team. Can you just talk next as super fans, some listeners to the podcast? Uh, so we wanna do a shout out to them, but also can you just talk about the team that you have that's kind of required to implement this sort of program across that many assets?
[00:23:15] Grigor Hadjiev: I think that I'm, I'm working with exceptional colleagues. Um, uh, first I will say a word about our strong presence locally. So we have in each, uh, um, location where we have, uh, big concentration of assets. We have, uh, a local team, local last management team. So we, uh, we work very closely with them and they're the one on the ground that is executing, um, the smart building strategy, the policy.
Uh, at the same time I'm extremely happy because I think I, I really work with the best people worldwide in terms of, uh, smart innovation digitalization. So we have a very small team of couple of people, four or five people. They're sitting here in Paris and together with them we define the global. , uh, we support the global rollout by, uh, setting the tools, by providing, for example, [00:24:00] the framework agreements, uh, and by negotiating some costs centrally, uh, on the European scale.
Uh, and to we support our, uh, local last management colleagues, uh, um, with some methodology and, um, with some manpower especially to start, uh, the, this, uh, this refurbishment project or to start the retrofits. So central team that works on the strategies, central teams that pick up the right technologies, um, central team that is negotiating the large, um, let's say the big framework.
Agree. So that we can have the same kind of qualities across Europe and central team that is consolidating the data. Once the, uh, upgrade is done, the data comes back to us. Uh, we structure, we analyze and we work with this data in order to mirror it back to the US management colleagues, uh, which will then use it to take better decisions in the everyday.
[00:24:51] James Dice: Yeah, and the reason I wanted to ask all these questions about the program is because I feel just, you know, talking to your team and. To you here, it, it feels [00:25:00] very much like you are, are very well integrated into the organization. You know, the organization from the top understands the value of technology and the value that each building can be, you know, more valuable it when technology is implemented in the right way.
And then you guys have taken this very strategic approach and, you know, done pilot projects and decided here are the use cases that we've, you know, picked out as valuable to roll out. And then you said, here are the assets where this applies. And then you've taken it and you've built a team around the program to sort of say, you know, these are the people that are required to like really make this.
Internally long term. And I just think that's, it's, it's rare, it's becoming less rare, but it's rare that there's that strategic of an approach of, you know, especially, you know, you know, for, you know, asset managers that, you know, it's not their core business to be smart buildings people. But having that, you know, internal team, I feel like is really important.
[00:25:57] Grigor Hadjiev: You've completely explained [00:26:00] the way that we are working. I need to stress out here that we have the full support from the executive committee where I'm presenting that is vetting the, the program, uh, and then we have the buy-in from our local teams because I think that they see the advantages. I'm not saying that everything is completely fluid and that there is nothing to be improved.
It's the right the opposite. So we are in the beginning. So we started two years ago, three years ago, and we learned a lot over these three years, but. . And I think that we are making huge progress, um, by doing it. And I think it's completely important for, uh, such strategic team, like, uh, the central team on smart buildings.
Also to work operationally on the projects, to go on the ground, not on all buildings, but to track and to follow. Couple of examples because we need to have this operational knowledge inside. Even if we do the pilots, we cannot roll it out on a hundred, a hundred hundred 60 buildings. I think this is what we have, what we are planning over the next three years, uh, we can, we can't, uh, cover with four people so many buildings and it doesn't make sense to have, uh, [00:27:00] only two people within an organization that understands from the topic.
It's really interesting to get everyone onboarded and everyone is adding something different from different backgrounds, from different perspective, from different country, and this is enrich. Constantly the problem. So we have top down, but then we have bottom up and it's constantly like a circle, top, down, bottom, up, bottom, up, down.
And uh, it's not a real gymnastic, but I think there is a very, there is a lot of positive vibes and interests, uh, uh, across the functional and business lines to, um, to go further in that direction.
[00:27:29] James Dice: Yeah. And I'm glad you pointed out the bottom up piece of it as well. Cause it's, it's, it is just sit kind of sitting in that sandwich of managing up and managing down for a team like yours and Yeah. That's super interesting. So let's, um, real quick, one aside before we deep dive into the technology a little bit.
Can you talk about for the people that, um, aren't in Europe and don't, aren't necessarily as familiar with Europe, the European market, can you talk about the importance of ESG and the importance of regulations as [00:28:00] well? Um, when it comes to carbon and sustainability?
[00:28:03] Grigor Hadjiev: Uh, so your question is outta Europe or specifically for your part. I just missed the
[00:28:06] James Dice: Specifically, Specifically, for Europe, um, you know, this audience is, you know, 60%, uh, north American probably. So there's a good amount of people that are gonna be listened to this, that are not as familiar with what's going on in Europe from a sustainability and from a, from a decarbonization
[00:28:23] Grigor Hadjiev: Got it. So, um, I, I, I would mention couple of elements that I will combine them into, into a summary. So, um, uh, Europe is very, uh, driven by regulations. Uh, so the US is a little bit more deregulated market, uh, as well as Asia. So Europe is very driven by regulations and um, I'll give the examples, the, an example from from France.
So in France, uh, we are supposed to respect European regulation. For example, the European taxon me that is giving like a kind. Direction of what should be the performance of a building in the future, uh, in a, as part of this, um, investment taxonomy alignment. Uh, and at the same time we have in France what we call the, so [00:29:00] this is a French specific regulation that is extremely specific about what should be the energy performance of a building tomorrow.
And for example, the French is saying that a building energy consumption in 2030 should be less than 40%. Compared to, uh, a year, uh, before 2018. So we have something that is extremely tangible. We need to optimize energy performance of building by 20% in 10 years. Then we have, uh, uh, specific other regulations that are coming from a, for example, A is committed net zero.
That means that all our assets are supposed to be carbon neutral by 2015 according to the crime methodology. And this is just added different one piece and another piece and another piece. So this is just different. Regulations that are going into direction of energy optimization. And at a certain point, um, the people, the tenants are there also looking for, uh, for, uh, for greener buildings.
So we have on one side the market. The market is looking for better products, and on the other hand we have, uh, cumulative [00:30:00] regulations on each other. This is very European. And when you all the ingredients and when you put all things into one place, you see that one way of doing it is just to refurbish the building.
Plan A or plan B is you need to, uh, through technology to some guys somehow optimize operation of the assets. Obviously by working together with the tenants. So we is no way in between in terms of ESG performance, so, or you need to go to hardcore or you need to use technology and to work a lot with the tenants in order to, uh, to, to improve, um, uh, with a, a big impact.
So alliance in that reason, uh, and this is one of the reasons why I think that also we run the innovation program out of Paris because France. Very, in France, we have a lot of restrictions that do not exist in other countries. So our life in France is more difficult than in other countries, but the European life is more broadly, more difficult than an Asian or us, uh, esg, ESG life.
At the same time in, in US, for example, I, I see that the topics of, um, uh, of the social aspects of the ESG are very important [00:31:00] versus in. Uh, we have a very strong e very strong, uh, let's say focus on E and not only on, uh, on the. Proper energy aspects, but more, more broadly. Also, for example, on biodiversity about circular economy and the materials that are used, uh, about water, about waste.
So this kind of topics are much more linked to the E, but at the same time, we're a little bit less focused on the s. So when we need to build a global strategy on innovation, smart and on esg, uh, we definitely need to combine, uh, in, in, in our site. So I'm, I'm leading the innovation aspects, but I work also with my colleagues from the central ESG team.
So we, we try to combine this kind of different expectations since we try to find the common denominator. What is common? Uh, through what works in all geographies and we are only learning, uh, from each other But yes Europe is a little bit more restrictive and the expectations in Europe have are tending to increase uh within the next years which is already the case but it's just getting tougher and tough each other. But yes, [00:32:00] Europe is a little bit more restrictive and the expectations in Europe have, are tending to increase, uh, within the next years, which is already the case, but it's just getting tougher and tough.
[00:32:09] James Dice: Got it.
Now I know many of you enjoy the virtual smart buildings exchange conference in August. The team behind that conference is the smart building center education program. Uh, 5 0 1 C3 non-profit organization that believes a smarter use of technology and practices in the built environment, particularly as they relate to billing, operations and management will enable a cleaner, healthier, and more productive future. The smart building center seeks to establish thought leadership for smart technologies and practices within the built environment and pursues its objective through the following.
Pillars of [00:33:00] activity first. They deliver a training programs to educate the building workforce, the future second, they enable industry leading demonstration projects, and finally they connect the industry through hosting and participating in events like the smart buildings exchange conference. So check out their body of work on the essential role of smarter buildings into clean energy transition at the link in the show notes. And when you get in touch, tell them nexus labs center.
[00:33:25] James Dice: it. And, and how big of a deal is. Decarbonization and specifically electrification of heating. Um, you know, if you look at a city like New York City, for example, if we go back to last week's podcast, you know, the group talked about how um, you know, they have local law 97 and it just continues to ratchet up the expected performance and the regulated performance of each building to the point where if you burn natural gas, you start to go out of compliance even if you have a really efficient building.
How big of a a, a deal is that? I know that in France it's a heavy [00:34:00] nuclear country, right? So you're, you're already electrified for the most part, or the electrification electricity grid is clean, whereas if you go east in Europe, it, it seems like there's a heavy natural gas component and a lot of systems are probably burning fossil fuels today.
So how do you guys think about that and is that a separate team within Allian that sort of focused on that piece?
[00:34:22] Grigor Hadjiev: it's,
it, so in terms of organization, we have, we are hybrid organized, so we have a strategy and then we have execution. Execution of ESG in my region is also with me. It's within additional team, but it belongs to the same community. So I can answer this question. Um, your first point was, what is the. how do we compare energy performance across countries and geographies?
This is first fundamental point, and here we are using, uh, the creme um, uh, methodology and the creme methodology is taken into account for each specific country. The mix, in order to define what can be the [00:35:00] derealization curve for each specific country and for each specific asset class. This helps us to eliminate this kind of, Uh, subjective, uh, thinking about, uh, uh, how to, how to convert, what, when in which units and what is good, what is bad.
Uh, and the grammatology is bringing basically two, uh, two main KPIs, um, upfront. One is the carbon footprint. This is what everyone is mentioning. Uh, but the second one is the kilowatt tower. So this is, I. The kilowatt tower per square meter per year. And uh, in your point, in your example about, uh, am I green if I use gas, uh, and even if my building is very efficient, but it uses gas, probably it's not very efficient in terms of carbon.
And this is one of the interest of the CRE methodology because you will have the two indicators. Is your building intrinsically, um, uh, uh, intrinsically, uh, let's say efficient and, uh, optimized. And then if you have a low energy [00:36:00] consumption, uh, which is the same across the same, uh, let's say we expect to have across the same latitude and geographical position in the.
See, pretty similar, uh, energy consumptions. But if you go to the north, to the south, you expect to have some variation. For example, the northy countries, they're overhitting, they're hitting a little bit more in the wintertime and the south countries, they're, they're, uh, they're cooling more in the winter.
So based on the geographical setup, um, you have different patterns in terms of energy consumption. And then the second question is, how do we qualify? As a green, and you mentioned the nature of gas one, I will not go into commenting. The decisions of creme is. Uh, green is, uh, green, uh, is, uh, is the natural gas green, but even if we like it or we don't like it, uh, there is for the first time a kind of reference model, uh, that is saying, okay, this is good.
This is not good. And then everyone is free to, to to, to get the data, to go into the details and to see, okay, I have a very good, uh, very [00:37:00] optimized, uh, building, but that is in terms of energy intensity, but still in. CO2 intensity and very high. So do I need to put a lot of CapEx in the building? No, because even if you put a lot of CapEx in a building that is intrinsically optimized, this will not change almost anything.
You'll just spend a lot of money because the building is already consuming a less, less energy. So in order to improve the carbon footprint, you need to look differently to the topic and, uh, . This is the point where I think that the overall global knowledge needs to move forward because you pointed out things that we are also thinking about and for which I cannot give a black or white answer, but just think that we need to look at the two KPIs entrance, the energy qualities of the building.
So through the Kwa Thes core meter per year and through the um, uh, co2 uh, emissions. Per year to make sure that we can, we can really understand, uh, what is triggering a bad performance. Is it the intrinsic or it's just the type of energy that is used, uh, or the source, or how greener is the source.
[00:37:59] James Dice: [00:38:00] Got
it. .Great. Great answer. I love that. So let's, let's talk about the technology. I know you guys, um, when I talked to your team, they talked a lot about, we, we, we probably talked for an hour about the concept of an independent data layer and the. You guys call it, I think building operating system.
Um, so can you just talk about, and, and I I think you were already talking about it a little bit before, when you talk about having occupancy, counting occupancy data, using that for energy optimization, but then having that data available to be used for other use cases like space planning and you know, whatever else you want to use it for.
So can you just talk about that sort of. Infrastructure and the importance of having that layer figured out and how you guys have sort of gone about, um, building that layer out in your program.
[00:38:46] Grigor Hadjiev: So,
um, uh, I will probably not satisfy with my answer the geek community, um, because I'm that representative of the geek community, but I'll explain with, with my, with my own words. So, um, historically the building [00:39:00] generates a lot of data, but this data goes into all directions, and sometimes in the same building we have.
Seen in the buildings from 10 to 10 years old, a couple of devices that are measuring exactly the same occupancy. And I was wondering why do we have like several devices that are managing, that are measuring exactly the same thing? And the answer is because they are coming with specific technical equipments and the equipments wants to measure himself, I think alone. And I said, interesting point, but so I need to maintain couple of devices just to have the same wrong information because they're systematic. Something is wrong with them. So our logic with the, the data, with the data layer, or what we call internal building operating system, is simply to make sure that the different technical, uh, equipments they're able to exchange in the same language.
One and B, that uh, if I need an information, there is a unique source of true for this information within the building. So if I need the occupancy, I'm, I will measure the occupancy once, and then this data will be shared with other, let's say, uh, technical equipments within the building or technical installations, or let's say whoever [00:40:00] needs, needs this data.
Um, but I know what is the source of truth this. Uh, and then the use cases are multiple. Historically, the use cases of the occupancy was were only, I needed to know if there is on offer the lighting, so no people. No lights, people light, uh, but today we know that there are plenty of other use cases, and we started defining the use cases, and we just realized that for us, as you mentioned, we can list a lot of use cases, but over time we are just adding new use cases, new use case and use cases.
So the denominator for all these use cases is data, and what we call the building operating system is just this data layer where all the data. Is kind of, um, structured. This is very important. So the data is structured, it's stored, and uh, we can manage the accesses to this data to different, uh, equipments, uh, to different stakeholders like the facility manager, uh, asset manager, and other people that really need to know that for whatever the reason that it is so central place where the [00:41:00] data is stored, where the data is analyzed, and where we can manage this kind of,
[00:41:05] James Dice: Yeah,
you mentioned earlier it was kind of like, it's kind of like the materials in a building and the way that I think about it is like, it's kind of like the infrastructure to a building. It's like you wouldn't buy a building. Plumbing, for example, or you wouldn't buy a building without internet or the, you know, electrical infrastructure.
And so the data infrastructure, it seems like you're, you're starting to think about that in the same way as any other type of infrastructure or any other type of finishing in the lobby or things like that, that they increase the asset value. Is that kind of how you're, you're thinking
[00:41:36] Grigor Hadjiev: Um,
yes, in the sole purpose of adding a value somewhere, which means energy efficiency, user experience, cyber security, or for us, To get this kind of analytics so that we can take better decisions. We believe that the infrastructure, uh, is part of the overall technical, let's say logic of the building. So we cannot dissociate the, the data flow from, uh, how the [00:42:00] building is operated.
So this is part of, uh, uh, of, uh, it's one component of the building. Like, uh, the HVAC is one component, the networks is another. The, the place where the data is gathered and redistributed across other equipments is another one. Uh, so this is a little bit the way that we, that we see that, because if you don't work specifically on that, on this integration from equipments a across, um, uh, across the building into one system, we can, uh, we cannot perform the other, uh, tasks and use cases.
So yes, we need see it as a separate, uh, as a separate asset within the building.
[00:42:36] James Dice: and,
and, after talking to your team, I learned that you guys kind of think about it in an interesting way. You think about this infrastructure, this data layer as kind of. Something that needs to be local to the building that lives as an asset locally that you, if you know, if the building turns over in a transaction, that asset goes with it to the new owner of that building.
I know you [00:43:00] guys like to hold, you know, typically hold buildings for a long time, but the way that you're thinking about it is like this asset lives as a piece of infrastructure with the building. Is, is that kind of how the business of Allan's kind of thinks? Okay.
[00:43:13] Grigor Hadjiev: So,
um, first we're in the beginning of this process. Uh, and, um, yes, our conviction as per today is that we want the building to be a little bit independent and to be run in an independence way from the entire global network. Uh, because we see on the market and, um, I will not surprise anyone. We know that a country can cut the access for some solution to another country and we don't want to, to be a kind of victim somewhere that our buildings are victimized somewhere.
So, uh, first the building needs to be, uh, operated, needs to be. So we need to make sure that all our buildings can be operated. First of all, then is the building operating system on premise or on the clouds? I think this is the second question, but in all cases, we need to make sure the building can run and can be managed, uh, locally, uh, in a completely independent [00:44:00] way from the network.
This is our conviction from a pure resilience topic. Uh, and then the topic of on-premise on cloud. I think that if it's built in a similar way, we can always mirror, uh, the information on a cloud if there is any interest to do that, or we can always try to have also the cloud solution to steer and to, to achieve scalability for several buildings.
On a Boss Cloud solution, let's put it in this way. Um, but to be honest, today I'm a little bit skeptical and I will go for a low tech solution. So manage all buildings remotely from a central boss that is managing 60 buildings centrally. Um, why not? But I don't think that will be the first one doing that, even if we already.
Two examples that we have delivered in this way, but it's not, it's not our strategy to be so dependent on cloud solutions. We really want to make sure that the building can be operated locally.
[00:44:54] James Dice: Hmm.
Yeah. Yeah. Very cool. So, um, when I think about the [00:45:00] building operating system or the independent data layer, I think about it as, you know, a horizontal layer that then applications can sit on top of, right? So, um, you mentioned, I think you, I think your words were ai, active energy management, so, That, that's maybe one app that sits on top of the building operating system, basically controlling systems better than they would be controlled if, if not, for that application.
What are the other applications? You mentioned tenant, um, or, you know, occupant experience application. Are there any others that you're, you're looking at, um, as being an important piece of the stack that sort of sits on top of the
[00:45:36] Grigor Hadjiev: Mm.
So, um, currently, uh, You, you, you're mentioning the one that is probably the most critical one. So in, in the, in this year of the energy management, we have also manage, uh, an energy monitoring one. Uh, so we are working with deep kit, not a secret that is gathering the portfolio information, uh, the consumption from the portfolio, um, on the European level.
Uh, and uh, then [00:46:00] we have also. Uh, facility management enhancement solutions like, uh, twin ops, um, that is used for the facility manager in a 3d. Um, they're using 3D model and the real time data in order to optimize the way that they operate the building. They replace per parts and so on. Uh, and we also, uh, on top of the building operating system there, we have our own data as management platform where we extract meaningful data for us, for our.
Use cases. Um, but you are, uh, right, that, uh, the, the, the bosses endless, endless number of solutions. So I think that we're really at the beginning and we see that our tenants, they're deploying their own solutions on top of the boss that are linked to the way that they. Are living their assets. So, uh, for example, meeting room, booking solution that is then integrating with the Boston, whenever you book the room, the book, the room is ventilated and so on.
So I think that the [00:47:00] importance here is really boss. I don't think that we are there yet with all possible applications that you can build on top of that. Uh, I think that in the next year, this is a very big market, and if someone wants to invest somewhere, uh, I definitely recommend to go into, look, what can you put on the boss, uh, in order to create value.
Uh, because for us, it's just simpler to, to work with such applications that come on top of the boss because we can control the information they are accessing. Uh, we know that, for example, the NH management partner is accessing the information. Um, the, the smart meters from the occupancy, from, uh, the comfort.
And we know exactly what he's, what, what he's using, and the way that he's using that. Uh, in the previous time, without boss, they just access to something we don't know, to what We don't know what they're doing. We don't know what kind of command they're also giving to the hr. Uh, um, and, and this kind of in transparency, uh, is limiting the number of use cases.
And by adding this data layer, we're just. Tremendously, dramatically the transparency. Uh, and starting from now, we can think, I think we're leaving the beginning of, uh, [00:48:00] thinking what else can be added. Uh, on top of that, obviously the, the, the kind of gateway solutions and cybersecurity aspects, um, that, uh, that are solution, that cybersecurity solution that are helping us to monitor better the networks is also something that goes easily on top of the boss versus, uh, uh, versus individually to try to secure plenty of networks.
So just a couple of examples.
[00:48:23] James Dice: Yeah.
Yeah. And I think the reason why your team listened to the podcast is the same reason that what listening to you is like, music to my ears, because we're, we're in such alignment with how the, you know, the stack should be built up and you. Uh, how smart buildings should be, should be done. And it's that horizontal approach, you know, network layer, data layer, application layer on top.
It's just the only way to then enable multiple applications. And like you said, you don't, you didn't know that your tenants were gonna build these different applications on top, right? [00:49:00] You just wanted to their building to be ready so that the tenant can do what they want with their data. And I think that's the piece.
We as an industry haven't quite grasped yet. Um, and it's the reason why I spent most of this year talking about it. So if I look back on 2022, that's the main thing that I've been sort of just pounding over and over and over again. And I, I love to see organizations like yours say, you know what? This is the way that we're gonna do it, and you're doing it independently for me.
Right? It's like you guys are, have come up with this on your. Um, and it's good to see people sort of mirroring the same approach as a best practice, uh, which is awesome. So what are the next steps in the program? It sounds like scaling up is a, is a big priority. Um, applying it to existing buildings, applying it to, like you said, capital projects, redevelopments.
What, what are your, what are your sort of, what's your sort of roadmap?
[00:49:53] Grigor Hadjiev: uh,
one of our challenges is acceleration of the deployment of the installation of the devices and across the assets. Uh, [00:50:00] there is a lack of partners, lack of, lack of competent people on the market. There is no industry for that, to be honest. Um, so there. I'm going back to what I said. So it's not that they're not competent people, but uh, the offering is not structured.
And, um, and this is, and when it's structured, it's completely structured different from one country to another one. And this is hindering us as a global player because, uh, in one country we go to the telecommunication operator to ask them to deploy devices in another country. We go to a construction company, another country we go to, um, to the facility manager, another country we go to, um, to, to the manufacturer of the h.
And, and it's, it's so, it's so disparate. So it's, so, um, there is no denominator for that. So one of our challenges is to make sure that we can deploy, um, the iot devices and set of technologies in a fast way, uh, across our geographies that we're looking for partners. And the second big challenge that we have is on the large refurbishments where we, where we put a hundred percent of our knowledge.
Um, we need to systematize more the role of the master [00:51:00] system integrator. That it's, uh, not a known, very well known role. Uh, a lot of, uh, different design, uh, engineering companies, they think that they can do it without really being able to do that. So, uh, we are becoming very, very, Uh, sophisticated in our requirements for the master system integrator because whenever we don't have a master system integrator, we just need to restart, to restart, to restart until ultimately we get one.
Uh, and uh, so we are, I think the next steps for us is to deploy on the bigger scale. On the largest scale to continue the deployment that we have already started. And two, to start working with the data that we are gathering because we start having a very valuable data across Europe. And so we would like to build a data as management function, which means that we need to analyze in a deeper way some trends and some tendencies across our portfolio.
For example, is it true that the people in big cities, uh uh, are more likely back to the. Uh, and is it true that the, uh, the offices in, uh, mid-sized cities, [00:52:00] uh, are not so, so this kind of trends, we start to having a kind of insight, and this is very important for us to build up further these competencies as well as next steps.
I will say. The deployment of the cybersecurity program, cybersecurity piece within the smart building program, which is a completely new piece that we have deployed only a couple of assets, but there as well, we need to, we need to build up competence internally and we need to bring our partners as well on the right level of competence because, I think that today we are teaching sometimes people that were supposed to be experts in that.
Uh, and those companies are telling us, yeah, but we never asked us something like that. So I think it's a, it's a partner in a partnership models. This is how we move forward and, uh, I just expect in the future that, um, On one hand, my teams continue to be as motivated and passionate as they are today about the topic, not to count working hours.
Uh, and then that we continue to work with good partners on the market because this is how we learn. We do not produce any software internally. We do not produce any technology internally. Our [00:53:00] role internally is to combine them and to make sure that when we deploy, uh, this is creating value. Uh, because ultimately our role, and I need to repeat that, uh, Alliance Real Estate.
We're an investment and asset manager, so we need to make sure that we increase the portfolio value, and this is what we try to do through technology and all the things that we have discussed today. And therefore, we do not invent any, anything new. We just put things together.
[00:53:24] James Dice: Totally.
Totally. That was a great place to end off. I think those are great directions to head. Well done putting together this program. Well done. Putting the pieces together, including all the people on your team. Um, let's end with some, some carve outs. So are there any books or podcasts or documentaries or anything else that sort of had, has had a major impact on you lately?
[00:53:47] Grigor Hadjiev: I,
I, probably, I will surprise you, but, um, I'm, I'm watching kind of documentaries for my five years old son on complex topics and I'm watching them and I say, oh my gosh, the explaining is [00:54:00] such a complex topic in such simple way. Uh, so, um, I will further tell you the name of the series. They're in French, but my learning from that, Uh, a lot of people spend a lot of time to simplify very complex topics, and I think that's, this is one of the challenges that we have, uh, in, in the field of smart and building technology, uh, is that we need to find a way to explain that with simple words.
Uh, to people, uh, um, that are supposed to use it, but that are not supposed to, to do it. And, uh, this is where I want to answer. I wish that I would be able one day to do this kind of documentary and smart buildings for my son and someone. Sometimes when I need to, uh, to speak with people, I'm thinking, how can I oversimplify exactly as I need to my son what I'm doing in the office?
And it's very difficult and I'm not there at all. But I hope that I will be able to, to, to, to go to that.
[00:54:51] James Dice: I'm
with you on that. I feel like it's, it's the challenge that I have in the position that, that I'm in, which is continue to push the [00:55:00] envelope and, and get to the edge with the, like you said, the nerds of the industry. I always say that I'm, I'm, I'm a proud nerd and I love our community of nerds, but we're, we need to push the edge of the envelope.
Well, at the same time, simplifying it to bring more people into community of Right? Um, and that's the, that's the balance that I feel like we're always trying to struggle with, with Nexus. And I find it to be very fun because I'm not the utmost expert in any topic. And so I'm kind of following along.
With the nerds to get to the edge. And then I'm kind of, I view myself as like, I gotta bring the, the people that aren't in the circle along with, you know, you know, try to get them up to where I'm at, you know, following along with the nerds. So I'm, I'm with you in that. I think it's super important and it's, it's, it's how we sort of create change, I think.
thank
you Gregor, for, for coming on the show. Uh, thanks for doing what you do.
[00:55:52] Grigor Hadjiev: James.
The pleasure was mine.
"For us, it's simpler to work with applications that go on top of the BOS because we can control the information being accessed. Without the BOS, transparency is limited, which limits the number of use cases.
By adding this data layer, we're dramatically increasing transparency and the possibilities of what else can easily be added on top."
—Grigor Hadjiev
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Episode 130 is a conversation with Grigor Hadjiev, Head of Development, ESG & Innovation at Allianz Real Estate in Paris, France.
We talked about why technology increases the value of Allianz’s portfolio of hundreds of assets, we talked about the where, what, how, and when of Allianz’s smart building program, including the vital independent data layer or Building Operating System as Grigor’s team calls it.
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Note: transcript was created using an imperfect machine learning tool and lightly edited by a human (so you can get the gist). Please forgive errors!
[00:00:33] James Dice: Altura associates is a midsize mission-driven firm, delivering impact and performance across the built environment in north America. And they're looking for the best in the industry to join their team from designing and implementing corporate sustainability programs to manipulating systems in the field to achieve optimized performance, to building the tools that support those project teams.
Altera is committed to solving our world's macro level problems through tangible projects today. If you're interested in [00:01:00] working alongside passionate colleagues to make a lasting impact, reach at careersatalteraassociates.com. That's careers@alturaassociates.com.
[00:01:11] James Dice: This episode is a conversation with Greek or hajib, head of development, ESG and innovation at Allianz real estate in Paris, France, we talked about why technology increases the value of Allianz has portfolio of hundreds of assets. We talked about the, where, what, how, and when of Allianz is smart buildings program, including the vital independent data layer or building operating system as rigorous team calls it. Before we dive in, I want to remind everyone to start budgeting for the next cohort of our foundations course, we use this course to help people across the world level up their impact in smart buildings.
And you can find more info at nexus labs.online/foundations. So without further ado, please enjoy this episode of the nexus podcast with Grigor. Hi, Jeff. Jeff.
Hello Gregor. Welcome to the Nexus Podcast. It's great to have you.
[00:01:57] Grigor Hadjiev: Thank you, James.
[00:01:58] James Dice: Uh, [00:02:00] can you start by, uh, introducing yourself and providing a little background?
[00:02:04] Grigor Hadjiev: With pleasure. So, um, I'm in charge of, uh, the designing and execution of large CapEx programs in our West European, uh, region, Italians real Estate, and I'm also leading the global innovation digitalization. Activities bringing basically, um, data asset management into the firm's expertise. And prior to joining Alliance Real Estate in 2018, uh, I was leading the French speaking Switzerland's office of a large, um, real estate consulting and project management company.
[00:02:33] James Dice: All right. And what, what's your, your background? Is it, it technology.
[00:02:37] Grigor Hadjiev: I have a, I have a degree in architecture, uh, then a little bit more specialized in engineering, uh, building topics. And then, uh, I did a business degree, so I worked a little bit also in the finance industry. So I'm a little bit between the two worlds.
[00:02:52] James Dice: All right. All right. And you're, you're in France. Are you in Paris? Where are
[00:02:56] Grigor Hadjiev: I'm based in Paris and I'm covering out of Paris for [00:03:00] a couple of topics. The West Europe region and for other topics. Uh, it's a global function. Yeah. Out of Paris.
[00:03:06] James Dice: Got it. Got it. Cool. So tell us about Allianz. Um, number of buildings. Types of buildings. Where are they? Sounds like Western Europe, maybe Eastern Europe as well. Uh, and then what's the sort of real estate investment approach? How long do you guys hold buildings or is it more transactional? Can you just take us through an overview of the p.
[00:03:25] Grigor Hadjiev: Yeah. Yeah. So, um, Alliance Real Estate is managing over, uh, 91 billions of assets on the management. Uh, to give a number of buildings. This is difficult, but in Europe, for example, we have roughly speaking between 450, 500, uh, assets. Uh, in terms of asset classes. We are covering, uh, offices, retail logistics, but also reside.
Uh, and a little bit of hospitality mixed used and, uh, student housing. Our, uh, offices are close to our assets. That means predominantly in Europe, [00:04:00] uh, but also uh, in Asia Pacific, like in Singapore, in Japan, uh, in China. Uh, and so we have also offices across the United States, uh, where we cover the local markets in those types.
[00:04:13] James Dice: Got it. Very cool. So let's talk about, you mentioned digitization, and that's kind of part of your, your role. We're gonna talk about smart building technology obviously. Can you just talk broadly about how those two types of technology initiatives. Um, improve asset value. So how does, how does Allan's the real estate company look at technology to sort of make the buildings worth more?
[00:04:37] Grigor Hadjiev: Hmm. So, um, first of all, I need to mention that we are a long term, uh, investor. You asked me that in the previous question. Uh, that means that we hold the buildings for 10 years, uh, and more. Uh, and we need to manage our buildings, our clients buildings, uh, in the best way during this period and keep them attractive, uh, because we will either sell or hold them for another period.
After this already pretty long period. [00:05:00] So innovation and technology has to support asset management decisions, uh, to ensure continued portfolio attractiveness and resilience. And therefore we use technology innovation to improve this operational efficiency that we will speak a little bit later, uh, in details.
Uh, and uh, this is also a lever first. Lower the running cost of the buildings and to optimize the energy performance. Those two builders are fundamentally important and we believe that they're generating today's or help us to, to, to keep the value of our assets. Uh, at the same time, alongside this optimized performance, we are deploying technology to create.
Better, um, workplace to that is leading to high productivity, especially in office buildings for our tenants. And, uh, this is increasing, we believe the attractiveness to tenants who prefer to work in assets that are green and productive rather than one that are a little bit less capable. [00:06:00] Uh, and in best case, we think that through technology we can eventually, um, eventually, uh, get standards that are willing.
Uh, more for this high performing product, but even if they're not paying more, our assets, uh, stay, uh, less, uh, on the market empty, which is already improving the, um, the year visa and therefore the operating income. Uh, and I will not referring to all the studies on the market that are demonstrating that, uh, assets that are.
Are, uh, showing better, um, results, higher ends, that assets that are not green, we can observe exactly in all the portfolio, the strength, but we can definitely, um, we can definitely say that we see this kind of indications, uh, on the market. Yes.
[00:06:46] James Dice: Got it. And how do you think about smart building technology? Is that different than the digitization effort or digitalization effort? The way I think about it is like there are certain technologies that are helping us run the [00:07:00] building better, but then there are certain technologies that are helping just run the real estate business better.
And those might be mutually exclusive or they might be a similar, um, you know, you might check both boxes with a sim with one technology. Do you think about those two efforts as separate or are they, or, one, one, um, in.
[00:07:17] Grigor Hadjiev: So we handle differently internally the corporate innovation and let's say the smart buildings. Uh, on the corporate innovation digitalization side, we have the introduction of a lot of tools for Ali's real estate, for example. Place to underwrite, um, to do the business plans or, uh, or software to manage the portfolio on the larger scale, but it's more on financial and let's say high level and precise datas versus on the building side, we try to stay closer to what is happening on the technology, uh, and to make sure that with the building technology, we can at the same time increase the, uh, the energy performance, the user, the user [00:08:00] experience.
We believe that the user topics are a bit, the, the building topics are a bit closer, uh, to, to, to the assets, into the operations versus our own business. We have started already a couple of years ago to, uh, put the same solutions in place, for example, SAP for the accounting globally. So I can say that, um, we first, um, baselined and, uh, worked on our corporate solutions and then we started working on, on, on the buildings.
Uh, having one size, one size fits always a little bit more difficult than on the corporate size. Even if technology is helping to, uh, to baseline and to, to put similar standards across buildings, across different geographies.
[00:08:42] James Dice: Yeah. Yeah. Makes sense. So you mentioned all the different types of assets you, you guys have under management. Um, when you talk about like the user or the occupant experience, like you talked about with office buildings, like where the office building industry is going. Do you have something [00:09:00] similar? You mentioned dormitories, multi-family, industrial, do, is there something similar for those other verticals that, um, you know, kind of speaks to the importance of technology and engaging whatever end user that is?
So if I'm a
[00:09:16] Grigor Hadjiev: Yeah.
[00:09:17] James Dice: you know, it's a university
[00:09:18] Grigor Hadjiev: Yeah. Yeah.
[00:09:19] James Dice: are there similar reasons for technology in, in those other types of buildings?
[00:09:23] Grigor Hadjiev: Um, yes. So our focus predominantly with our smart building program is, uh, definitely on office buildings. One of the reasons that we operate them directly. Um, to answer your quick question, I think that, uh, across all asset classes, we use similar technology, but the use cases are very different. Uh, if the problematic in an office building is, uh, uh, in, in residential is how to optimize the energy performance, even if you use similar technologies, ultimately the, the way that we use that is different.
Uh, we don't do the same in student housing as we do in offices. [00:10:00] Even if. Uh, from a technical perspective, the technical solutions or digital solutions are similar because I can, uh, control, um, and I can manage closely in office building the heating and the cooling. But when I, when it comes to private areas, for example, in an apartment, uh, sometimes, uh, it, not sometimes, but this is generally, uh, in within the responsibility of.
Um, of the person that's of the occupiers that lives in this apartment, and sometimes he has like, uh, this, uh, different needs than, uh, than the one that we can see for office buildings. And, uh, so focus on office buildings because we operate in, but on the other asset classes, we systematically work with specialized operators.
You have mentioned student housing and. And the dormitory housing and also shopping centers. We work with partners and we observe that they use similar technologies than the one that we are using, but just for different use cases and in a different manner.
[00:10:58] James Dice: I [00:11:00] see. I see. Okay. I think that sets the, sets the context for us. Now, let's, let's sort of, sort of start diving into your guys'. Um, Smart Buildings program. So I think a good place to start would be to say just how do you define smart buildings? Um, you know, you know, I feel like it's where a lot of people start and everybody has their own definition, but I thought it'd be good to just hear from your, like, so we just kind of set the stage for what, what do you mean by smart building?
[00:11:27] Grigor Hadjiev: I, I, I know that I have been recorded of giving 10 different explanations across conferences of what is a smart building, so this will be the 11th one. I really think that the smart building is simply a good building. Uh, which means that, um, through, obviously through technology and through exchange of data across, uh, various technical installations, uh, the performance of the BUN is really optimized, the comfort is optimized, and this is happening in an obstacle free and seamless way for the end user.
And this is when we focus on [00:12:00] specifically on the technological side. But, uh, technology is just enhancer. Uh, and if you have a bad fundamentals of the buildings, bad architecture, bad design. Bad materials. You can have the smartest building, but if the fundamentals are, but you just have a bad building that is smart.
So we cannot completely dissociate, um, the smartness from the other intrinsic qualities of the building. But I would have qualified that as a, uh, as a, this kind of, uh, data layer that comes and that makes, uh, the technical installations communicate to each other. And that is just improving the way that the people are using, uh, the building and that the building.
[00:12:36] James Dice: Got it. Got it. All right, let's dive into that. So you guys have this, this team and program and sort of, um, long term plan, I would assume, for rolling out technology in your buildings. Can you just do an overview of like, you know, how many, how many people are on your team, what's your approach, what's the status of the implementation pilot stage, rollout stage, and then sort of what's the roadmap [00:13:00] for, you know, the next few years?
[00:13:02] Grigor Hadjiev: So, um, our, uh, smart building program, uh, we call it internally as per today, the building s. Program. Um, and this is a set of, uh, set of solutions, set of technologies that we have combined from the market that, uh, uh, help us to reach this use cases that we're speaking on until now. So, improve user experience, better comfort for the tenants, um, but also optimize energy performance, uh, and so on.
So, uh, we have selected globally a set of technologies and digital solutions that we have tested locally in our, across the different region. Uh, worldwide, uh, and we found the denominators, so the solutions that are, uh, bringing value, uh, systematically in all, uh, locations. So we combined these digital solutions and technical equipments into one set, uh, into one.
Uh, we bundle them in one place and, uh, we are aiming to cover, roughly speaking 20% of the net asset [00:14:00] value of our portfolio, um, by, uh, this program. So that means that our buildings, whenever this is applicable, That will have an energy management solution, that will have, um, user experience, uh, applications, user experience solutions.
And uh, what is very important is that, uh, on those buildings, we will collect a big amount of data in order to optimize, uh, the operations. Uh, and this data will also to help us to support, uh, the local, um, the, the users, the tenants, uh, in their everyday business. For example, we are supporting them with a return to office.
We are supporting them to improve. Uh, the comfort in the building by adjusting, for example, the temperature. We are supporting them to provide this obstacle free experience with entering into the office. Uh, with my phone, with my phone, I can then book a room. Um, I can also order food. Uh, so this kind of little services that are in the interface between what the tenant can do and what the landlord can provide.
So we have combined this set of solutions. We are deploying it [00:15:00] current. , uh, in Europe we have delivered already 15 big, uh, assets. And so we have another 30 assets across the planets that are, uh, within this process of smart, uh, of smart, of great. And here I would like to mention that uh, our building signature program has.
Two big fundamental pieces. One is, uh, the, the deployment of existing buildings within the portfolio. This is difficult piece because, um, we are adding costs, but the tenants are there and we need to work with them and to add a kind of a subset of our technological solutions to the buildings to cover a subset of the challenges that we have identified.
And on the other hand, we have a very strict long policy on how to refurbish buildings whenever we have large CapEx programs. And then we. We are coming with hundreds of pages of recommendations and the guiding principles and the design principles to make sure that everything that we know the best of our knowledge is deployed and will be deployed by our network of partners, uh, mainly across Europe.
So we have [00:16:00] upgrades of existing buildings, light upgrades, and then we have this kind of, uh, holistic, agnostic, uh, deep profound, um, ization that we deploy whenever we have a large CapEx programs, uh, across the portfolio.
[00:16:13] James Dice: Makes sense on, on those existing buildings that are occupied, you know, not, they're not undergoing a huge, you know, CapEx redevelopment. How do you work through the business case with adding costs, adding, uh, ongoing costs, um, to those buildings and those tenants? How, how does that work
[00:16:30] Grigor Hadjiev: Yeah, so it, it, it's a fair point. It's a fair point. I think my, um, executive board could have asked exactly the same one, and they're doing it nonstop, by the way. So, uh, in a nutshell, uh, when we have existing buildings, the main challenge that we are currently facing, that our existing buildings are facing is, Optimization for that, you basically need to, uh, to add a artificial intelligence, energy management solution.
If you want to take the low hanging fruit through, uh, through technology and to do, uh, uh, an active [00:17:00] energy management, you need basically to put a couple of devices in the building, like people counting, like temperature meters, comfort meters, uh, in order to make sure that. Uh, decrease the temperature in the building.
You still have a kind of acceptable comfort level from the tenants. And, uh, and also, uh, if you want to cut, uh, the lighting, you need to make sure that no one is in the building. So this occupancy adjusted, uh, energy management in the building comes with a kind of set of devices. Uh, and the second big trigger for existing buildings is, uh, cyber security.
We need to make sure where the data is flowing, how the data. Uh, where the data goes. We have access to the data, uh, and we need to make sure that there's some kind of, uh, basic stuff that are done in the building. And, uh, the third aspect. around that is, but this is really, uh, discussed with the tenants. Do they want to have some kind of, uh, uh, technologies that are improving the comfort?
For example, as we already track the, the, the air quality, uh, in order to optimize, uh, the energy performance. Uh, sometimes [00:18:00] when we discuss with them, they're saying, oh, you know, but, uh, because we have already this kind of occupancy information, I want to use that in order to switch to flex. Or, um, because I'm switching to Flex Desk, can you please add also this kind of, um, uh, tenant app control, access control?
So this kind of discussions, they're really case by case based, but the two fundamentals are easy improvements and, um, and cybersecurity. And they are driving the set of technologies that we need to deploy on the existing buildings. The costs are pretty low, so we speak about something. Uh, um, five and 12 euros per square meter.
Um, additional fees, additional costs. And this is then leading to, uh, on average 20% of energy savings and a lot of data that the tenant can use in his everyday business. As I mentioned already, like the return to office or to track tenants, how, how his own area is occupied. Are the people using the same floors on the building?
What do they, why don't go to certain areas. Um, how is the food and beverage offer, for example, used within the building? So [00:19:00] we're able to provide some analytics only based on the data that, on the devices that we need to put to do our two main topics. Energy optimization and cyber security. So we add these devices for energy performance and cyber security eventually for some comfort elements.
But then we use the data, and this is what this, this is what it becomes interesting. We use, uh, the data generator from those devices to add additional services and insights for, um, for example, the office manager or for the real estate team of our tenants. And this kind of insights are valuable for them to do. Adjustments, uh, of cleaning of, uh, uh, of, uh, the, the number of desks and others.
[00:19:43] James Dice: Got it. Let's circle back. I want a couple questions before we dive into some of the details around the actual infrastructure with, you know, how you enable all of this. Um, one is I think people be, be, will be surprised when they listen to this and they hear you. You know, we [00:20:00] have several hundred assets and, but then your Smart Buildings program is only really gonna be applied to, I think you said, 20% of them.
Can you, can you walk through like, what, what makes a building, um, qualify for this program?
[00:20:13] Grigor Hadjiev: Um, so, uh, probably I did not express it correctly. So we, we are targeting 20 billions, uh, of assets in the management that needs to be upgraded. Uh, this basically covers, uh, fast, uh, almost half of our directly managed assets. So I would have said that this is covering more every second suitable assets. So now what means treatable assets?
Um, a building to be qualified for our. , it needs to be obviously, uh, beginning needs to have some technical installations there. For example, central Building Management System. Uh, it needs to have a critical size. So we target buildings that are larger than 5,000 square meters. Uh, and, um, why, why we do that?
So we take a very small, uh, residential asset in the city center of Paris with, uh, 15 apartments. [00:21:00] Um, uh, the hitting the cooling and most of the, uh, most of. Let's say the production and of, uh, um, most of the services to the, to the departments are done locally within the apartments. So we can steer, for example, the cooling central because there is no central steering.
We cannot steer the, the lighting except on the common areas. But this is minor versus in an office building where we have, for example, a single tenant with which we work, it is much more easier to be impactful. So the. We take only, uh, big buildings. We do the predominantly on office, uh, on office assets.
And I think that, um, we will try to cover, uh, almost all buildings that are larger than 5,000 square meters and almost all, uh, office assets across, um, across Europe, uh, within, within the program.
[00:21:46] James Dice: It makes sense. So it seems like the first step in your sort of rolling out the program is to then analyze all of the buildings and say, you know, where do we apply this and where do we not, where does it make sense and where does it not make
[00:21:58] Grigor Hadjiev: Exactly this is, this is exactly [00:22:00] what we did for what we did, for example, with the, let's say 450 European assets, physical assets in, in, in Europe. So we screened them and we, for example, for some of them, realized that there is just not a building management system. If the building is, even if the building is big, because it's, it's an older building and as such, building will go into a refurbishment process in two years time.
So typically such a building. As per today out of the program because we know that we will refurbish it in two years time. And as we discussed a couple of minutes ago, when we do refurbishment, we do the full set. We deploy the full set. But as this process will start in two years time, we just keep these buildings that will undergo hardcore refurbishment.
We keep that. I'm saying that it's out of the program, but in fact, um, we can say that the program is a 5, 6, 10 years program and that the entire portfolio will sooner or. Go through this process, but currently we're targeting for the next three years to go, uh, with this, uh, uh, 20 billions of facets in the management.
[00:22:55] James Dice: Got it. Got it. Okay. Two last questions on the program you have. First is [00:23:00] you have some super fans on your team. Can you just talk next as super fans, some listeners to the podcast? Uh, so we wanna do a shout out to them, but also can you just talk about the team that you have that's kind of required to implement this sort of program across that many assets?
[00:23:15] Grigor Hadjiev: I think that I'm, I'm working with exceptional colleagues. Um, uh, first I will say a word about our strong presence locally. So we have in each, uh, um, location where we have, uh, big concentration of assets. We have, uh, a local team, local last management team. So we, uh, we work very closely with them and they're the one on the ground that is executing, um, the smart building strategy, the policy.
Uh, at the same time I'm extremely happy because I think I, I really work with the best people worldwide in terms of, uh, smart innovation digitalization. So we have a very small team of couple of people, four or five people. They're sitting here in Paris and together with them we define the global. , uh, we support the global rollout by, uh, setting the tools, by providing, for example, [00:24:00] the framework agreements, uh, and by negotiating some costs centrally, uh, on the European scale.
Uh, and to we support our, uh, local last management colleagues, uh, um, with some methodology and, um, with some manpower especially to start, uh, the, this, uh, this refurbishment project or to start the retrofits. So central team that works on the strategies, central teams that pick up the right technologies, um, central team that is negotiating the large, um, let's say the big framework.
Agree. So that we can have the same kind of qualities across Europe and central team that is consolidating the data. Once the, uh, upgrade is done, the data comes back to us. Uh, we structure, we analyze and we work with this data in order to mirror it back to the US management colleagues, uh, which will then use it to take better decisions in the everyday.
[00:24:51] James Dice: Yeah, and the reason I wanted to ask all these questions about the program is because I feel just, you know, talking to your team and. To you here, it, it feels [00:25:00] very much like you are, are very well integrated into the organization. You know, the organization from the top understands the value of technology and the value that each building can be, you know, more valuable it when technology is implemented in the right way.
And then you guys have taken this very strategic approach and, you know, done pilot projects and decided here are the use cases that we've, you know, picked out as valuable to roll out. And then you said, here are the assets where this applies. And then you've taken it and you've built a team around the program to sort of say, you know, these are the people that are required to like really make this.
Internally long term. And I just think that's, it's, it's rare, it's becoming less rare, but it's rare that there's that strategic of an approach of, you know, especially, you know, you know, for, you know, asset managers that, you know, it's not their core business to be smart buildings people. But having that, you know, internal team, I feel like is really important.
[00:25:57] Grigor Hadjiev: You've completely explained [00:26:00] the way that we are working. I need to stress out here that we have the full support from the executive committee where I'm presenting that is vetting the, the program, uh, and then we have the buy-in from our local teams because I think that they see the advantages. I'm not saying that everything is completely fluid and that there is nothing to be improved.
It's the right the opposite. So we are in the beginning. So we started two years ago, three years ago, and we learned a lot over these three years, but. . And I think that we are making huge progress, um, by doing it. And I think it's completely important for, uh, such strategic team, like, uh, the central team on smart buildings.
Also to work operationally on the projects, to go on the ground, not on all buildings, but to track and to follow. Couple of examples because we need to have this operational knowledge inside. Even if we do the pilots, we cannot roll it out on a hundred, a hundred hundred 60 buildings. I think this is what we have, what we are planning over the next three years, uh, we can, we can't, uh, cover with four people so many buildings and it doesn't make sense to have, uh, [00:27:00] only two people within an organization that understands from the topic.
It's really interesting to get everyone onboarded and everyone is adding something different from different backgrounds, from different perspective, from different country, and this is enrich. Constantly the problem. So we have top down, but then we have bottom up and it's constantly like a circle, top, down, bottom, up, bottom, up, down.
And uh, it's not a real gymnastic, but I think there is a very, there is a lot of positive vibes and interests, uh, uh, across the functional and business lines to, um, to go further in that direction.
[00:27:29] James Dice: Yeah. And I'm glad you pointed out the bottom up piece of it as well. Cause it's, it's, it is just sit kind of sitting in that sandwich of managing up and managing down for a team like yours and Yeah. That's super interesting. So let's, um, real quick, one aside before we deep dive into the technology a little bit.
Can you talk about for the people that, um, aren't in Europe and don't, aren't necessarily as familiar with Europe, the European market, can you talk about the importance of ESG and the importance of regulations as [00:28:00] well? Um, when it comes to carbon and sustainability?
[00:28:03] Grigor Hadjiev: Uh, so your question is outta Europe or specifically for your part. I just missed the
[00:28:06] James Dice: Specifically, Specifically, for Europe, um, you know, this audience is, you know, 60%, uh, north American probably. So there's a good amount of people that are gonna be listened to this, that are not as familiar with what's going on in Europe from a sustainability and from a, from a decarbonization
[00:28:23] Grigor Hadjiev: Got it. So, um, I, I, I would mention couple of elements that I will combine them into, into a summary. So, um, uh, Europe is very, uh, driven by regulations. Uh, so the US is a little bit more deregulated market, uh, as well as Asia. So Europe is very driven by regulations and um, I'll give the examples, the, an example from from France.
So in France, uh, we are supposed to respect European regulation. For example, the European taxon me that is giving like a kind. Direction of what should be the performance of a building in the future, uh, in a, as part of this, um, investment taxonomy alignment. Uh, and at the same time we have in France what we call the, so [00:29:00] this is a French specific regulation that is extremely specific about what should be the energy performance of a building tomorrow.
And for example, the French is saying that a building energy consumption in 2030 should be less than 40%. Compared to, uh, a year, uh, before 2018. So we have something that is extremely tangible. We need to optimize energy performance of building by 20% in 10 years. Then we have, uh, uh, specific other regulations that are coming from a, for example, A is committed net zero.
That means that all our assets are supposed to be carbon neutral by 2015 according to the crime methodology. And this is just added different one piece and another piece and another piece. So this is just different. Regulations that are going into direction of energy optimization. And at a certain point, um, the people, the tenants are there also looking for, uh, for, uh, for greener buildings.
So we have on one side the market. The market is looking for better products, and on the other hand we have, uh, cumulative [00:30:00] regulations on each other. This is very European. And when you all the ingredients and when you put all things into one place, you see that one way of doing it is just to refurbish the building.
Plan A or plan B is you need to, uh, through technology to some guys somehow optimize operation of the assets. Obviously by working together with the tenants. So we is no way in between in terms of ESG performance, so, or you need to go to hardcore or you need to use technology and to work a lot with the tenants in order to, uh, to, to improve, um, uh, with a, a big impact.
So alliance in that reason, uh, and this is one of the reasons why I think that also we run the innovation program out of Paris because France. Very, in France, we have a lot of restrictions that do not exist in other countries. So our life in France is more difficult than in other countries, but the European life is more broadly, more difficult than an Asian or us, uh, esg, ESG life.
At the same time in, in US, for example, I, I see that the topics of, um, uh, of the social aspects of the ESG are very important [00:31:00] versus in. Uh, we have a very strong e very strong, uh, let's say focus on E and not only on, uh, on the. Proper energy aspects, but more, more broadly. Also, for example, on biodiversity about circular economy and the materials that are used, uh, about water, about waste.
So this kind of topics are much more linked to the E, but at the same time, we're a little bit less focused on the s. So when we need to build a global strategy on innovation, smart and on esg, uh, we definitely need to combine, uh, in, in, in our site. So I'm, I'm leading the innovation aspects, but I work also with my colleagues from the central ESG team.
So we, we try to combine this kind of different expectations since we try to find the common denominator. What is common? Uh, through what works in all geographies and we are only learning, uh, from each other But yes Europe is a little bit more restrictive and the expectations in Europe have are tending to increase uh within the next years which is already the case but it's just getting tougher and tough each other. But yes, [00:32:00] Europe is a little bit more restrictive and the expectations in Europe have, are tending to increase, uh, within the next years, which is already the case, but it's just getting tougher and tough.
[00:32:09] James Dice: Got it.
Now I know many of you enjoy the virtual smart buildings exchange conference in August. The team behind that conference is the smart building center education program. Uh, 5 0 1 C3 non-profit organization that believes a smarter use of technology and practices in the built environment, particularly as they relate to billing, operations and management will enable a cleaner, healthier, and more productive future. The smart building center seeks to establish thought leadership for smart technologies and practices within the built environment and pursues its objective through the following.
Pillars of [00:33:00] activity first. They deliver a training programs to educate the building workforce, the future second, they enable industry leading demonstration projects, and finally they connect the industry through hosting and participating in events like the smart buildings exchange conference. So check out their body of work on the essential role of smarter buildings into clean energy transition at the link in the show notes. And when you get in touch, tell them nexus labs center.
[00:33:25] James Dice: it. And, and how big of a deal is. Decarbonization and specifically electrification of heating. Um, you know, if you look at a city like New York City, for example, if we go back to last week's podcast, you know, the group talked about how um, you know, they have local law 97 and it just continues to ratchet up the expected performance and the regulated performance of each building to the point where if you burn natural gas, you start to go out of compliance even if you have a really efficient building.
How big of a a, a deal is that? I know that in France it's a heavy [00:34:00] nuclear country, right? So you're, you're already electrified for the most part, or the electrification electricity grid is clean, whereas if you go east in Europe, it, it seems like there's a heavy natural gas component and a lot of systems are probably burning fossil fuels today.
So how do you guys think about that and is that a separate team within Allian that sort of focused on that piece?
[00:34:22] Grigor Hadjiev: it's,
it, so in terms of organization, we have, we are hybrid organized, so we have a strategy and then we have execution. Execution of ESG in my region is also with me. It's within additional team, but it belongs to the same community. So I can answer this question. Um, your first point was, what is the. how do we compare energy performance across countries and geographies?
This is first fundamental point, and here we are using, uh, the creme um, uh, methodology and the creme methodology is taken into account for each specific country. The mix, in order to define what can be the [00:35:00] derealization curve for each specific country and for each specific asset class. This helps us to eliminate this kind of, Uh, subjective, uh, thinking about, uh, uh, how to, how to convert, what, when in which units and what is good, what is bad.
Uh, and the grammatology is bringing basically two, uh, two main KPIs, um, upfront. One is the carbon footprint. This is what everyone is mentioning. Uh, but the second one is the kilowatt tower. So this is, I. The kilowatt tower per square meter per year. And uh, in your point, in your example about, uh, am I green if I use gas, uh, and even if my building is very efficient, but it uses gas, probably it's not very efficient in terms of carbon.
And this is one of the interest of the CRE methodology because you will have the two indicators. Is your building intrinsically, um, uh, uh, intrinsically, uh, let's say efficient and, uh, optimized. And then if you have a low energy [00:36:00] consumption, uh, which is the same across the same, uh, let's say we expect to have across the same latitude and geographical position in the.
See, pretty similar, uh, energy consumptions. But if you go to the north, to the south, you expect to have some variation. For example, the northy countries, they're overhitting, they're hitting a little bit more in the wintertime and the south countries, they're, they're, uh, they're cooling more in the winter.
So based on the geographical setup, um, you have different patterns in terms of energy consumption. And then the second question is, how do we qualify? As a green, and you mentioned the nature of gas one, I will not go into commenting. The decisions of creme is. Uh, green is, uh, green, uh, is, uh, is the natural gas green, but even if we like it or we don't like it, uh, there is for the first time a kind of reference model, uh, that is saying, okay, this is good.
This is not good. And then everyone is free to, to to, to get the data, to go into the details and to see, okay, I have a very good, uh, very [00:37:00] optimized, uh, building, but that is in terms of energy intensity, but still in. CO2 intensity and very high. So do I need to put a lot of CapEx in the building? No, because even if you put a lot of CapEx in a building that is intrinsically optimized, this will not change almost anything.
You'll just spend a lot of money because the building is already consuming a less, less energy. So in order to improve the carbon footprint, you need to look differently to the topic and, uh, . This is the point where I think that the overall global knowledge needs to move forward because you pointed out things that we are also thinking about and for which I cannot give a black or white answer, but just think that we need to look at the two KPIs entrance, the energy qualities of the building.
So through the Kwa Thes core meter per year and through the um, uh, co2 uh, emissions. Per year to make sure that we can, we can really understand, uh, what is triggering a bad performance. Is it the intrinsic or it's just the type of energy that is used, uh, or the source, or how greener is the source.
[00:37:59] James Dice: [00:38:00] Got
it. .Great. Great answer. I love that. So let's, let's talk about the technology. I know you guys, um, when I talked to your team, they talked a lot about, we, we, we probably talked for an hour about the concept of an independent data layer and the. You guys call it, I think building operating system.
Um, so can you just talk about, and, and I I think you were already talking about it a little bit before, when you talk about having occupancy, counting occupancy data, using that for energy optimization, but then having that data available to be used for other use cases like space planning and you know, whatever else you want to use it for.
So can you just talk about that sort of. Infrastructure and the importance of having that layer figured out and how you guys have sort of gone about, um, building that layer out in your program.
[00:38:46] Grigor Hadjiev: So,
um, uh, I will probably not satisfy with my answer the geek community, um, because I'm that representative of the geek community, but I'll explain with, with my, with my own words. So, um, historically the building [00:39:00] generates a lot of data, but this data goes into all directions, and sometimes in the same building we have.
Seen in the buildings from 10 to 10 years old, a couple of devices that are measuring exactly the same occupancy. And I was wondering why do we have like several devices that are managing, that are measuring exactly the same thing? And the answer is because they are coming with specific technical equipments and the equipments wants to measure himself, I think alone. And I said, interesting point, but so I need to maintain couple of devices just to have the same wrong information because they're systematic. Something is wrong with them. So our logic with the, the data, with the data layer, or what we call internal building operating system, is simply to make sure that the different technical, uh, equipments they're able to exchange in the same language.
One and B, that uh, if I need an information, there is a unique source of true for this information within the building. So if I need the occupancy, I'm, I will measure the occupancy once, and then this data will be shared with other, let's say, uh, technical equipments within the building or technical installations, or let's say whoever [00:40:00] needs, needs this data.
Um, but I know what is the source of truth this. Uh, and then the use cases are multiple. Historically, the use cases of the occupancy was were only, I needed to know if there is on offer the lighting, so no people. No lights, people light, uh, but today we know that there are plenty of other use cases, and we started defining the use cases, and we just realized that for us, as you mentioned, we can list a lot of use cases, but over time we are just adding new use cases, new use case and use cases.
So the denominator for all these use cases is data, and what we call the building operating system is just this data layer where all the data. Is kind of, um, structured. This is very important. So the data is structured, it's stored, and uh, we can manage the accesses to this data to different, uh, equipments, uh, to different stakeholders like the facility manager, uh, asset manager, and other people that really need to know that for whatever the reason that it is so central place where the [00:41:00] data is stored, where the data is analyzed, and where we can manage this kind of,
[00:41:05] James Dice: Yeah,
you mentioned earlier it was kind of like, it's kind of like the materials in a building and the way that I think about it is like, it's kind of like the infrastructure to a building. It's like you wouldn't buy a building. Plumbing, for example, or you wouldn't buy a building without internet or the, you know, electrical infrastructure.
And so the data infrastructure, it seems like you're, you're starting to think about that in the same way as any other type of infrastructure or any other type of finishing in the lobby or things like that, that they increase the asset value. Is that kind of how you're, you're thinking
[00:41:36] Grigor Hadjiev: Um,
yes, in the sole purpose of adding a value somewhere, which means energy efficiency, user experience, cyber security, or for us, To get this kind of analytics so that we can take better decisions. We believe that the infrastructure, uh, is part of the overall technical, let's say logic of the building. So we cannot dissociate the, the data flow from, uh, how the [00:42:00] building is operated.
So this is part of, uh, uh, of, uh, it's one component of the building. Like, uh, the HVAC is one component, the networks is another. The, the place where the data is gathered and redistributed across other equipments is another one. Uh, so this is a little bit the way that we, that we see that, because if you don't work specifically on that, on this integration from equipments a across, um, uh, across the building into one system, we can, uh, we cannot perform the other, uh, tasks and use cases.
So yes, we need see it as a separate, uh, as a separate asset within the building.
[00:42:36] James Dice: and,
and, after talking to your team, I learned that you guys kind of think about it in an interesting way. You think about this infrastructure, this data layer as kind of. Something that needs to be local to the building that lives as an asset locally that you, if you know, if the building turns over in a transaction, that asset goes with it to the new owner of that building.
I know you [00:43:00] guys like to hold, you know, typically hold buildings for a long time, but the way that you're thinking about it is like this asset lives as a piece of infrastructure with the building. Is, is that kind of how the business of Allan's kind of thinks? Okay.
[00:43:13] Grigor Hadjiev: So,
um, first we're in the beginning of this process. Uh, and, um, yes, our conviction as per today is that we want the building to be a little bit independent and to be run in an independence way from the entire global network. Uh, because we see on the market and, um, I will not surprise anyone. We know that a country can cut the access for some solution to another country and we don't want to, to be a kind of victim somewhere that our buildings are victimized somewhere.
So, uh, first the building needs to be, uh, operated, needs to be. So we need to make sure that all our buildings can be operated. First of all, then is the building operating system on premise or on the clouds? I think this is the second question, but in all cases, we need to make sure the building can run and can be managed, uh, locally, uh, in a completely independent [00:44:00] way from the network.
This is our conviction from a pure resilience topic. Uh, and then the topic of on-premise on cloud. I think that if it's built in a similar way, we can always mirror, uh, the information on a cloud if there is any interest to do that, or we can always try to have also the cloud solution to steer and to, to achieve scalability for several buildings.
On a Boss Cloud solution, let's put it in this way. Um, but to be honest, today I'm a little bit skeptical and I will go for a low tech solution. So manage all buildings remotely from a central boss that is managing 60 buildings centrally. Um, why not? But I don't think that will be the first one doing that, even if we already.
Two examples that we have delivered in this way, but it's not, it's not our strategy to be so dependent on cloud solutions. We really want to make sure that the building can be operated locally.
[00:44:54] James Dice: Hmm.
Yeah. Yeah. Very cool. So, um, when I think about the [00:45:00] building operating system or the independent data layer, I think about it as, you know, a horizontal layer that then applications can sit on top of, right? So, um, you mentioned, I think you, I think your words were ai, active energy management, so, That, that's maybe one app that sits on top of the building operating system, basically controlling systems better than they would be controlled if, if not, for that application.
What are the other applications? You mentioned tenant, um, or, you know, occupant experience application. Are there any others that you're, you're looking at, um, as being an important piece of the stack that sort of sits on top of the
[00:45:36] Grigor Hadjiev: Mm.
So, um, currently, uh, You, you, you're mentioning the one that is probably the most critical one. So in, in the, in this year of the energy management, we have also manage, uh, an energy monitoring one. Uh, so we are working with deep kit, not a secret that is gathering the portfolio information, uh, the consumption from the portfolio, um, on the European level.
Uh, and uh, then [00:46:00] we have also. Uh, facility management enhancement solutions like, uh, twin ops, um, that is used for the facility manager in a 3d. Um, they're using 3D model and the real time data in order to optimize the way that they operate the building. They replace per parts and so on. Uh, and we also, uh, on top of the building operating system there, we have our own data as management platform where we extract meaningful data for us, for our.
Use cases. Um, but you are, uh, right, that, uh, the, the, the bosses endless, endless number of solutions. So I think that we're really at the beginning and we see that our tenants, they're deploying their own solutions on top of the boss that are linked to the way that they. Are living their assets. So, uh, for example, meeting room, booking solution that is then integrating with the Boston, whenever you book the room, the book, the room is ventilated and so on.
So I think that the [00:47:00] importance here is really boss. I don't think that we are there yet with all possible applications that you can build on top of that. Uh, I think that in the next year, this is a very big market, and if someone wants to invest somewhere, uh, I definitely recommend to go into, look, what can you put on the boss, uh, in order to create value.
Uh, because for us, it's just simpler to, to work with such applications that come on top of the boss because we can control the information they are accessing. Uh, we know that, for example, the NH management partner is accessing the information. Um, the, the smart meters from the occupancy, from, uh, the comfort.
And we know exactly what he's, what, what he's using, and the way that he's using that. Uh, in the previous time, without boss, they just access to something we don't know, to what We don't know what they're doing. We don't know what kind of command they're also giving to the hr. Uh, um, and, and this kind of in transparency, uh, is limiting the number of use cases.
And by adding this data layer, we're just. Tremendously, dramatically the transparency. Uh, and starting from now, we can think, I think we're leaving the beginning of, uh, [00:48:00] thinking what else can be added. Uh, on top of that, obviously the, the, the kind of gateway solutions and cybersecurity aspects, um, that, uh, that are solution, that cybersecurity solution that are helping us to monitor better the networks is also something that goes easily on top of the boss versus, uh, uh, versus individually to try to secure plenty of networks.
So just a couple of examples.
[00:48:23] James Dice: Yeah.
Yeah. And I think the reason why your team listened to the podcast is the same reason that what listening to you is like, music to my ears, because we're, we're in such alignment with how the, you know, the stack should be built up and you. Uh, how smart buildings should be, should be done. And it's that horizontal approach, you know, network layer, data layer, application layer on top.
It's just the only way to then enable multiple applications. And like you said, you don't, you didn't know that your tenants were gonna build these different applications on top, right? [00:49:00] You just wanted to their building to be ready so that the tenant can do what they want with their data. And I think that's the piece.
We as an industry haven't quite grasped yet. Um, and it's the reason why I spent most of this year talking about it. So if I look back on 2022, that's the main thing that I've been sort of just pounding over and over and over again. And I, I love to see organizations like yours say, you know what? This is the way that we're gonna do it, and you're doing it independently for me.
Right? It's like you guys are, have come up with this on your. Um, and it's good to see people sort of mirroring the same approach as a best practice, uh, which is awesome. So what are the next steps in the program? It sounds like scaling up is a, is a big priority. Um, applying it to existing buildings, applying it to, like you said, capital projects, redevelopments.
What, what are your, what are your sort of, what's your sort of roadmap?
[00:49:53] Grigor Hadjiev: uh,
one of our challenges is acceleration of the deployment of the installation of the devices and across the assets. Uh, [00:50:00] there is a lack of partners, lack of, lack of competent people on the market. There is no industry for that, to be honest. Um, so there. I'm going back to what I said. So it's not that they're not competent people, but uh, the offering is not structured.
And, um, and this is, and when it's structured, it's completely structured different from one country to another one. And this is hindering us as a global player because, uh, in one country we go to the telecommunication operator to ask them to deploy devices in another country. We go to a construction company, another country we go to, um, to the facility manager, another country we go to, um, to, to the manufacturer of the h.
And, and it's, it's so, it's so disparate. So it's, so, um, there is no denominator for that. So one of our challenges is to make sure that we can deploy, um, the iot devices and set of technologies in a fast way, uh, across our geographies that we're looking for partners. And the second big challenge that we have is on the large refurbishments where we, where we put a hundred percent of our knowledge.
Um, we need to systematize more the role of the master [00:51:00] system integrator. That it's, uh, not a known, very well known role. Uh, a lot of, uh, different design, uh, engineering companies, they think that they can do it without really being able to do that. So, uh, we are becoming very, very, Uh, sophisticated in our requirements for the master system integrator because whenever we don't have a master system integrator, we just need to restart, to restart, to restart until ultimately we get one.
Uh, and uh, so we are, I think the next steps for us is to deploy on the bigger scale. On the largest scale to continue the deployment that we have already started. And two, to start working with the data that we are gathering because we start having a very valuable data across Europe. And so we would like to build a data as management function, which means that we need to analyze in a deeper way some trends and some tendencies across our portfolio.
For example, is it true that the people in big cities, uh uh, are more likely back to the. Uh, and is it true that the, uh, the offices in, uh, mid-sized cities, [00:52:00] uh, are not so, so this kind of trends, we start to having a kind of insight, and this is very important for us to build up further these competencies as well as next steps.
I will say. The deployment of the cybersecurity program, cybersecurity piece within the smart building program, which is a completely new piece that we have deployed only a couple of assets, but there as well, we need to, we need to build up competence internally and we need to bring our partners as well on the right level of competence because, I think that today we are teaching sometimes people that were supposed to be experts in that.
Uh, and those companies are telling us, yeah, but we never asked us something like that. So I think it's a, it's a partner in a partnership models. This is how we move forward and, uh, I just expect in the future that, um, On one hand, my teams continue to be as motivated and passionate as they are today about the topic, not to count working hours.
Uh, and then that we continue to work with good partners on the market because this is how we learn. We do not produce any software internally. We do not produce any technology internally. Our [00:53:00] role internally is to combine them and to make sure that when we deploy, uh, this is creating value. Uh, because ultimately our role, and I need to repeat that, uh, Alliance Real Estate.
We're an investment and asset manager, so we need to make sure that we increase the portfolio value, and this is what we try to do through technology and all the things that we have discussed today. And therefore, we do not invent any, anything new. We just put things together.
[00:53:24] James Dice: Totally.
Totally. That was a great place to end off. I think those are great directions to head. Well done putting together this program. Well done. Putting the pieces together, including all the people on your team. Um, let's end with some, some carve outs. So are there any books or podcasts or documentaries or anything else that sort of had, has had a major impact on you lately?
[00:53:47] Grigor Hadjiev: I,
I, probably, I will surprise you, but, um, I'm, I'm watching kind of documentaries for my five years old son on complex topics and I'm watching them and I say, oh my gosh, the explaining is [00:54:00] such a complex topic in such simple way. Uh, so, um, I will further tell you the name of the series. They're in French, but my learning from that, Uh, a lot of people spend a lot of time to simplify very complex topics, and I think that's, this is one of the challenges that we have, uh, in, in the field of smart and building technology, uh, is that we need to find a way to explain that with simple words.
Uh, to people, uh, um, that are supposed to use it, but that are not supposed to, to do it. And, uh, this is where I want to answer. I wish that I would be able one day to do this kind of documentary and smart buildings for my son and someone. Sometimes when I need to, uh, to speak with people, I'm thinking, how can I oversimplify exactly as I need to my son what I'm doing in the office?
And it's very difficult and I'm not there at all. But I hope that I will be able to, to, to, to go to that.
[00:54:51] James Dice: I'm
with you on that. I feel like it's, it's the challenge that I have in the position that, that I'm in, which is continue to push the [00:55:00] envelope and, and get to the edge with the, like you said, the nerds of the industry. I always say that I'm, I'm, I'm a proud nerd and I love our community of nerds, but we're, we need to push the edge of the envelope.
Well, at the same time, simplifying it to bring more people into community of Right? Um, and that's the, that's the balance that I feel like we're always trying to struggle with, with Nexus. And I find it to be very fun because I'm not the utmost expert in any topic. And so I'm kind of following along.
With the nerds to get to the edge. And then I'm kind of, I view myself as like, I gotta bring the, the people that aren't in the circle along with, you know, you know, try to get them up to where I'm at, you know, following along with the nerds. So I'm, I'm with you in that. I think it's super important and it's, it's, it's how we sort of create change, I think.
thank
you Gregor, for, for coming on the show. Uh, thanks for doing what you do.
[00:55:52] Grigor Hadjiev: James.
The pleasure was mine.
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