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Smart Building Insights

Putting Smart Buildings on the Blockchain


A tsunami of headlines about cryptocurrencies and blockchain washed over the media earlier this year, feeding a boom and bust for the numerous digital currencies out there and spawning a torrent of initial coin offerings. Some people made billions on the ride upward, while others lost their investments in the deluge.

Through it all, the hype outpaced reality and many great possibilities were overlooked, including the gains to be made when the blockchain meets smart buildings and commercial real estate (CRE).

New Kids on the Blockchain

Before discussing how to apply blockchain to smart buildings and CRE, it’ll be helpful to identify the concept and its strengths and weaknesses first.

Whenever two or more parties conduct a transaction, a contract is drawn up and signed to encode and enforce the terms of the agreement. Naturally, this single dependency creates a host of issues, like forgery and dealing with notaries, and it still largely relies on pen and paper.

The blockchain acts as a public ledger for all transactions, indisputable and reliable. It works by logging the transaction and terms in a universal format across numerous computers, from thousands to millions, depending on the scale of the network. The approach creates so many copies of the record that it’s virtually impossible to forge and is irrefutable.


Continuing from that, blockchain enables and is increasingly paired with smart contracts, which contains the terms of the agreement in lines of code and automatically executes the contract once those terms are satisfied. Think of them

Blockchain methodologies and smart contracts have countless applications across industries and they can and likely will play a pivotal role in the development and proliferation of smart buildings.

Build It Right

Construction is messy and requires a ton of permits, work orders, invoices, materials purchases, labor agreements, compliance forms – it’s all a complicated mess that developers and builders would sure love to avoid, or at least simplify.

With a multiparty adoption of blockchain and smart contract technologies, the tedious process for building or developing can be streamlined in a vastly more efficient and verifiable manner. As soon as one step is completed and recorded on the minimum amount of ledgers in the system, the next one is triggered and the whole process continues.

Got all your building permits and compliance forms approved? Work orders start getting shipped to the crews. Did the materials get shipped? Then equipment rentals will start getting shipped, too.

Not only are the efficiency gains important, so is the verification. Knowing what is where and when, but also where did it come from. Is the construction crew using cheaper steel than you’d prefer? Did those sensors ship from the right company or did you get knock-offs from overseas? Ironing out the preferred supply chain ensures your smart building is built to last and doesn’t break any rules.

The ongoing ledgers will provide tracking in the event something does go awry and ideally protect any wronged parties. Ledgers will also report on who did what exactly in the building, providing a much more accurate report for crediting or blaming builders.

Staying Up to Code

Maintaining the property is every bit as a pain as building it. Using blockchain technologies can transform the property management field into one that’s much more performance-based, which would deliver fairer outcomes instead of buying into expensive long-term contracts.

Smart buildings are uniquely able to self-report their problems when they emerge. Pipes will let you know when they’re leaky and lighting fixtures will document when their bulbs burn out, creating an exact record of how long maintenances issues last until they’re resolved.

Prolonged delays in repairs often lead to upset tenants and bad reviews, meaning more complaints and fewer leases. If these things stack up, a ledger of issues would justify dismissing poor maintenance staff or even breaking contracts with property managers.


Ledgers would also simplify compliance and inspections. A perfectly trustworthy track record for buildings standards, upkeep, environmental impact, and everything else (supplied by the smart building’s array of sensors) would reduce the need for intrusive inspections and lengthy forms. If the data genuinely points to a lack of faults, then business can carry on as usual, uninterrupted.

Blockchains also create trusted identities for individuals and devices, verified by many digital endpoints. This multifaceted approach makes spoofing either a person or a component of the building nearly impossible and protects the integrity of the building’s processes, primarily security and access control.

Closing the Deals

When a smart building is ready to be rented out or sold, you’ll need to issue contracts and be armed with  a stack of reports verifying the value of the office space or the building at large. This is where smart contracts can come in very handy.

Lessors can code requirements into their lease contracts and issue them to tenants, who would have their identity and financials authenticated by their hashes on the blockchain. Active monitoring by building sensors can enforce monitor tenants’ usage and enforce terms of the lease. Violations could yield automatic warnings, penalties, or even evictions, as stipulated by the smart contract.

In a selling process, the blockchain can supplement or even replace the escrow process as we know it, simplifying and streamlining by eliminating the need for third parties.

A potential buyer is interested in the newest smart building on the block and makes a bid, which the seller is willing to entertain. Instead of transferring the funds to a third party with fees of its own, the funds could instead be transferred to a cryptographic wallet and the key to unlock the wallet would only be transmitted to the seller once the terms of the smart contract have been satisfied (inspectors, financing, compliance, et cetera).

Let it not be said that the blockchain offers unique benefits to the sale of smart buildings, but enterprising owners would do well to find smarter ways of handling leases and sales. The smarts that go into a smart building don’t have to end at the door.

These are but a few ways for applying blockchain and smart contract thinking to smart buildings. Finding new ways to govern your building and handle transactions can lead to great savings and fewer headaches. As blockchain technologies enter maturity, it’d be wise to keep an eye on new applications for CRE and smart buildings, lest the opportunities for better outcomes be missed.

Jonathan Goodwin