Control What’s in Your Control: DAS in Commercial Real Estate

Pre-pandemic occupancy rates may never be seen again. Many building owners and real estate investors had hoped for a federally mandated return to office in order to avoid the financial pressures of reduced occupancy. An August 2022 Gallup survey of remote-capable workers shows that 34% of respondents want to work full-time remotely; 60% want a flexible hybrid schedule.

The challenges in commercial real estate created by lower occupancy rates are compounded by a global economy trying to recover from the lingering effects of a pandemic, the ongoing war in Ukraine, inflation that is still running at more than 7%, and unexpected bank failures in the U.S. and Europe.

As CBRE reports in their U.S. Real Estate Market Outlook 2023, “Tenants will continue to shed underutilized office space next year (…) older buildings with outdated amenities will struggle to attract tenants, leading to a glut of obsolete vacant space.”

While these market conditions are outside of anyone’s control, commercial real estate firms still maintain a fiduciary responsibility to their clients by not only maintaining but improving properties.  Property managers, leasing agents and project managers play a pivotal role in helping owners significantly improve their assets.

CRE professionals must maintain these assets to the highest of standards in order to attract tenants, increase lease rates and ultimately increase the overall valuation of the building. Making the most of the things that can be controlled is paramount and connectivity should be at the top of that list.

In 2023, it’s the most basic and fundamental amenity commercial space can offer.  – and if a prospective tenant can’t make or receive a call during the walk-through, or encounters dead zones in the elevator on their way out, they’re not going to want to lease at any price.

A DAS (Distributed Antenna System) is a good solution to solve in wireless connectivity issues. It’s a network designed to distribute or boost commercial wireless cellular signals from the carriers like AT&T, Verizon and T-Mobile inside of a building.

Some property owners may argue that their internal Wi-Fi networks can handle the load, but usually they can’t.  Audiovisual, smart or low voltage lighting solutions, HVAC, concierge services, and more rely on that Wi-Fi network.  Many buildings require third-party maintenance crews to attend to mechanical, electrical and other significant building systems. These crews usually require immediate connectivity on their own devices for diagnosis, dispatch and escalation of additional support for the services they are providing. This can all take a toll on the standard Wi-Fi system by additional traffic sitting on a network.

For buildings that remain well occupied and full of people carrying laptops, smartphones, and tablets, and Wi-Fi bandwidth slows to a trickle.  A DAS solution helps to mitigate that traffic and bandwidth usage by offloading some of that traffic from Wi-Fi to a secured cellular system.

This is more urgent given the fact that 5G and beyond is being rapidly implemented across urban areas. While 5G offers higher bandwidth, the signal tends to attenuate rapidly. Plus, it has a harder time penetrating glass which can further degrade the signal. The problem is compounded in LEED-certified buildings using low-E glass — cellular signals bounce off the glass rather than into the building.

Adding a DAS is one of the few capital improvements with the potential to move the needle on lease rates: if connectivity is strong, tenants may absorb the cost of the service in their lease rates as part of the overall utility service of the building. It can also help you achieve longer lease terms, while reducing complaints from tenants.

Especially in this economic environment, building owners and investors will look hard at any cost to upgrade their building. But the return on investment can’t be ignored.

What’s more, there may be strategies to help ensure a reasonable ROI while mitigating the initial investment costs. An interesting option is DAS as a Service. This shifts the investment from a simple capital expenditure to an operational expense with depreciation components that help mitigate the overall cost over a period of time.

With the challenges ahead in commercial real estate, it pays to control the things that are in your control — especially those with the potential to pay for themselves. Connectivity should be at the top of your list.