Smart Buildings: How Landlords and Tenants Can Create Shared Value

What You'll Learn

Smart building technology can create value for landlords and tenants, but realizing the benefits requires collaboration, shared objectives, and clear agreements. In this blog, you'll learn:

• Why aligning smart building investments with tenant needs can create greater value for both landlords and tenants.
• How transparent data-sharing agreements help build trust and support better building performance.
• How demand-based operations can reduce energy waste while improving workplace comfort and efficiency.
• Why shared-savings agreements and other commercial arrangements can help address competing financial interests.
• How clear governance, defined responsibilities, and measurable performance objectives support lasting collaboration.

Why Smart Buildings Need Landlord-Tenant Collaboration

What happens when landlords and tenants have different ideas about what makes a building smart?

For landlords, a smart building may mean greater energy efficiency, improved operational performance, and increased asset value. For tenants, the priorities may be lower operating costs, more comfortable workplaces, and spaces that better support their business needs. Both parties stand to gain from smart building technology, yet differing priorities, financial incentives, and expectations can make it difficult to agree on which improvements to pursue and how to measure the value each receives.

The challenge isn't necessarily a lack of technology. During a July 2026 roundtable convened by PropTech Connect, senior leaders from organizations including British Land, CBRE, Hines, Legal & General, M&G Real Estate, and Mitsubishi Electric explored the barriers to greater collaboration and better building performance. A central finding emerged: the systems needed to monitor, connect, and optimize commercial buildings largely exist. The more difficult task is building trust, aligning commercial interests, and establishing the processes that turn technological capabilities into measurable business outcomes. 

As the Mitsubishi Electric team emphasized:

“The smart comes from what you can do with this, not the data itself.”

The discussion formed the basis of the Mitsubishi Electric Iconics Digital Solutions research report, Bridging the Landlord-Tenant Divide with Smart Building Technology, which explores how landlords and tenants can work toward shared objectives and realize greater value from smart building investments.

Align Smart Building Investments with Tenant Needs

Landlords and tenants may occupy the same building, but they don't necessarily measure success in the same way. Landlords typically focus on asset value, operating efficiency, sustainability performance, and tenant retention. Tenants are more concerned with how their workplaces support employees, business operations, and financial objectives.

Even within a tenant organization, priorities can differ. Facilities managers may focus on equipment reliability and maintenance costs, sustainability teams on energy consumption and emissions, and employees on comfort, accessibility, and the everyday workplace experience. As a Technical Director of Smart Buildings at WSP observed:

“What we think is a big blob of people is actually lots of different perspectives.”

Consulting tenants about workplace challenges, operational needs, and opportunities for improvement can help landlords make more informed smart building investment decisions. By considering tenant feedback alongside building performance objectives and financial priorities, landlords can identify improvements that deliver value to both parties.

For corporate occupiers, however, the challenge extends beyond individual buildings. Organizations operating across multiple locations often want consistent access, booking, and workplace technologies throughout their portfolios, regardless of who owns each property. As Andrew Dyke, Managing Director and Head of Smart Buildings at Mitsubishi Electric Iconics Digital Solutions, explained:

“Landlords think vertically about their building. Corporate occupiers think horizontally about their estate and portfolio.”

Recognizing these different perspectives can help landlords and tenants identify opportunities for collaboration and select technologies that support both building-level performance and portfolio-wide workplace requirements.

Consider occupancy analytics. For a landlord, understanding how spaces are used can support more efficient HVAC and lighting operations. For a tenant, the same information can inform workspace planning, hybrid work policies, and decisions about future space requirements. The technology creates value for both parties, but the benefits depend on their respective needs.

By understanding the outcomes tenants want to achieve, landlords can make more informed investment decisions while identifying opportunities that benefit both parties. The objective is not simply to introduce more smart building capabilities, but to address the operational and business priorities of landlords and tenants alike.

Build Trust Through Landlord-Tenant Data Sharing

As a Digital Advisory Director at CBRE observed during the roundtable:

“If they can use the data we share to deliver something for them, ESG or operational efficiencies, then there's a reason to do it.”

Smart buildings generate valuable information about energy consumption, occupancy, equipment performance, and environmental conditions. Landlords and tenants can use this information to pursue their respective operational and business objectives, but realizing those benefits often depends on sharing relevant data. Both parties therefore need a clear understanding of what information is collected, how it will be used, and what value each can expect to receive.

For tenants, concerns may extend beyond data privacy and security to include how occupancy information could influence lease negotiations, service charges, or decisions about space utilization. Landlords, meanwhile, need reliable data to improve building performance, manage operating costs, and demonstrate the value of their investments.

The research report Bridging the Landlord-Tenant Divide with Smart Building Technology recommends establishing a landlord-tenant data charter to clarify expectations around information sharing. Such an agreement can address several important questions:

Establishing these expectations provides a framework for responsible data sharing and helps build trust between landlords and tenants.

Consider energy performance data. A landlord may use building-level consumption trends to identify opportunities for greater efficiency, while tenants may need information about their own energy use to monitor sustainability targets and operating costs. Agreeing on what information each party can access, and for what purpose, helps ensure that data sharing delivers practical value to both.

The key is to make data sharing a mutually beneficial arrangement rather than a one-sided request for information. When landlords and tenants agree on the purpose, safeguards, and expected outcomes, building data becomes a resource for improving performance and strengthening their relationship.

Improve Smart Building Performance with Demand-Based Operations

Once landlords and tenants agree on what information to share and how to use it, the next challenge is translating that data into improvements in building performance and tenant experience.

Traditional building operations often rely on fixed schedules, regardless of how spaces are actually used. As the Head of Retail Operations at British Land observed during the roundtable:

“We're moving from a time-based building to an occupancy-based building.”

The need for more responsive operations is reflected in CBRE's 2025 figures, which show average office utilization of 53%, with peak utilization averaging 80%. Demand-based operations offer a more responsive approach by integrating occupancy, environmental, and equipment data with building automation systems. Building operators can use these insights to:

• Optimize HVAC operations: Where controls allow, adjust heating, cooling, and ventilation according to actual occupancy and environmental conditions rather than fixed schedules, reducing unnecessary energy consumption while maintaining comfort and indoor air quality.
• Improve lighting efficiency: Where controls allow, adjust lighting based on space utilization to reduce energy waste in unoccupied areas.
• Enable proactive maintenance: Use fault detection and diagnostics to identify abnormal equipment behavior and investigate potential problems before they cause more serious disruptions.

Consider an office building where occupancy varies significantly throughout the week. Facilities teams can use occupancy patterns to adjust building operations according to actual demand. Landlords benefit from greater operational efficiency and lower costs, while tenants gain a more comfortable workplace that responds to how their spaces are used.

However, identifying opportunities for improvement is only valuable when someone acts on them. An analytics system might flag an air-handling unit operating inefficiently, but the potential savings remain unrealized until the issue is investigated, corrected, and the results verified.

Connecting building insights to engineering workflows, with clear responsibility for each intervention, an expected benefit, and a method for measuring the outcome, can help ensure that opportunities identified through analytics lead to meaningful improvements. Such an approach helps facilities teams prioritize improvements and provides landlords and tenants with evidence of the value created through smarter operations.

Measurable results also strengthen the business case for further investment, particularly when the parties funding building improvements are not necessarily the ones receiving all the benefits.

Address the Costs and Benefits of Smart Building Investments

As the Head of Germany and Central and Eastern Europe at M&G Real Estate observed during the roundtable:

“Somebody has to pay for it at the end of the day.”

Even when landlords and tenants recognize the benefits of a proposed smart building investment, they may disagree about who should pay for it and how the resulting value should be shared.

For example, a landlord might fund upgrades to building automation systems that reduce energy consumption, while tenants receive much of the financial benefit through lower utility bills. Conversely, improvements that enhance workplace comfort and employee satisfaction may be highly valuable to tenants but difficult for landlords to justify through conventional return-on-investment calculations.

Addressing these competing interests requires commercial arrangements that reflect how costs, savings, and risks are distributed. The research report identifies several approaches:

• Shared-savings agreements: Establish a baseline for energy consumption, agree on how improvements will be measured, and determine how verified savings will be distributed between landlords and tenants.
• Co-investment during lease renewals: Use lease negotiations or major refurbishments to identify improvements that support both building performance and longer-term tenant requirements, with costs shared according to the expected benefits. As a Development Director at Hines emphasized:

“The earlier you can partner, the better.”

• Value demonstration before introducing charges: Allow tenants to experience and evaluate new building services before agreeing to additional fees, helping establish a clearer connection between the investment and its benefits.

A CapitaLand example highlighted in the research report demonstrates how aligning financial interests can benefit both parties. The building owner funded upgrades to metering, LED lighting, and the removal of gas-based systems, while the occupier benefited from improved operational performance. In return, the owner secured a longer income term and an increase in the property's valuation. 

The arrangement illustrates how smart building investments can deliver operational benefits to tenants while creating longer-term financial value for landlords.

Strengthen Landlord-Tenant Collaboration Through Clear Governance

Agreeing on how smart building investments will be funded and how the benefits will be shared is only part of the challenge. Landlords and tenants also need a practical framework for making decisions, addressing operational issues, and monitoring performance over time.

The research report proposes a joint operating compact to establish how landlords, tenants, and building operators will work together. Such an agreement can address five important areas:

• Roles and responsibilities: Define who is accountable for building operations, technology investments, and performance improvements.
• Decision-making authority: Establish who can approve operational changes, authorize investments, and resolve disagreements.
• Performance expectations: Agree on measurable objectives, service levels, and how results will be monitored and reported.
• Issue resolution: Establish procedures for investigating problems, escalating concerns, and implementing corrective actions.
• Allocation of costs, savings, and risks: Agree on how investment costs, financial benefits, and associated risks will be distributed among landlords, tenants, and other stakeholders.

Regular performance reviews can help stakeholders assess progress against agreed objectives, evaluate building performance, and identify emerging tenant needs. Shared dashboards and consistent reporting can support these discussions by giving everyone access to relevant information.

Regular collaboration helps landlords and tenants respond to changing requirements, resolve issues more effectively, and maintain the benefits of their smart building investments over time.

Bridging the Landlord-Tenant Divide Through Smart Building Collaboration

Smart building technology can help improve energy efficiency, operational performance, and the workplace experience. Realizing those benefits, however, requires more than connected systems and advanced analytics. Landlords and tenants need shared objectives, mutual trust, and a commitment to working together.

By aligning priorities, establishing clear agreements, and measuring outcomes, both parties can make more informed investment decisions and create lasting value. The opportunity lies not simply in making buildings smarter, but in making them work better for everyone who owns, operates, and uses them.

For practical guidance on putting these recommendations into action, the full research report includes a six-point landlord-tenant data charter, four commercial models for sharing costs and benefits, a cybersecurity checklist for connected assets, and a ten-step action plan.

Download the research report: Bridging the Landlord-Tenant Divide with Smart Building Technology

Speak to a Smart Buildings Expert

Frequently Asked Questions

Smart building investments raise important questions about responsibilities, data sharing, financial benefits, and operational priorities. The following answers address common considerations for landlords and tenants seeking to create shared value through smart building technology.

How can landlords and tenants benefit from smart building technology?
Landlords can benefit from improved energy efficiency, lower operating costs, stronger asset performance, and greater tenant retention. Tenants can benefit from more comfortable workplaces, better operational efficiency, and building services that respond to their business needs. The greatest value comes from identifying improvements that support both parties' objectives.

Why is data sharing important in smart buildings?
Sharing relevant building data helps landlords and tenants make informed decisions about energy consumption, occupancy, equipment performance, and workplace conditions. Clear agreements about data ownership, access, privacy, and permitted uses help establish trust and ensure that both parties benefit from the information.

How can smart building technology reduce operating costs for landlords and tenants?
Connected building systems and demand-based operations help facilities teams adjust HVAC and lighting according to actual building use, where controls allow. Fault detection and diagnostics can also identify equipment inefficiencies that contribute to unnecessary energy consumption. Correcting these problems can reduce operating costs while maintaining occupant comfort.

How can landlords and tenants share the costs of smart building improvements?
Shared-savings agreements, co-investment arrangements, and commercial agreements negotiated during lease renewals can help distribute costs and benefits more equitably. The appropriate approach depends on who funds the improvements, who receives the benefits, and how performance outcomes will be measured.

What role does governance play in successful smart building collaboration?
Clear governance establishes responsibilities, decision-making authority, performance expectations, and procedures for resolving operational issues. Regular performance reviews and shared reporting help landlords and tenants evaluate results, address changing requirements, and maintain the benefits of their investments over time.