Although it could be three to five years before the promise of 5G internet can be realized in offices and multifamily spaces, the real estate industry is starting to think about what kind of impact 5G will have inside the built environment.
It is hard to escape the 5G hype. Just about any time you turn on the TV or watch videos online, you see an ad from Sprint, T-Mobile, or Verizon trumpeting the blazing-fast, no-lag future of 5G that is rolling out nationwide and the promise that it holds for streaming video, gaming, and videoconferencing on the go. At the same time, Apple, Samsung, and other mobile device makers are touting the 5G-readiness of their next-generation phones and tablets.
To hear the telecom and tech giants tell it, the 5G revolution is almost here and it is time for everyone to jump on board.
In reality, however, ubiquitous 5G is still several years away. The physical infrastructure needed for wall-to-wall coverage in cities and suburbs is very expensive—experts are talking about 5G implementation costing trillions of dollars—and it will take a long time to build out. But as providers continue to shout from the rooftops about the promise of 5G, excitement in the general population grows along with their expectations of fast, seamless wireless internet access wherever they go.
The telecom companies will be responsible for delivering that wireless service in the public realm. But the responsibility for that access indoors in offices and homes where people spend most of their time will fall on commercial and residential building owners and operators.
And though it could still be another three to five years before the promise of 5G can be realized in offices and multifamily spaces, the real estate industry is starting to think now about what kind of impact 5G will have inside the built environment and whether 5G will live up to the hype and supplant wi-fi as the wireless technology of choice.
Some experts think that 5G will be the foundation for transforming offices and homes into the fast, connected, flexible, device-heavy environments that tenants will demand. Others are skeptical that 5G can overcome limitations such as its high cost to implement indoors, its ongoing cost to use, and the competition coming from the next generation of wi-fi technology.
Urban Land spoke with real estate and technology industry professionals, wireless-access advocates, and other experts to understand how 5G could reshape offices and multifamily residential buildings and what owners and operators need to be doing now to prepare for the 5G future.
What Exactly Is 5G—and Wi-Fi 6?
Of course, 5G is the next-generation cellular mobile data network. It will eventually replace 4G LTE—though not for many years—much the way that 4G has largely replaced 3G in most places. 5G operates on a much higher part of the radio frequency spectrum, which, in turn, has a much shorter wavelength. That short wavelength—called millimeter wave by the industry—allows for much higher speeds. The telecom companies promise speeds as much as 100 times faster than those offered by 4G.
According to Deloitte, the consultancy and auditing firm, those speeds are at least five years off, if they ever are fully reached. In the immediate term, 5G speed will likely be double that of 4G in urban environments. In three years’ time, it will be 10 to 20 times faster than 4G. Eventually, it could be 50 to 100 times faster than 4G.
Perhaps as important as the speed it offers, 5G promises to deliver four to five times lower latency than current cellular data networks offer. The lower the latency, the less lag experienced by users. At the cutting edge of technology, that low latency will help facilitate autonomous vehicle use or telemedicine—two uses in which dropped signals could be matters of life and death.
Most users probably are not in such dire need of an uninterrupted broadband signal, but they absolutely want their videoconferencing service to stop lagging in the middle of a work meeting or their Netflix stream to stop lagging on movie night. The greater bandwidth of 5G will also be able to handle more devices being connected to it at once.
One major challenge for 5G is the need for many more small towers to distribute the signal. The signal for 5G does not travel as far as the signals of the older networks. So, while telecom companies will continue to use their large towers, they will be adding many small towers as well—potentially hundreds of thousands of them throughout the United States—on light posts, roofs, and other existing structures in the urban environment.
However, 5G is not the only new wireless technology on the horizon. It is worth mentioning that the next generation of wi-fi technology, called wi-fi 6, also promises faster speeds, lower latency, and an ability to service more devices at once. Some experts think it will be a viable, potentially less expensive alternative to 5G for in-building use. Wi-fi 6–compatible devices and routers started hitting the market in 2020. At the least, building and office managers interested in providing wi-fi 6 will need wi-fi 6 routers. Some buildings might need to upgrade their copper cable or install fiber optic to deliver the speeds that wi-fi 6 is capable of.
What Can 5G Do for Real Estate?
At its simplest level, 5G could be one way for building owners and operators to meet the ever-growing demand from tenants to have the fastest internet possible. Homes are filling with many more devices as the “internet of things” (IoT) becomes more ubiquitous, with each of those things requiring a connection. A 2019 report by Deloitte found that the average U.S. home with broadband had 11 internet-connected devices ranging from computers and phones to smart speakers and refrigerators. That number is expected to continue to grow in the coming years.
“If a resident lives in an area with a fully deployed 5G network, they will come to expect blazing-fast speeds at every turn,” says Kevin Donnelly, vice president of government affairs for the Washington, D.C.–based National Multifamily Housing Council (NMHC). “Resident surveys year after year show us if a prospective resident walks into a property and their signal drops, they’re more than likely to move to the property across the street that doesn’t have a signal challenge.”
Commercial building owners and operators also expect a high demand for 5G from tenants, and 5G could be a way for office buildings to stand out from the competition.
“New tenants are going to want 5G,” says Manuel Fishman, a lawyer with the firm Buchalter who represents commercial real estate developers and who is a former chair of the San Francisco Building Owners and Managers Association’s government affairs committee. “The trend now in first-class office buildings is to adopt more of a hospitality model because tenants have options to work remotely and because there’s going to be a heightened need for a perception of safety in office buildings. 5G does fit into that hospitality model.”
Fishman imagines that 5G will be a key issue in lease negotiations in 2021 and that tenants might expect building owners to subsidize the cost of 5G infrastructure, especially if office rent rates drop as expected. Others in the wireless world, however, think that while tenants may start demanding 5G because of telecom marketing, wi-fi will continue to make more sense for most users.
“For the life of me, I can’t imagine why, if I was a prospective tenant, having 5G inside the building would be that appealing to me,” says Christopher Mitchell, director of the community broadband networks initiative at the Institute for Local Self-Reliance. “I don’t want something that I’m paying per megabit for or [that] gets capped at a certain data usage per month. I want something that’s basically unlimited and fast and affordable. . . . 5G would be so much more expensive because of the fees that the cell carriers charge. And it’s not clear to me you’d get better performance on 5G than with wi-fi 6.”
Still, some people think that 5G has transformative potential beyond simply meeting customer demand.
The COVID-19 pandemic has transformed many aspects of multifamily operations, including moving previously in-person services entirely online. Donnelly says he expects that to continue long after the pandemic abates.
“It’s a blessing and a curse, but the pandemic has really shown us the future of multifamily in a lot of ways,” he says. “Existing connectivity has allowed for acceleration in a lot of ways that show a hint of the future. Virtual tours and online leasing are two trends we think are here to stay. 5G could allow property owners and managers to take an even more hands-off approach to leasing.”
Paul Bingham is the founding director of Trusted Wireless, a London-based consultancy focused on in-building wireless technology. He is also the founder of Smart Connected Buildings, a community of real estate and technology professionals working on smart-building issues. Bingham thinks that 5G has the potential to transform how commercial real estate fundamentally operates.
“You’ve got a lot of building owners now that are trying to convert and change their business model to attract the new flex worker, and a lot of their buildings aren’t wired or cabled or able to be flexible,” Bingham says. “The biggest benefit for 5G is that if you’ve got 5G wireless infrastructure throughout the building, ultimately the building is completely flexible to deploy whatever you want, wherever you want.”
He continues, “The traditional commercial real estate model is going to change. Building operators are not going to have long-term tenants that are going to sign 10- to 15-year tenancy agreements. They’re going to have short-term, flexible tenancy agreements where the occupants of the building will change continually and the building will need to reinvent itself. 5G allows a platform for building owners and asset owners to be far more flexible, innovative, and nimble.”
Because 5G is powerful and flexible, it potentially future-proofs the office in a way that allows new tenants to move in without needing to do major renovations and rewiring to accommodate their technology needs.
OWNERS WILL LIKELY NEED TO INSTALL DISTRIBUTED ANTENNA SYSTEMS (DASs) OR LOW-POWER
SMALL-CELL TRANSCEIVERS INSIDE THEIR BUILDINGS TO TRANSMIT THE 5G SIGNAL. . . . IT COULD
COST AS MUCH AS $100,000 TO INSTALL A DAS IN A SMALL- TO MIDSIZED DOWNTOWN OFFICE
BUILDING. A 50-STORY COMMERCIAL BUILDING WOULD BE MANY TIMES MORE EXPENSIVE.
Bringing 5G Indoors?
One of the big physical obstacles of 5G’s shortwave signal is that it does an even worse job of penetrating glass and concrete than 4G (which already was not great). This means that users inside offices and apartment buildings will have a very difficult time using the telecom company’s outdoor 5G signals.
To remedy this, owners will likely need to install distributed antenna systems (DASs) or low-power small-cell transceivers inside their buildings to transmit the 5G signal. Fishman estimates that it could cost as much as $100,000 to install a DAS in a small to midsized downtown office building. It would be many times more expensive to install one in a 50-story commercial structure.
“The big question is: who’s going to pay for it?” Fishman asks. “Verizon and AT&T are going to be using all their capital for the public network. They’re really not going to be throwing money at us building owners. Who’s going to pay for the capex [capital expenditures]? Who’s going to pay for the radio antennas?”
Donnelly is similarly concerned about the capital expenditure for new infrastructure. “When you’re already dancing on a tight balance sheet, making these major upgrades—and increasingly doing it without contributions from providers—can really impact affordability across the board and what rents residents ultimately pay.”
Some in the industry are hoping that because the telecom companies need significantly more antennas and towers to make the 5G network function, they will be able to lease rooftop space to the telecom companies. Whether that comes to fruition remains to be seen.
Dealing with Distrust
One potential pitfall of hosting 5G equipment in or on a building is the broad level of misinformation and conspiracy theory around 5G. Some fear that 5G towers will emit harmful radiation. There also are conspiracy theories that 5G towers spread the virus that causes COVID-19.
The conspiracy theory is patently false, and scientific research has found that cellular tower radiation is probably not harmful. According to the American Cancer Society, “Newer 5G signals still use [RF or radio frequency] waves, so they are still forms of non-ionizing radiation, which is not thought to have the ability to directly damage DNA. At this time, there has been very little research showing that the RF waves used in 5G networks are any more (or less) of a concern than the other RF wavelengths used in cellular communication.”
Still, fears regarding 5G have led people to burn and damage more than 140 5G towers in the United Kingdom and Europe. In May, ABC News reported that there had been five arson attacks on cell towers in Memphis, with another 14 towers in western Tennessee purposefully getting shut off by attackers. At a less destructive scale, a group of protestors in Berkeley, California, delayed the installation of two 5G small cell towers.
Whether 5G can deliver on its promises of high speeds, minimal lag, and great connectivity for the ever-increasing number of devices remains to be seen. Even optimists expect that it could still take another three to five years before building operators could fully realize the power of next-generation wireless.
Donnelly is hoping for the best but is not holding his breath. “For the last three to four years, we in the multifamily industry have really been scratching our heads about what this means for us. There’s so much and we’ve failed to see the reality play out in our communities as quickly as we’d been promised. This was sort of touted as a potential game-changer—and we still hope that is the case—but I think we still need to overcome the challenge of building structure and design.”