Use of “Digital Twin” Modeling Could Transform Real Estate Industry

Real-time replicas of assets could lead to more efficiency and better decision-making.

Digital twins—real-time virtual models of objects, ranging from a building to an entire city—are an emerging concept that has the potential to transform the built environment and the real estate industry in numerous ways, according to the technology’s proponents.

“The infrastructure that’s in a city—from light poles to built objects—can be digitized,” explains Kevin Danehy, chief executive for North America of Willow, an Australian-based company that markets its trademarked WillowTwin digital twin platform globally. “This data can be used for value creation, such as predictive analysis.”

Already, cities in the U.S. and elsewhere are rushing to create digital models of themselves to improve their services and planning. In January, for example, Las Vegas unveiled a virtual version of its 4.3-square-mile (7 sq km) downtown created by digital twin firm Cityzenith, which uses a network of sensors to pull in real-time data on traffic density, air quality, noise pollution, and carbon emissions from local buildings. On the other side of the U.S. the Orlando Economic Partnership, which represents seven counties and the city of Orlando, is developing an ambitious digital replica of the 40-square mile (64.4 km) metro area. A study by ABI Research has predicted that than 500 cities across the world will have digital twins by 2025.

Chungha Cha, co-founder and chair of the Reimagining Cities Foundation in Seoul, says digital twins could be a valuable tool for decarbonization, because they could be used to test ways to reducing energy use and emissions, and do people mapping inside buildings to spot under-utilized areas that are wasting energy. He also sees their potential to improve city residents’ health and well-being, by pinpointing areas with environmental problems. “With this building, the indoor air quality is really, really bad, versus the other buildings that are pretty good,” he says. “So, what’s happening here?”

“The more granular it is, the more exciting it is,” says Cha.

Cha envisions building massive digital twins that include millions of buildings scattered across the world, which would provide insights into the energy efficiency and carbon footprint of various asset classes.

Massive public facilities such as airports, transit systems, and sports arenas also are turning to virtual replicas to aid their operations.

Not New, But Increasingly Cost-Effective

The concept of such replicas has been around since the 1960s, when NASA used networked computers to create mostly digital spacecraft simulators which astronauts and mission control crews could use for training. In recent years, the development of sophisticated sensors and the Internet of Things (IoT) has made it possible to generate enormous amounts of data to create detailed real-time virtual replicas. Technology giant GE, for example, now markets digital twins that monitor the performance of assets ranging from oil rigs and wind farms to jet engines, according to the company’s website.

Digital twins eventually might become commonplace tools for operating and managing individual office towers or apartment buildings as well. A digital twin could be used to operate a building and fine-tune its efficiency, but even more, value would be created by being able to do predictive analytics with a building’s data, according to Willow’s Danehy.

Danehy came to Willow a year ago after spending a decade with Brookfield Properties, where he says that he and colleagues avoided terms such as “smart building” or “smart city” because they seemed too vague. But digital twins have changed his thinking.

“This is the first time in my 40-year career in real estate where there’s actually a characteristic about the asset that one could suggest is smart,” he says. “You have 30 or 40 different technology systems that are now deployed across commercial properties, whether it’s an office building or a mall. And they’ll have the opportunity to integrate into one place and aggregate live data.”

Growth in Analytics

Danehy compares that to how former Oakland Athletics general manager Billy Beane, the subject of the 2003 book and subsequent film Moneyball, began using data analytics to scout baseball players.

In the mid-2010s, while running a predecessor company, Willow co-founder and CEO Joshua Ridley and colleagues saw a rising trend in the construction business, in which architects, engineers and construction companies were increasingly interested in utilizing data as they erected buildings. Ridley began connecting different types of data with information from operating manuals and warranties for equipment and utilizing it in building information modeling (BIM).

One of their corporate customers liked the results so much that it wanted to know if there was a way to keep using digital modeling after the building’s completion. “They told us, ‘We don’t want to ever go back to whiteboards and pens and ring binders, and drawings rolled up in a corner in the janitor’s office,” Ridley recalls. “We want to utilize the valuable information we’ve created during construction, as the basis for managing the building.”

Ridley pondered the problem one Saturday morning. After watching a video about how IBM had created a digital model of a jet engine to study its performance, he had an epiphany. The same sort of approach could be used with real estate portfolios. It was “a new way of approaching the world of real estate,” he says.

Willow’s customers include SoFi Stadium, home of the Los Angeles Rams and Chargers NFL teams. “Our goal is to deliver a new type of fan and visitor experience, and to do that, we need a comprehensive, data-driven view into how all the pieces of this project connect,” Jason Gannon, managing director, SoFi Stadium and Hollywood Park, explained in a 2020 press release. Willow also has worked with major technology companies and a major international airport in the southwest, creating a digital twin that included digital versions of everything from runways to terminals. Another major client is a commuter rail system in one of Canada’s biggest cities.

New and Existing Structures

Creating a digital twin is not something exclusively for new construction. When an older building is renovated and repurposed as a smart building with IoT sensors and other technology, it basically is being turned into a massive computer that creates large amounts of data that the digital twin can utilize, according to Ridley.

As Ridley explains, a digital twin consists of multiple layers. There’s the building’s static asset data, the spatial data those assets are distributed throughout, and the live data that flows from the equipment. In the past, this information was held in siloed storage, or held by companies that might have kept it to themselves.

All that information—millions of data points—flow into the cloud, where the platform can store and analyze them and with seconds deliver insights that can be visualized on a computer screen or mobile device.

“Willow provides a centralized home for your building data, so users can compare and benchmark their assets, in real-time,” says Ridley, who recently relocated from Sydney to Dallas in order to help Willow in the fast-growing North American proptech market.

Digital twins could enable building management to easily view live data on energy usage and occupancy, as well as historical data such as the operating history of a particular piece of equipment, including when it was installed or last inspected. It also would be possible to view the performance of the elevators or the building’s security system. That sort of easy access to a wide range of important information about a property also could be used to help potential buyers or lenders make informed decisions.

“There are fewer assumptions that need to be made, and more decisions based on fact,” Danehy says. “And so, from a lender’s perspective, if there’s less risk, the cost of capital is going to be less. So there’s a potential for the building to be worth more because you’re paying less in interest costs.”

The data from a digital twin can be viewed on different sorts of devices ranging from a mobile phone to a desktop computer, or even in a virtual reality format, according to Ridley.

While the use of digital twins is still in its early stages, Ridley envisions the technology spreading, because of its usefulness for risk management, meeting environmental-social-governance requirements and maintaining cybersecurity.

Danehy thinks that owners who utilize digital twins for buildings will gain a significant competitive advantage, to the point that assets with digital twins may be worth more.

“They’re going to be able to move more quickly, more decisively, and, you know, be effective in the acquisition, ownership and trading of assets, and how they interact with the capital markets in terms of providing debt or equity,” Danehy says.