How can green energy and technology shape the future of Norwegian commercial buildings?

May 13, 2024 | Articles

Over the past two decades, only 1,501 new offices and commercial buildings have come onto the Norwegian market. We were surprised to find out that this number is so low. In a time of rapid technological advancement, a boom in commercial construction is to be expected, but this stagnant growth seemed like an anomaly that prompted us to take a deep dive into the underlying factors. 

We suspected that technology, or the lack of it, played a significant role in this decline, but the story unfolded a little differently when we decided to dig deeper.

Figure: Stable number of new commercial buildings in Norway over time. Source: (Statistics Norway)

Regulatory framework

First, Norway's strict regulatory framework prioritizes sustainability and energy efficiency. All new commercial buildings must meet strict standards under the Technical Regulation (TEK17) which is in line with EU regulations that aim to achieve fully decarbonized buildings by 2050. Given that buildings account for approximately 40% of all energy consumption in the EU, it has become a highly regulated area. From January 1, 2027, all new buildings occupied or owned by public authorities must meet NZEB (nearly zero energy buildings) standards. This change introduces the concept of the 'brown discount', a decrease in tenant demand due to non-compliance with green regulations, which may be contributing to this stagnation in growth rates.

Energy efficiency touches every aspect of a building ecosystem. From how environmentally friendly the building is constructed, how efficiently the building's managers maintain it, how service providers deliver their services in the building, to how responsibly the tenant consumes those services. Everything counts. Our solution, the Izy portal creates an ecosystem so that it brings all these parties together in one platform where you have one place to manage all aspects of the commercial building, while saving time and resources. In addition, our prediction platform helps make data-based decisions about future sales to manage the supply chain accordingly. In this way, clean operations with green energy will strongly influence what the future of a commercial property in Norway will be like.

Figure: Distribution of weekly orders in the Izy platform. Source: Data from the Izy platform

Then comes technology. Norway's adoption rate of electric cars, which accounted for 82.4% of all new passenger car sales in Norway in 2023, underscores the national affinity for technology and innovation. Smart homes and smart buildings have become core to Norwegian culture. At Izy, we're promoting this with mAIfood, a smart checkout system powered by artificial intelligence. The future also depends on how facility management platforms can integrate LLMs (Large Language Model) and other generative AI applications to improve the tenant experience. 

Finally, we've looked at how the post-pandemic work culture has moved towards home office or hybrid working, the already increasing work-life balance, adding to the challenge of user satisfaction that service providers need to take into account. Honestly, not many of us want to sit in our offices on a hot summer day which is already a rare commodity in Scandinavia after a long winter.

Green energy, technology and changing user behavior

To summarize this insight, we believe that the future of commercial real estate in Norway will be shaped by three key forces: green energy, technology and changing user behavior. Technology, along with improving building operations, is also influencing tenant expectations. With growing concerns about climate action, the source of energy to power the innovative technology is equally important and tenant behavior is often driven by technology. We believe that the future of commercial real estate lies somewhere between the triad of technology, green energy revolution and shift in user behavior as consumers of the services.

This article was originally written in English and has been translated into Norwegian, read the original article here

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