Digital infrastructure as a value driver for real estate

A broker or appraiser assesses an office based on dozens of characteristics. Location, accessibility, floor area, parking, year of construction, installations, energy label, sustainability, amenities, market rent, vacancy, contract duration and required investment. These characteristics are recorded systematically, compared with reference properties and translated into a value. That process is proven and reliable.

Yet many real estate analyses still lack a characteristic that is becoming increasingly decisive for the modern user: the building's digital infrastructure. A modern company barely functions without internet, cloud software, mobile connectivity and digital systems. The connection that carries all of this is rarely recorded with the same rigour as a lift installation or a climate system.

This article examines a hypothesis, not a conclusion. The claim is not that digital infrastructure makes real estate more valuable. The question is subtler and scientifically more precise: if digital quality gains influence over the usability and lettability of a building, when does digital infrastructure become relevant real estate information for brokers and appraisers?

Start with how we currently value real estate

Valuation in commercial real estate revolves around cash flows and risk. Market rent, the likelihood of vacancy, contract duration, required investments and the return an investor demands together determine value. Any object characteristic that demonstrably affects one of these factors deserves a place in the analysis.

It is tempting to link digital infrastructure directly to a euro amount, but that is too simplistic from a valuation standpoint. An investment in IT does not automatically lead to a higher value. The right question is through which existing valuation mechanisms digital quality could work its way, and whether there is evidence for this in the Dutch market.

That is exactly why this subject belongs in a trade publication rather than a sales brochure. Anyone who wants to understand why IT infrastructure could become value-determining for real estate must first map the path towards that value rather than assume the conclusion in advance.

What do we mean by digital infrastructure?

Digital infrastructure in real estate is the collection of facilities that enable connectivity. Think of fibre connections, the availability of multiple internet providers, capacity and bandwidth, redundant connections, mobile 4G and 5G coverage, telecom rooms, backbone infrastructure, internal data cabling, network facilities, wifi capabilities, backup provisions, scalability and the building facilities relevant to cybersecurity.

Smart building technology comes on top of this. It adds IoT, sensors, building management systems, occupancy measurement, access control, climate control, lighting, energy optimisation, predictive maintenance and user applications. The two concepts are connected: a smart building needs digital infrastructure to be smart in the first place.

The comparison that best captures this relationship is a simple one. The physical installations form the body of a building. Digital infrastructure is increasingly becoming its nervous system. A healthy body with a faltering nervous system does not function fully, and that is precisely why fibre in buildings is no longer a side issue.

From real estate object to digital usage platform

The way offices are used is changing. Organisations rely on SaaS and cloud applications, video conferencing, cloud storage, VoIP, digital collaboration, cybersecurity services, connected devices, IoT, data analytics, building applications and, increasingly, AI and generative AI. An office is no longer just a collection of square metres, but also a platform on which digital processes run.

This is where the concept of data consumption becomes useful. Data consumption is not just about the number of gigabytes downloaded. It concerns the total digital load and dependency created by users, devices, cloud connections, uploads, downloads, real-time applications and business-critical processes. Every organisation has its own digital usage profile.

A concrete example makes this tangible. Two tenants might both need 1,000 m² of office space and 100 workstations, yet place entirely different digital demands on the same building. A law firm, a call centre, a software developer, a media company and an AI company may all employ a hundred people, but their data consumption, upload capacity, redundancy needs and latency sensitivity vary widely.

Alongside the familiar space profile, a second concept therefore emerges: the digital usage profile. Anyone unfamiliar with this profile will struggle to assess whether a building and a tenant are a good match. This connects to the broader shift from square metres to data capacity.

The market struggles to value what it does not measure. As long as digital quality is not recorded, the question of its value remains unanswerable.

AI makes this discussion more relevant, with nuance

The current AI transition places this subject in a new light, but calls for nuance. It would be incorrect to state that every AI application requires enormous amounts of internet capacity. A significant part of AI computing takes place in data centres and cloud environments, and network usage varies greatly by application.

The relevant development for real estate is broader. AI, together with cloud, IoT and further digitalisation, is increasing dependency on reliable digital infrastructure. Organisations that use technology intensively may therefore start setting different requirements for their location. This is a hypothesis that requires investigation, not an established fact.

The researchable question is therefore: can digital infrastructure gain the same selective effect for certain tenants as accessibility, parking, sustainability and energy supply? This is most conceivable for tenants from technology, AI, software, fintech, the creative industry, engineering and data-intensive business services. Whether this also holds true in the Dutch market requires further empirical research. The broader question of whether our buildings are ready for the AI revolution is explicitly part of that.

What does international research say?

Internationally, a growing but carefully interpreted body of evidence exists. Cushman & Wakefield analysed long-term leasing and certification data in its study The Smart Premium (2023, London office market). It found an average rent premium of roughly 4.1 percent associated with buildings that had certified digital connectivity. Buildings that combined high-quality connectivity with smart building certification were linked to a higher premium of around 7.3 percent.

JLL reported in research among occupiers that a very large proportion of respondents, on the order of ninety percent, indicated a willingness to pay a premium for technology-enabled real estate. RICS is paying increasing attention in its professional guidance to the technological and sustainability characteristics of properties. WiredScore and SmartScore provide valuable international certification frameworks for connectivity and smart building functionality respectively, and supply the datasets on which much of this research rests.

A scientific caveat

These figures are international market observations and associations, not Dutch valuation adjustments that can be applied automatically. A foreign rent premium of four percent does not mean a Dutch appraiser may add four percent to the rental value without further market evidence. Location, building quality, year of construction, sustainability and tenant profile can correlate with digital certification, meaning the measured premium partly reflects other characteristics.

The distinction between fact, correlation and causation is crucial here. The figures show that digitally high-performing buildings and higher rents occur together. They do not prove that one causes the other. It is precisely this restraint that makes the subject suitable for serious real estate analysis and explains how the IT-label relates to yield, acquisition and disposition.

The possible valuation chain

To structure the discussion, a simple theoretical model helps. Digital infrastructure can lead to better usability, which increases attractiveness for certain tenants, which can affect lettability, rent and vacancy, which in turn feeds into cash flows and risk, and ultimately possibly into value. Each step deserves separate testing.

Market rent and vacancy

When technology-intensive tenants demonstrably prefer digitally high-performing buildings, this could, under certain market conditions, affect the achievable rent. Conversely, a building that fails to meet the basic digital requirements of the relevant target group may have a smaller potential tenant market, which could increase vacancy risk.

Incentives and CAPEX

A digitally well-equipped building may require fewer tenant investments before an organisation becomes operational. Whether this influences incentives in transactions is a research question. Conversely, a building with outdated infrastructure may require future investments, which an appraiser could demonstrably factor into the analysis of future cash flows. This connects directly to the question of who invests in which IT facilities.

OPEX and digital obsolescence

IoT and smart building technology can contribute to more efficient energy use, maintenance and building management. However, this can only be quantified once object data is available. Introduce, in addition, the concept of digital obsolescence: can a building still function well physically and energetically, yet become digitally functionally obsolete? This is a real scenario that deserves attention in condition assessments.

Exit yield and risk perception

Here the greatest caution applies. An appraiser cannot state, without market evidence, that better IT leads to a lower yield. It is conceivable, however, that digital future-readiness becomes part of investors' risk assessment, comparable to how sustainability and technical obsolescence gradually found their way into investment analyses.

Ten questions every broker can ask about a building

For commercial brokers, the first step is to ask a few digital questions during the inspection. This is not about deep technical detail, but about recording usable real estate information.

1. Which internet providers are actually available, not just: is there fibre?
2. Is redundancy possible via a second independent connection or route?
3. What is the mobile coverage, measured per provider and per zone where possible?
4. What data cabling is present, and what belongs to the building versus a previous tenant?
5. What digital condition is delivered to a new tenant?
6. Where is the demarcation between owner and tenant?
7. What smart building facilities are present, such as sensors, building apps or energy management?
8. Is the infrastructure scalable for more users, devices or applications?
9. What digital usage profile is the building suited to?
10. Are there known transactions in which digital quality demonstrably played a role?

The ultimate task is translating technical specifications into understandable real estate information. Anyone wanting to know what a tenant should pay attention to will see that these questions yield exactly the same information the user is looking for.

Digital infrastructure in appraisal

Should digital infrastructure become part of the appraisal? The answer is nuanced: not as an arbitrary surcharge on value, but possibly as an object characteristic that warrants further market research. At minimum, an appraiser could examine the digital facilities, the quality and age of the infrastructure, available connectivity, smart building functionalities, necessary future investments, comparability with reference properties and the tenant target group.

The practical suggestion is to add digital infrastructure to the property inspection. Just as information on climate installations, lifts, parking spaces, sustainability and maintenance condition is recorded, a standardised digital section could be included with fields for connectivity, providers, redundancy, mobile coverage, cabling, telecom rooms, smart building facilities, digital scalability and the digital delivery level.

Initially, this is mainly about data collection. Only once sufficient market data becomes available can it be statistically examined whether, and to what extent, these characteristics correlate with rents, vacancy, transaction values and returns. The table below shows how a real estate characteristic, a digital characteristic, a possible economic impact and the required data relate to one another.

The real estate sector needs data first

This may be the most important message. We can only value digital real estate quality once we start measuring it structurally. When brokers, appraisers, owners and advisors fail to record digital characteristics, no datasets emerge with which it can later be examined whether these characteristics actually influence value.

The parallel with sustainability is instructive. There too, valuation knowledge did not emerge overnight. First, characteristics and performance were made more visible, then larger datasets emerged, and only after that could it be increasingly well examined how sustainability correlated with rents, occupancy, liquidity, risk and transaction value. The question is whether digital infrastructure now stands at the beginning of a similar development. The path from energy label to IT-label shows that measurability precedes valuation.

The role of IT-label

IT-label does not determine how many euros more a building is worth. It is an independent standard and knowledge collective that seeks to make digital real estate quality measurable, comparable and understandable. The classifications range from IT1+ PREMIUM for a fully digital ecosystem, through IT1 HIGH PERFORMANCE for high-quality infrastructure, IT2 PLUG & PLAY for a strong digital foundation and IT3 READY for basic facilities in place, to IT4 CORE with mainly a digital connection point and IT5 SHELL, where the digital fit-out is largely left to the user.

Importantly: IT1+ does not automatically mean a higher market value than IT3. Value always arises within the context of location, target group, rental market, building quality, costs and alternatives. A deliberately shell-delivered floor in an otherwise high-quality building can be highly marketable. What the label enables is something else: comparability. And comparability creates data.

The logical sequence is therefore: measure, compare, analyse, build market evidence and only then possibly value. Not the other way around. In relation to WiredScore and SmartScore, which offer valuable international frameworks, IT-label mainly seeks to research the translation to the digital delivery level, usage and Dutch real estate practice. These standards are not competitors, but supply complementary building blocks for one language for digital building quality.

A call to broker and appraiser associations

This is not an attack on existing appraisal methods, but a professional question: should digital infrastructure become a standing item on the agenda of the Dutch real estate professional? Industry associations, training institutes and researchers could jointly investigate which digital object data are relevant, what information a broker should collect during inspection, how connectivity and smart building technology can be distinguished from one another, and whether digital quality demonstrably correlates with rent, vacancy, liquidity and value.

IT-label invites broker associations, appraisers, academics, real estate owners, IT specialists and telecom companies to join the independent knowledge collective. The message is deliberately modest: IT-label does not want to predetermine the conclusion, but wants to ensure we finally gather the data needed to answer the question.

Three follow-up studies lend themselves to collaboration with universities and the market. A hedonic pricing study of Dutch office rents with and without documented digital characteristics. A vacancy study linking initial vacancy to the digital usage profile of target groups. And a longitudinal study of digital obsolescence, testing whether buildings with outdated infrastructure become functionally obsolete faster.

From facility to economic quality

Twenty years ago, an internet connection was mainly a practical facility. Today, virtually no modern office tenant can function without digital connectivity. As AI, cloud, IoT and smart building technology become further embedded in business processes, a new real estate question arises: is digital infrastructure still a facility, or is it becoming part of a building's economic quality?

We do not yet have a definitive answer, and that is precisely the reason to investigate it. An appraiser can only value what the market values, but the market struggles to value what we do not measure. That is why IT-label starts at the foundation: recording digital infrastructure objectively, making it understandable and making buildings comparable with one another. Not to add a digital premium to every appraisal tomorrow, but to ensure that professionals will, within a few years, have the data needed to determine whether that premium exists.

A concrete next step: run your own portfolio or inspection process through the digital object section and record the characteristics in a structured way. Anyone wanting to see how this translation works will find the tools to get started on the increasing real estate value page and in the broader knowledge base. From square metres to digital capacity, from technology to usage, from usage to market data, and from market data ultimately to value. Together, we make visible what remains invisible for now.