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The iconic white peaks of Denver International Airport’s roof will form a backdrop for Peña Station Next. (©L.C. Fulenwider Inc.)

About a 20-minute light-rail trip northeast from downtown Denver and nestled on the edge of Denver International Airport, a prototype for the technologically transformed urban neighborhood of the future is just starting to take shape.

Already, one of the Peña Station Next development’s buildings has been completed—the gleaming, solar-powered 112,500-square-foot (10,500 sq m) edifice that houses Panasonic Enterprise Solutions’ operations and technology center. In the streets, workers are installing the wirelessly controlled light-emitting diode (LED) streetlights that will illuminate the mixed-use complex, providing as much as a 70 percent energy savings over conventional lampposts.

But that is just the start. Panasonic and local developer L.C. Fulenwider, which are partnering on the project with the city of Denver and an assortment of other local stakeholders, envision a dense mixed-use project—including 1.5 million square feet (139,000 sq m) of office space, 500,000 square feet (47,000 sq m) of retail uses, and 2,500 residences—that will double as a proving ground for exotic technology. When the $500 million project is completed in ten to 12 years, it will be a landscape where virtually every object—from lighting to parking meters—will be connected to the internet and equipped with sensors and/or cameras to supply a continuous stream of data to the development’s managers, who also will be able to control them via cloud-based apps.

The parking area for the light-rail stop will be covered with a massive solar canopy, which will tie into a battery-equipped micro grid that will not only supply the neighborhood’s energy needs, but already make it into a net producer of energy. On-demand robotic shuttles will transport residents and workers between the rail stop and their homes and offices. A cutting-edge sensor array already developed by federal government researchers will continuously monitor environmental conditions—everything from the cloud cover to the level of particulates in the air, as well as traffic density and pedestrian count. “It’s a Fitbit for cities,” explains George Karayannis, vice president of Panasonic’s CityNow smart city division.

Smart Nodes Installation

Smart Nodes being installed on an LED streetlight at Peña Station Next.

Peña Station Next’s gadgetry will even be able to detect the temperature of the ground below road surfaces where snow has fallen. Together with other data provided by the Panasonic Weather Solutions network, which relies upon 300 sensor-equipped commercial aircraft to gather more than 320 millon data points across the globe, the information will enable road crews to plow more quickly and efficiently.

“That might sound mundane, but snow removal is a big political, social, and economic issue for cities,” Karayannis says.

Such optimization of services is one of the goals for Peña Station Next, whose developers aim to make it, in Karyannis’s words, “the smartest and most sustainable 382 acres [155 ha] in the country.”

“Some cities are piloting some of these technologies,” he says. “But no one city is doing all of what we’re doing.”

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The Argonne Array of Things, an environmental sensor, measures a dozen factors.

Panasonic, which chose Denver out of a list of 22 finalists for the site of its technology center, hopes to turn Peña Station Next into both a proving ground for smart-city technology and a template for other real estate projects. Karayannis says the company already is having discussions with “a few dozen” developers across the nation. “We’re looking for opportunities to develop transformative, human-centric communities,” he says.

A Worldwide Movement

The Denver development is at the forefront of the smart-cities movement—the wave of innovation that already is starting to transform urban areas across the globe—and in the process is creating new challenges and opportunities for the commercial real estate sector. Advances such as the internet of things (IoT), in which devices communicate with each other via internet connections; sophisticated sensing technology; wireless broadband; “big data” analysis; and automation are converging to improve how cities use energy, water, and other resources; how they manage traffic and monitor environmental quality; and how they provide basic services such as policing and snow removal. That promise is so alluring that Colorado-based Navigant Research predicts that the market for smart cities technology will grow to $27.5 billion worldwide by 2023.

Experts say that the move toward smart cities is playing out in a variety of ways. Rapidly growing countries in Asia and the Middle East are trying to build entire technologically advanced cities from scratch. In the United States and Europe, in contrast, local officials face the complicated task of figuring out how to retrofit cities’ existing infrastructure or to layer new capabilities onto it. But the most rapid progress toward smart cities may come in the commercial real estate sector, where private entities developing greenfield projects or renovating sizable urban parcels have more freedom and agility to embrace innovation.

In places such as Peña Station Next, a promising new partnership model is emerging in which a real estate firm partners from the start with a technology company that not only supplies the electronics, software, and expertise, but which becomes an investor as well. “I think this is where the real estate industry is going,” says L.C. Fulenwider senior vice president Ferd Belz, who was part of the effort to bring Panasonic into the project. “They’re with you from the beginning, as the technology evolves. This is going to be a learning lab, where we’ll be experimenting with systems and figuring out how to make them work. That’s hard to do if you just work with a technology contractor.”

According to Belz, the project’s genesis was in the fall of 2014, when Panasonic had narrowed down its choices for the technology center to Denver and another city. Belz and Fulenwider president L.C. “Cal” Fulenwider III met with Panasonic Enterprise Solutions president Jim Doyle and told him about roughly 400 acres (162 ha) of farmland that Fulenwider already owned near the light-rail line to the airport. Fulenwider, which had already envisoned a transit-oriented development for the site, invited Panasonic to join in the project. Belz credits Doyle for seeing the land as “a blank canvas” for smart-city technology, and Fulenwider adapted its original plans to fit Panasonic’s futuristic vision.

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About 48,000 people live in Songdo, South Korea, a new smart city near the capital’s Incheon International Airport. (©Lee Won Eun/Geo. )

Songdo, South Korea

The idea of a smart-city developer joining forces with a technology provider is not completely new. Back in 2001, New York City–based developer Gale International signed on to be the master-

plan developer for the 1,500-acre (607 ha) central business district of Songdo, a new city in South Korea that was to be built from scratch on reclaimed land near the site of Incheon International Airport outside Seoul. Gale’s chairman and chief executive officer, Stan Gale, conceived the notion of weaving digital connections and functionality deep into Songdo’s design. Eventually, in 2011 Gale brought in technology giant Cisco as a partner and investor in its u.Life Solutions venture.

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The Canal Walk in Songdo’s central business district.

Today, Gale’s portion of Songdo is about three-fourths complete, and about 48,000 people live in what is widely regarded as one of the prototype smart cities on the planet. “It’s probably one of the places with the most sensors in the world,” explains Gale executive vice president Tom Murcott. “There are probably millions of them. The challenge is how you take the data from those sensors and convert it into something you can use.”

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A receptacle that whisks trash away underground through an automated system that sorts it into matter to be recycled, or burned as fuel.

Songdo’s data-gathering devices electronically monitor everything from traffic flow to air quality, and keep on the lookout for police or fire emergencies. It is a city without garbage trucks or sidewalk trash cans; instead, refuse is sucked down through pipes into an automated underground collection system, where it is sorted and recycled, or burned as a fuel.

The city’s smart capabilities are a part of daily life as well. In Songdo’s below-ground parking garages, spaces automatically alert residents when their spouses or partners arrive in the evening. A telepresence system built into Songdo’s apartments enables people to be examined by a family doctor or have a psychotherapy session without leaving home. Residents also can access the city’s network of video cameras. “You can take a look through a monitor on your wall or pull up a smartphone app and make sure your kid in the playground is okay,” Murcott says.

Digital India

Throughout Asia, numerous other new cities are springing up with smart capabilities. In India, for example, Prime Minister Narendra Modi’s vision of a “Digital India” calls for building 100 smart cities to accommodate population and economic growth, with the first, Gujarat International Finance Tec-City, scheduled for completion by 2020.

In Europe and the United States, in contrast, cities have focused more upon finding ways to replace existing infrastructure with smart upgrades. Chicago already is using the same “Fitbit for cities” device that Peña Station Next will deploy, is in the process of upgrading more than 270,000 lights on city streets and in parks to LEDs, and is setting up a smart system to manage all of them remotely. Seattle is working with the MetroLab Network, a partnership among 38 cities and researchers at more than 50 universities, to gather information from 100 temperature sensors around the city and use it to figure out its relationship with electrical demand. (“Cities don’t have an army of engineers at their fingertips,” explains MetroLab executive director Ben Levine. “The partnership is a way of getting university expertise on issues.”) And last year, Columbus, Ohio, won a federal competition entitling it to a $40 million grant to develop a smart transportation system, which will integrate sensors with self-driving cars and networked vehicles.

Road congestion is one area where smart technology can have a major impact, explains Mike Zeto, general manager of the Smarter Cities business unit at AT&T, which is working with eight U.S. cities to develop smart solutions for their various challenges. With sensing devices to monitor traffic flow, he notes, cities gradually will be able to do away with timer-based traffic lights. Instead, “you can create intelligent intersections, with automated signals based upon the actual flow of traffic, rather than timer-based,” Zeto says.

But that is just the beginning, he says. With the advent of increasingly sophisticated electronics and autonomous vehicles, smart traffic systems eventually will use V2X (“vehicle to everything”) communications, in which they will link directly with traffic signals, as well as with each other. Computerworld recently reported that Miami–Dade County, Florida, will soon begin testing a V2X system developed by AT&T.

Getting Ahead of the Curve

But governments’ efforts to make cities smarter are constrained by funding, political inertia, and the pressure to focus on immediate problems rather than long-term transformation. City officials “don’t want to hear about a sensor or a predictive solution,” says Philip Bane, managing director of the Smart Cities Council, a Redmond, Washington–based organization that promotes the use of technology to improve urban life. “What they want to talk about is reducing congestion on their streets, or making the streets safer, or how to improve their hospitals or education. They’re focused on the benefits.”

But experts say that private developers, who have more freedom and agility in creating large-scale mixed-use projects with the latest technology, might be able to advance the smart cities concept more rapidly.

“You have developers wanting to create the most technologically advanced live, work, and play environment on the planet,” says Zeto, who says he has had numerous discussions with private players but cannot discuss them because of nondisclosure agreements. “They want to use IoT technologies to help facilitate that value for their commercial tenants, for folks who purchase condos, or for people who visit. They want to make the experience seamless, whether it’s parking, or public safety, or access to wi-fi, or the cost of utilities. When their buildings are more efficient and their systems are being monitored by IoT, they can do that.”

Zeto cites as a prime example the Related Companies’ Hudson Yards project in New York City. Hudson Yards’ sensor-laden environment provides data to New York University researchers studying how residents use urban spaces.

For a while, the private sector has been embedding smart technology in individual structures and using it to manage building operations and provide occupants with a better experience. Rick Huijbregts, vice president of digital transformation and innovation at smart cities technology provider Cisco’s Canadian operation, describes the Toronto office building in which he works as a prime example: The building recognizes his mobile phone so that whenever he goes into a space that he has reserved in the building, the temperature and lighting automatically are reset to his preferences. And those LED lights actually are powered through the building’s Ethernet network itself, rather than through an electrical closet on each floor.

“All of the systems that historically were siloed and proprietary gradually are converging into one IT structure,” he says. “And because of advanced analytics and artificial intelligence and other applications, we can make buildings a lot smarter and more responsive than ever before.” And it is cheaper to put up and operate smart digital buildings as well, he says. The space that Cisco occupies in Toronto, for instance, costs 60 cents per square foot ($6.46 per sq m) less than comparable conventional buildings, according to Huijbregts.

In Denver, Peña Station Next is an attempt to apply that same logic across an entire community. As Panasonic’s Karayannis explains, the development is a bigger, more advanced, and Americanized version of Fujisawa Sustainable Smart Town, a previous project that the company has built over the past decade on 45 acres (18 ha) outside Tokyo that previously had been the location of a plasma TV factory. Like Peña Station Next, Fujisawa relies upon a micro grid that is largely powered by solar energy. But unlike its mixed-use American analog, Fujisawa primarily is a residential community—one where 1,000 families live in homes that are worth 25 percent more than their equivalents in neighboring towns. Smart technology “provides a premium that developers can benefit from,” Karayannis says.

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At Peña Station Next, solar panels above the parking area will feed into the electricity grid.

Peña Station Next’s lighting system is one example of how smart technology can benefit cities. The system can notify city managers when a light goes out, and can save energy by dimming the lights when there is a full moon or during the late-night hours when fewer people are on the streets. The resulting savings can be used to finance other services, such as smart parking and community wi-fi. “Streetlights might be 40 percent of a city’s energy budget,” Karayannis says. “They are really expensive. But when they can transition from a liability to an asset, that is strategic.”

Peña Station Next’s scale will give it additional value as what Karayannis calls a “living lab” for Panasonic, the city of Denver, and others to experiment with. “They can bring all the technology to Peña Station and build a business case for it before they deploy it more widely in the city,” he says. “It’s a very rare opportunity.”

In particular, Karayannis expects Peña Station Next to become a hotbed for smart technology related to managing autonomous vehicles. The developers have established a partnership with Colorado’s department of transportation, whose RoadX program looks to develop ways for vehicles to communicate with each other and physical infrastructure—such as “virtual guardrails” that would help prevent crashes. “We’ll have almost 400 acres [162 ha] of low-speed roads for testing,” he says. “That’s pretty unique.”

L.C. Fulenwider’s Belz sees Panasonic’s presence—and the expertise and services it can offer to prospective tenants—as a major draw for the smart neighborhood, which will be built out over the next decade. “You won’t have to go to an outside contractor for security or building maintenance,” he says. “We’ll have real-time info on all that. You’ll be able to offload those functions and have them managed right down the street.”

L.C. Fulenwider plans to keep a third of the land and sell the rest to other developers, but Karayannis expects that those who will be attracted to putting up buildings in the community will embrace the same sort of smart technology that Panasonic is demonstrating—for example, the high-definition LEDs embedded in the skin of its own building, which enable it to display a changing assortment of digital art and vivid colors.

“When the Broncos win the Super Bowl again, we could turn the entire community orange,” he boasts.

Patrick J. Kiger is a Washington, D.C.–area journalist, blogger, and author.