by Rob Murchison
In our previous post on water and gas utilities, I explored how they transformed commercial real estate (CRE), laying the groundwork for safer, more efficient buildings that provided better experiences for their tenants. Each of the first two utilities created new possibilities that reshaped industries. Next, we focus on the third transformative milestone: electricity—and how it forever changed how we think about building operations and tenant experience. As you read, consider the possibilities that today’s CRE technologies might unlock in the coming years and your role in adopting those changes.
From Illumination to Innovation: How Electricity Transformed CRE
Imagine a time before electricity, when buildings relied on natural light during the day and gas lamps at night. While gas could provide illumination, it came with safety risks—leaks, poor ventilation, and fire hazards were constant concerns. In 1882, when Edison’s New York power plant began illuminating Lower Manhattan with Direct Current (DC) power, building owners and operators saw the potential for safer, more versatile spaces. With DC electricity, commercial properties could extend their hours without compromising safety, and the “24-hour city” began to emerge.
However, as cities and demand grew, the limitations of DC became apparent—it couldn’t efficiently travel long distances. In 1896, the Niagara Falls Power Project marked a breakthrough with Alternating Current (AC), which could be transmitted over miles, reaching a broader urban landscape and scaling electricity for commercial buildings. (Note: This difference between DC and AC shaped how power is delivered and still matters today. To power many modern CRE technologies—like IoT devices—AC power must be converted to DC to provide the steady, one-way flow these devices need to work at all.)
Electricity soon powered innovations that reshaped the CRE landscape. In 1889, Elisha Otis’s company installed the first electric elevator in New York’s Demarest Building, enabling vertical growth and transforming urban skylines. The key benefit of electric motors over hydraulic lifts was that they had virtually no height limit, enabling taller buildings. By 1928, Willis Carrier’s air conditioning system made high-rise buildings suitable for year-round occupancy, with the 21-story Milam Building in San Antonio being one of the first to incorporate this CRE technology. This advancement set a new standard for tenant comfort and transformed how commercial properties could operate. This era of rapid transformation showed that embracing innovation didn’t just improve buildings—it created value for tenants and set the stage for future growth.
Electricity as a Utility: A Standard for Today’s Infrastructure
Electricity’s journey to becoming a utility wasn’t easy. It faced regulatory hurdles, infrastructure challenges, and initial skepticism. Yet, by the early 20th century, cities began standardizing electrical infrastructure. In 1913, New York City published its first comprehensive set of rules and regulations for electrical installations, which evolved into the city’s first Electrical Code by 1915. This initiative set a precedent for other cities, demonstrating that investing in standardized and safe electrical infrastructure enhances tenant satisfaction and property value, creating more vibrant communities and improving operational efficiency that wasn’t possible without it.
Today, CRE tech and its need for digital infrastructure face similar opportunities, especially regarding the seamless integration of “smart” systems for operational efficiency and sustainability. Digital connectivity and management systems are no longer just nice-to-have features—they’re becoming essential, meeting the same criteria as past utilities: they’re indispensable and reliable. They must be designed and built to scale. Property owners and operators can enhance tenant satisfaction by treating digital infrastructure as a utility while simultaneously reducing costs and preparing their properties for a more connected and efficient future.
Your Role as the Industry Leader
The story of electricity reminds us that embracing new utilities can create a legacy. Building owners, operators, and developers can set a new standard today. Adopting digital infrastructure as a utility positions you as a leader in CRE and a forward-thinking innovator. Just as electricity turned skeptics into believers, the impact of digital infrastructure could redefine what’s possible in CRE.
Let’s consider how this shift could look in practice as we continue this series. What could digital infrastructure enable in your property, and how might it elevate your role in the industry? The future is closer than ever, and those who embrace these changes will be well-positioned to create the next chapter in CRE.
Setting the Stage for Future Success
As you envision the future of CRE building operations, consider the exciting potential of seamlessly integrating digital infrastructure into daily operations. Today’s commercial real estate professionals have a wonderful opportunity to spearhead this transformation, much like the pioneers of electricity did over a century ago. By embracing digital systems that boost efficiency, support sustainability, and enrich tenant experiences, you can elevate your property and ensure its lasting success in a dynamic industry. The future is bright, and your leadership can make a remarkable difference!