GLOBAL KNOWLEDGE CENTER

5G WILL CHANGE COMMERCIAL REAL ESTATE. HERE’S WHAT TO EXPECT.

JULY 26, 2019

BY ADRIANNA KOWALCZYK AND BRUCE SIMONEAUX

NEWMARK KNIGHT FRANK GLOBAL KNOWLEDGE CENTER: 5G WILL CHANGE COMMERCIAL REAL ESTATE. HERE’S WHAT TO EXPECT. | 1

Television commercials and Tech-relaTed news claim that the 5G revolution is here. 5G, or fifth generation, refers to a new cellular network technology that will not only help you stream a video on your phone faster, but it has the potential to change how we experience the workplace, home, transportation, and the way we live. Given 5G’s capacity to shift practices in the commercial real estate industry—and even the fabric of our lives, we created a guide on what you need to know about this technology.

WHAT IS 5G?As evidenced in the exhibit below, 5G refers to an entirely new generation of mobile services. This technology promises to eliminate video buffering and lags when connecting to the internet. More importantly, 5G has the potential to connect everyday devices such as thermostats, wearable devices and lighting, as well as vehicles and even buildings, to the Internet of Things that use real-time analytics, machine learning and sensors to track and analyze data on each device. This hyper-connectivity will allow for increased safety and infrastructure in metropolitan areas and will lead to significant improvements in the healthcare sector, technology and other industries.

NEWMARK KNIGHT FRANK GLOBAL KNOWLEDGE CENTER: 5G WILL CHANGE COMMERCIAL REAL ESTATE. HERE’S WHAT TO EXPECT. | 2

Theoretical download speed 2kbit/s 384kbit/s 56Mbit/s 1Gbit/s 10Gbit/s

EXHIBIT 1: EVOLUTION OF MOBILE GENERATIONS

Source: ITU Report, “Setting the Scene for 5G: Opportunities & Challenges” (2018), p.6 ; Global Knowledge Center Research

Allowed us to take phone calls

on the go

Approximate deployment date

Latency

1980s

N/A

1990s

629 ms

2000s

212 ms

2010s

60-98 ms

2020s

<1 ms

Connected mobile devices to

the internet

Made texting possible

Let us stream videos on mobile

devices

Capabilities of previous generations

100 times faster download speed

Elimination of video buffering and lags

Hyper-connectivity between human beings and

technological devices

1G 2G 4G3G 5G

NEWMARK KNIGHT FRANK GLOBAL KNOWLEDGE CENTER: 5G WILL CHANGE COMMERCIAL REAL ESTATE. HERE’S WHAT TO EXPECT. | 3

According to Ericsson, a leading Information and Communication Technology (ICT) service provider, the global impact of 5G is so great that 25% of mobile data traffic around the world will be carried by 5G networks by 2024.

In 2017, Cisco Systems, a telecommunications and technology conglomerate, reported that smart devices were responsible for 92% of mobile data traffic around the world. For the purposes of their study, they classified “smart devices” as mobile connections with computing and multimedia capabilities that have at least 3G connectivity. Cisco predicted that mobile data traffic will advance at a compound annual growth rate of 46% between 2017 and 2022. By 2022, 90% of global mobile traffic will be generated by smartphones. If Cisco is correct, we are moving into a technologically-advanced world where human beings will engage seamlessly with devices in our homes, the vehicles we use, and in the buildings in which we work.

THE 5G WORKPLACE OF THE FUTURE In the next five to ten years, 5G will bring new levels of Artificial Intelligence and Virtual Reality to the workplace. Imagine an office where the space you are working is intelligent and capable of conversing with the people using it. Walking through the door of a fully-operational 5G office, you will be greeted by a bot or personal assistant concierge asking what it can do to help you settle into your workday. You will find that some employees in the office will be wearing Virtual Reality headsets and Augmented Reality glasses that allow immersive holographic experiences.

NEWMARK KNIGHT FRANK GLOBAL KNOWLEDGE CENTER: 5G WILL CHANGE COMMERCIAL REAL ESTATE. HERE’S WHAT TO EXPECT. | 4

The workplace of the future will have desk spaces and offices that learn your personal habits and preferences. Equipped with bio-informed sensors, these spaces will communicate data about you that will be used by the space to meet your physiological needs. Space and speech recognition software will detect your mood—whether you are alert or slightly less so. The software will then adjust the lighting and temperature around you to not only fit your personal preference but also to allow you to concentrate better.

As real-time video conferencing becomes a standard feature of office buildings, you will have virtual meetings with colleagues overseas in a video-connected conference room where speech recognition and translation software allow you to hear others in your first language, in real time. Following your meetings, the space will provide you with a condensed summary of topics discussed and a digitized action plan for attendees. These virtual meeting rooms may lead to the reduction of physical meeting rooms in the future. Technology will become your co-worker and even your personal companion.

5G WILL IMPACT THE INDUSTRIAL SECTOR In the future, the industrial sector will likely experience widespread automation and adoption of 5G technology. Ghost cargo ships will cross the Earth collision-free by independently communicating with one another and their surroundings about the delivery of goods. Cars, buses and trains will move autonomously, guaranteeing mobility and transportation services that require little-to-no human interaction. In the background, sensor networks will constantly gather real-time data that will be analyzed using machine-learning. These insights will be used to further improve the services and make them more efficient for human beings.

NEWMARK KNIGHT FRANK GLOBAL KNOWLEDGE CENTER: 5G WILL CHANGE COMMERCIAL REAL ESTATE. HERE’S WHAT TO EXPECT. | 5

Several industries will be affected by the implementation of a 5G network. In the transportation industry, autonomous vehicles will change the way we travel and commute. Cars will be able to communicate with one another and with the surrounding infrastructure which will significantly decrease the risk of collisions and other accidents. 5G will also affect how goods are made. We’ll see that in the manufacturing industry, 5G will enable real-time product inspection and assembly-line maintenance. Industrial robots will be able to use 5G to communicate with one another and with machinery on the factory floor, reducing accidents involving humans. Moreover, 5G will likely increase the efficiency of processes and the flexibility of workers, as well as decrease production time, lower maintenance costs and improve safety for factory workers.The ability to monitor patients’ health 24/7 will become possible with consistent uptime of high-quality data. Doctors will be able to perform medical procedures and surgeries remotely using robotic arms. The consistent uptime in data will improve care and administrative services provided to patients.

In the energy industry, infrastructure has not allowed for much connectivity between oil, gas and electrical industries. Advancements in 5G connectivity will lead to remote monitoring and therefore will improve security. This means that we will not need to send people into dangerous areas for inspections, as sensors will be able to report signals in real-time, giving management and public officials enough time to respond to critical situations. We will also see changes in the agriculture industry. Human beings will be able to further optimize agricultural processes like water management, fertilization, crop monitoring and livestock safely by using real-time data collection and fast-response management. Technology currently used in this sector is not equipped to manage large amounts of data, but in the future, smart farming will become possible. These examples indicate just some of the ways that 5G will improve technology, safety and production in the industrial sector.

5G WILL RESHAPE URBAN ENVIRONMENTS5G has the potential to revolutionize urban environments. By connecting Internet of Things devices to one another and to the public infrastructure of buildings and roads, 5G will likely change the way we interact with our surroundings.Its’ high-speed data and guaranteed connectivity will allow for unprecedented advancements in human-machine interactions. In the smart city of the future, 5G could eliminate road accidents and traffic congestion because autonomous vehicles will be able to avoid collision by communicating with one another, in real time, about their direction of travel. Changes such as these will make cities not only more efficient, but increasingly livable.

NEWMARK KNIGHT FRANK GLOBAL KNOWLEDGE CENTER: 5G WILL CHANGE COMMERCIAL REAL ESTATE. HERE’S WHAT TO EXPECT. | 6

If urban environments are successful in building the infrastructure needed for 5G connectivity, cities will transition into smart cities of the future. The uptime of data and real-time feedback will make commuting easier for those who need to go to the office, but it will also result in many people not having to commute for their jobs at all. Operators for excavators and building maintenance will be able to operate from the comfort of their homes. Operators for excavators and building maintenance will be able to operate from the comfort of their homes, a concept that has come to be known as the “Internet of Skills”. The ability to work remotely, however, may lead to global recruitment for jobs in a way that we have not experienced before.

In the United States, telecommunications companies Verizon, AT&T and Sprint have already established fixed and mobile 5G services in several cities including Chicago, Charlotte, Dallas and Atlanta. IHS Markit, a London-based global information provider, reported that initial commercial 5G tests were off to a rocky start, with proper market results expected in 2019. Uber, with support from 5G technology, is planning to test its Uber Air flying taxi in 2020 with the aim of launching the service commercially in 2023 in Dallas-Fort Worth and Frisco, Texas and in California. As 5G is not widely available yet, it will be some time before consumers are guaranteed a satisfactory 5G experience. This will change as 5G-fitted devices and the supporting infrastructure are built to support this kind of technology.

South Korea and China are also testing 5G technology on a national scale. In South Korea, the government initially delayed the commercial release of 5G because the price set by telecommunications carriers was too high for consumers. Along with the Departments for Digital, Culture, Media and Sport in the United Kingdom, the government of South Korea is developing a £2.4m pilot project that will transform the Korean metro system using innovative 5G applications.

China is setting an example of how 5G can be implemented in cities. Companies have been testing wireless communications between autonomous cars and their close environment since September 2018. China Mobile, a telecommunications carrier, installed 5G towers along a six-mile long road in Fangshan district, twenty-four miles from Beijing. Testing on 5G-enabled devices, such as autonomous vehicles, are scheduled to continue in seventeen other cities to speed up the 5G technology roll-out. In the meantime, the government has allocated appropriate low/medium-frequency bands to China’s largest telecommunication companies—China Mobile, China Unicom and China Telecom.

NEWMARK KNIGHT FRANK GLOBAL KNOWLEDGE CENTER: 5G WILL CHANGE COMMERCIAL REAL ESTATE. HERE’S WHAT TO EXPECT. | 7

Optical fiber and CATS cabling will be needed to create a robust wireless infrastructure for the building.

Prepare for augmented reality, even with building inspections.

Prepare for the data deluge. Building owners will have to determine which situations are appropriate for collecting massive amounts of data.

5G cloud-based Building Management Systems will enhance current systems today.

EXHIBIT 2: KEY TRENDS DETERMINING THE FUTURE OF WORK

In the future, technicians will address problems virtually which will help to reduce downtime of utilities in the building.

The building’s technological and internet-related equipment needs to be capable of transitioning from 4G to 5G.

Cybersecurity protocols will need to be enhanced to minimize exposure to cyber hacks.

Do an audit of your technological systems. Take time today to determine what upgrades need to be done so that network hardware, software, and other systems to become 5G ready.

Source: U. Verma, Five Steps For A Successful Smart Building Deployment (2019)

IS 5G EVERYTHING IT CLAIMS TO BE?Despite its promising potential, rolling out 5G technology will take some time, and there are some drawbacks to consider. The infrastructure of a 5G network requires small cell towers located very close to one another, which will raise concerns about health hazards for people. Moreover, 5G may not do what it has promised—yet. PC Magazine tested 5G systems released by Verizon in Chicago and AT&T in Dallas, and they found that neither one of the networks could service uploads, nor did they have the low latency that was advertised with the 5G service. Sascha Segan, writing for PC Magazine, predicts that the first “real” 5G products will not appear on the market until 2022. Until then, we’re likely to see multiple telecommunications carriers like Verizon, AT&T, T-Mobile and others trialing and testing the service.

NEWMARK KNIGHT FRANK GLOBAL KNOWLEDGE CENTER: 5G WILL CHANGE COMMERCIAL REAL ESTATE. HERE’S WHAT TO EXPECT. | 8

There are other obstacles to consider as well. 5G devices and systems will be able to gather, collect and store a myriad of data about individuals regarding their preferences and actions. Privacy and security of data will become an issue in this hyper-connected world where human beings and machines communicate easily and efficiently. The final point to keep in mind is that we still have a long way to go before 5G will be implemented on a global scale. In the United States, we can expect to see real use cases of 5G ten years from now. This lengthy interval is not due to the lack of devices equipped to serve 5G, but rather to the lack of proper infrastructure to sustain the network. As devices, buildings and vehicles become better equipped to sustain a 5G network, we will begin to see how a new level of interaction between human beings and the machines we use. Until then, this new technology can only serve as an indicator of future possibilities.

The building’s technological and internet-related equipment needs to be capable of transitioning from 4G to 5G. Optical fiber and CATS cabling will be needed to create a robust wireless infrastructurefor the building.

1.

2.

3.

4.

5.

6.

5G will create smart buildings that monitor and analyze data about their infrastructure. In the future, technicians will address problems virt ually which will help to reduce downtime of utilities in the building. 5G cloud-based Building Management Systems will enhance current systems today.

Do an audit of your technological systems. Take time today to determine what upgrades need to be done so that network hardware, software, and other systems can become 5G ready.

Cybersecurity protocols will need to be enhanced to minimize exposure to cyber hacks.

Prepare for the data deluge. Building owners will have to determine which situations are appropriate for collecting massive amounts of data.

In the United States, we can expect to see real use cases of 5G ten years from now. This lengthy interval is not due to the lack of devices equipped to serve 5G, but rather to the lack of proper infrastructure to sustain the network.

EXHIBIT 3: A QUICK GUIDE FOR LANDLORDS ON 5G BUILDING PREPARATIONS

Source: U. Verma, Five Steps For A Successful Smart Building Deployment (2019)

Smart buildings with hyper-connected networks will lead to a new kind of building inspection. Prepare for building inspection based on 5G capability. Also consider that augmented reality may be used to inspect buildings.

NEWMARK KNIGHT FRANK GLOBAL KNOWLEDGE CENTER: 5G WILL CHANGE COMMERCIAL REAL ESTATE. HERE’S WHAT TO EXPECT. | 9

1. Ericsson (2018). Mobile data traffic growth outlook, Ericsson (2018). Available at: https://www.ericsson.com/en/mobility-report/reports/november-2018/mobile-data-traffic-growth-outlook. [Accessed 19 April 2019].

2. International Telecommunications Union (2018). Setting the Scene for 5G: Opportunities & Challenges, ITU (2018). Available at: https://www.itu.int/en/ITU-D/Documents/ITU_5G_REPORT-2018.pdf

3. Woyke, E. (2019). China is racing ahead in 5G. Here’s what that means. MIT Technology Review. 18 December 2018. Available at: https://www.technologyreview.com/s/612617/china-is-racing-ahead-in-5g-heres-what-it-means/. [Accessed 19 April 2019].

4. Cisco (2019). Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2017–2022. 18 February 2019. Available at: https://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/white-paper-c11-738429.html.[ Accessed 19 April 2019].

5. Segan, Sascha (2019). What is 5G. PC Mag. 16 April 2019. Available at: https://www.pcmag.com/article/345387/what-is-5g. [Accessed 19 April 2019].

6. Wokye, E. China is racing. Available at: https://www.technologyreview.com/s/612617/china-is-racing-ahead-in-5g-heres-what-it-means/.

7. Si, M. (2018). China Mobile marches ahead with 5G trials. China Daily. 8 December 2018. Available at: http://global.chinadaily.com.cn/a/201812/08/WS5c0ba0b4a310eff30328fe34.html. [Accessed 18 February 2019].

8. Mu-Hyun, C. (2019). South Korea 5G rollout faces delays. ZDNet. 8 March 2019. Available: https://www.zdnet.com/article/south-korea-5g-rollout-faces-delay/. [Accessed: 16 April 2019].

9. Verma, U. (2019). Top five things building owners can do to prepare for 5G. 6 February 2019. Available at: https://inbuildingtech.com/5g/5g-commercial-office-buildings/.

10. Verma, U. (2019). Five steps for successful smart building deployment. 20 February 2019. Available at: https://inbuildingtech.com/smart-buildings/smart-building-iot-2/.

11. Verma. U. (2019). How will 5G impact in-building wireless infrastructure? 9 January 2019. Available at: https://inbuildingtech.com/5g/5g-inbuilding-wireless-infrastructure/.

12. Duran, M., T. Moynihan and M. Calore. (2019). What is 5G, and when do I get it? 23 February, 2017. Available at: https://www.wired.com/2017/02/what-is-5g-and-when-do-i-get-it/.

13. Le Maistre, R. (2018). Piecing Together the 5G Big Picture. 10 September 2018. Available at: https://www.lightreading.com/mobile/5g/piecing-together-the-5g-big-picture/d/d-id/745878.

14. Dulin, J. (2018). The Impact of 5G and Corporate Real Estate’s Changing Telecommunications Landscape. Realcomm. Vol. 18, no. 42. 18 October 2018.

15. Pongratz, S. (2019). Advanced Market Research Reports on 5G. Dell’Oro Group. 2019. Available at: https://www.delloro.com/advanced-research-report/5g-ran/.

16. CB Insights. (2019). 5G & The Future of Connectivity: 20 Industries the Tech Could Transform. March 19, 2019. Available at: https://www.cbinsights.com/research/5g-technology-disrupting-industries/.

17. IHS Markit. (2019). 5G First Look: The Promise, Potential, and Real-World Performance. 2019 Available at: https://cdn.ihs.com/www/pdf/0519/IHSMarkit_5G_First_Look_Product_Overview.pdf.

18. Dickey. M.R. (2019). Uber Adds Another Air Taxi Vehicle Partner to the Mix. Tech Crunch. 11 June 2019. Available at: https://techcrunch.com/2019/06/11/uber-adds-another-air-taxi-vehicle-partner-to-the-mix/.

BIBLIOGRAPHY

NEWMARK KNIGHT FRANK GLOBAL KNOWLEDGE CENTER: 5G WILL CHANGE COMMERCIAL REAL ESTATE. HERE’S WHAT TO EXPECT. | 10

19. Scroxton, A. (2019). British 5G Developers to Test Their Mettle in South Korea. Computer Weekly. 27 April 2019. Available at: https://www.computerweekly.com/news/252462318/British-5G-developers-to-test-their-mettle-in-South-Korea.

20. Finley, K. (2019). The Hyper-Speed Promise of 5G. Dialnet. Vol. 27 no. 2. Pages 26-27.

21. Nordrum, A., Clark, K., IEEE Spectrum Staff. (2017). Everything You Need to Know About 5G. IEEE Spectrum. 27 January 2019. Available at: https://spectrum.ieee.org/video/telecom/wireless/everything-you-need-to-know-about-5g.

22. Maistre, R. (2018). Piecing Together the 5G Big Picture. Reading 5G. 10 September 2018. Available at: https://www.lightreading.com/mobile/5g/piecing-together-the-5g-big-picture/d/d-id/745878.

23. Digital Trends. (2018). How 5G Will Change Your Smartphone, and Your Life in 2019. YouTube. 26 December 2018. Available at: https://www.youtube.com/watch?v=MC_Sfkh5-zQ.

RAJEEV THAKURExecutive Managing DirectorHead of Global Knowledge Center571.230.0242rthakur@ngkf.com

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