Digital Infrastructure, Security, Connectivity Highlighted at NAIOP NJ Conference  

HOBOKEN, NJ—Commercial real estate owners, developers and property managers need to keep up with rapid changes affecting digital infrastructure, connectivity and cyber security, say panelists at “Future Proof Your Buildings,” the final installment of NAIOP New Jersey’s 2018 Building a Better New Jersey seminar series.

Leading tech, legal and insurance experts shared strategies for ensuring the future viability and desirability of commercial properties throughout the state.

“Cyber threats are real,” says Tom Brennan, a director at security services firm IOActive. “As our cities become ‘smarter’ and more reliant on technology for everything from lighting and traffic control to public transportation, security becomes super important. It is critical to have control of these assets once they are deployed.”

Among the biggest problems Brennan cited as a result of the “Smart City” evolution are wireless encryption issues, deploying new systems and devices without security testing, and poor communication and coordination when responding to security incidents.

Even older technologies are ripe for attack if not properly secured or monitored, he says. “Infiltration of traffic control and public transportation systems happens frequently, and simple bugs in a single device can cause complete chaos,” says Brennan.

Cities must act now to protect against cyber-attacks, patch vulnerabilities when they are detected and develop coordinated response plans.

“Preparing for the worst, a timely response and the ability to fix security issues quickly are essential strategies for preventing data from being accessed and manipulated,” says Brennan.

Rich Berliner, founder of Fifth Gen Media, led a panel discussion that addressed the vital importance of connectivity.

“The emergence of real estate technology, or ‘proptech,’ is becoming essential for landlords and tenants,” he says. “However, without connectivity, none of it makes any difference.”

Landlords need to ensure that communication infrastructure meets tenants’ needs, he says, including working with trusted partners and installing the right kinds of fiber optic networks.

“Fiber optic networks are the base road on which communications travel, and private fiber networks have become the critical differentiator for building owners and developers,” says Victoria Lamberth, co-founder of ZenFi Networks. “Prospective tenants will make decisions based on the underlying connectivity in your building.”

To prepare buildings for future digital demands, landlords must have a robust communications infrastructure and make it easy to attract service providers, she says.

“Offer tenants flexibility and carrier diversity, and make sure you work with providers that will accommodate large companies looking to build their own networks,” says Lamberth.

John Dimitrakakis with JMA Wireless agreed, cautioning owners looking to future-proof their buildings for the arrival of 5G that they “need to get as much fiber into the building as possible so that it’s easy for carriers and equipment providers like us to connect.”

Buildings with older systems can present their own unique challenges.

Ernst & Young’s Tom Jackson, senior manager of Global OT/iOT Cyber Security, specifically cited issues related to operational technology versus information technology.

“In the real estate world, companies tend to be most concerned about securing the data in their corporate offices,” he says. “But when it comes to all of the buildings they own, it’s likely they focus more on maintenance than cyber security.”

Jackson emphasized the importance of practicing basic cyber hygiene. “This means avoiding common situations where one computer password is shared by three maintenance shifts as well as outside vendors. Find out what technology is in your buildings and be conscious of how systems are being used.”

SJP Properties’ executive vice president Peter Bronsnick moderated a panel discussion on legal and leasing issues.

“A cyber-attack occurs roughly every 40 seconds around the world,” he says. “As landlords, the question is not simply how we stop a security breach, but how we can be prepared and protect ourselves.”

Building owners must focus on identifying their exposures and mitigating those risks, says Brian Gillin, vice president and New York Cyber Solutions team leader with Aon Risk Solutions. “If there is a security breach there will likely be a financial loss involved. Landlords need to understand who is responsible for this loss and backstop it with the right insurance policy to help reduce costs.”

Landlords need proper insurance with an appropriate level of coverage, Gillin says.

“Cyber insurance is an immature marketplace, and products tend to be purchased a la carte based on what is most relevant to the business,” he says. “However, there are a host of coverage nuances that must be considered in order to put a mature response plan in place.”

Liability is one of the fundamental risks facing building owners, says Eric Levine, co-chair, cyber security and data privacy, Lindabury McCormick Estabrook & Cooper.

“A landlord will always be judged by whether or not they reasonably protected the tenant,” Levine says. “If you provide the system, it’s your responsibility to make sure it’s secure. However, the more outward-facing points of entry and the friendlier the building is for a tenant, the more risk there is.”

Levine advises building owners to assess their current risk, including identifying the types of tenants in the building, the information they have and what systems are in play. Leasing language should be adapted to provide adequate protection.

“You may have to ask high-risk tenants if they have cyber security policies and make sure they are auditing their systems every few years,” he says. “Consider including language regarding tenant use of vendors and requiring them to provide proof of security coverage.”

“Real estate has long been siloed so data wasn’t retrievable,” says Onyx Equities co-founder Jonathan Schultz. “We need to build standards to ensure we’re all on the same page.”

In his closing remarks, Schulz suggested that the industry needs to prioritize the use of technology to capture data and customer insights.

Noting that tenants are the new consumers, Schultz also encouraged office building owners to think like high-end hotel owners, including using technology to create touchpoints for gathering data insights in order to provide the amenities tenants want.

“As an asset class, we’ve been guessing for years why people came to our buildings and why they stayed,” he says. “Through the use of various engagement apps, tenants can tell us what they do and don’t like, and you can find out what ‘useful’ means for your buildings.”