Commercial Real Estate Prepares for 5G


There is a lot of talk about the 5G network—dubbed the next commercial real estate (CRE) utility—and how it will radically change the way we operate and do business. It’s going to be big. Really big.

The eminent need for the 5G network is there is simply too much data and not enough bandwidth.  Think about it this way: imagine bandwidth as a river, and on that river are boats (data). As more boats that try to pass through the river, a traffic jam forms and the boats slow down. By comparison, too much data can create a backlog and result in significant latency. The 5G network will open up those channels by dramatic proportions.

According to Medium.com, 5G will allow mobile users to stream movies and surf the web almost 500 times faster than with 4G LTE at its fastest.  Sprint recently announced plans to begin its mobile 5G rollout in the first half of 2019, including in Atlanta, Chicago, Dallas, Houston, Kansas City, Los Angeles, New York City, Phoenix, and Washington, D.C. Other carriers like AT&T already launched 5G in 12 cities last year, and T-Mobile aims to have coverage in 30 cities by year-end. While the network is already available in select major cities, full 5G infrastructure won’t be completed until at least 2020, according to Esquire.

But the 5G impact will reach beyond mobile phones. Lower latency, faster speeds and the ability to transmit large amounts of data will revamp exiting industries (think healthcare and the possibility of doing robotic surgeries remotely) and pave the way for new industries (smart cities could become a reality with 5G).

The 5G value potential is staggering. According to Qualcomm, the 5G mobile value chain alone could generate up to $3.5 trillion in revenue in 2035. For CRE, there is opportunity to invest in the 5G network on the property level because it adds tenant value and moves the NOI needle.

Consider this: telecomm companies are fervently working on establishing their best-in-class 5G networks and are tapping building owners to lease rooftop or interior space to set up micro-data centers (likened to the size of a briefcase) to strengthen their network. CRE owners can also collect additional income streams from tenants subscribing to the building’s network, instead of incurring the expense of installing their own wireless network.  It’s estimated that tenants will save 20-30 percent on utilities in a building equipped with a 5G network—a huge sales point for leasing agents.

From a management perspective, 5G will make buildings smarter by streamlining functions and operations and services, such as surveillance capabilities with high-definition video imaging, maintenance assessments and reporting, and maximizing vendor relationships and fulfillment.

KBS is already leading the charge and working with various providers and carriers on different 5G solutions for its portfolio. 5G will fuel future technologies and adaptions in the CRE space to keep pace with emerging trending and how professionals interact with real estate. From how a lease deal is transacted to managing building systems, every tenant, investor, broker, owner/operator, vendor and employee will be affected by 5G.