Cure to the office market crisis? The opportunities and risks of digital transformation of office buildings

While installing sensors or Internet of things systems in buildings to make them more intelligent is not new, the impact of COVID has given building digitization its most immediate motivation. Thanks to the development of various remote collaboration tools, working in hybrid mode is a more efficient and comfortable way to work.

The immediate impact of this hybrid work trend is that demand for physical office space will decrease significantly. Most office properties will face the pressure of increasing vacancy rates. Office space that is not yet vacant also faces a short-term decline in space occupancy, resulting in high wasted operating costs for HVAC systems (heating, ventilation, and air conditioning). This situation can become an even more severe problem at a time when European countries are facing energy problems.

The hybrid work trend also means that business owners do not have to pay extra rent for office space if it does not offer a greater performance bonus than a living room or café. Despite the findings of many studies, remote work is still not a complete substitute for offline work and in-person communication. For example, a study of the MIT community's email communication network during a lockdown showed that remote work suppressed "weak ties" compared to a "normal" work environment, which helps. However, traditional workspaces do not emphasize these "irreplaceable" qualities in particular. The question of how to make the office space enhance work performance is a question that determines the core value of the office space.

Digitization seems to offer a solution to this dilemma. Based on sensor networks and automatic control systems, both building managers and users can get more precise information about the operating status of the office space and react efficiently. Moreover, in terms of energy savings and operating costs, digitized office buildings can do so by adjusting the operation modes of lighting systems and HVAC systems in different areas according to the spatial and temporal distribution of the users. This method saves much energy compared to the traditional mode of turning on all systems during working hours or turning off the HVAC system when energy prices rise.

On the other hand, digitization allows office spaces to make subtle adjustments to environmental quality in real-time, leading to productivity gains at the macro level. For example, many studies have shown the potential impact of indoor air quality, especially CO2 levels, on cognitive function and productivity (Duran et al, 2021; Allen et al., 2016). Theoretically, if office spaces can ensure adequate ventilation rates, the cognitive impairment and decreased efficiency associated with CO2 build-up can be avoided. However, our study found that human behavior often significantly influences the actual ventilation effect. One can either hope that someone remembers to open the windows in time or choose the relatively energy-intensive option of turning up the mechanical ventilation to the maximum. With building digitization, the ventilation rate can be automatically adjusted in real-time according to the CO2 content of the air by making air quality sensors work in conjunction with the HVAC system. The same logic applies to all office space components, from elevators to desks.

Still, we cannot ignore systemic risks associated with digitization. For a traditional office building, a cyber attack does not change it. But under the same conditions, a digitized office may face more significant troubles, such as an HVAC system outage. We must be prepared for dysautonomia if we give the office space an efficient autonomic nervous system.


Durán, Nicolás, et al. "Indoor Air Quality and Student Performance: Evidence from A Large Scale Field Study in Primary Schools." (2021)

Allen, J. G., MacNaughton, P., Satish, U., Santanam, S., Vallarino, J., and Spengler, J. D. (2016). Associations of cognitive function scores with carbon dioxide, ventilation, and volatile organic compound exposures in office workers: a controlled exposure study of green and conventional office environments. Environmental health perspectives, 124(6):805-812

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