Jeff Hendler is co-founder and CEO of Logical Buildings, a Livingston-based firm that provides software and solutions for energy management and energy savings in large buildings. — Photo by Aaron Houston for Real Estate NJ
By Joshua Burd
One might say Jeff Hendler has found the secret to energy and cost savings in large buildings.
It all starts in a place that is not so secret at all — the electricity meter — where he and his firm, Logical Buildings, have learned to capture and analyze the same information that is collected by the utility company, allowing them to create what he describes as data transparency.
“That’s providing 12 data points every month — and then we translate that into 15-minute data points, which the utility actually looks at,” said Hendler, the co-founder and CEO of Logical Buildings. “And now we can look at it and see — like an EKG — the true health of the building and when it actually peaks during the day, or even the highest peak during the month or the year.
“It enables us to work with them to develop a strategy of how to reduce those peaks, how to modulate the building differently and put it on a different exercise program, so to speak,” he added. “And the first step is with that meter, because that’s like the mother of energy settlement of a building. It’s the cash register of the building.”
Hendler’s firm, which is based in Livingston, has leveraged that strategy to help build its core business of cutting operating costs for building owners during peak demand times and year-round, while making their buildings more resilient and generating revenue through incentive programs. In the process, the company has mastered the use of WiFi-enabled sensors and other smart devices that help building managers control heating, cooling and energy usage — all from a user-friendly mobile app that is now fueling the company’s growth.
Less than five years after landing its first third-party client, Logical Buildings’ portfolio has grown to more than 80 million square feet of residential and commercial space from New Jersey to California. Its client list is a who’s who of major owners and operators, from AvalonBay Communities Inc. and Greystar to Kushner Real Estate Group and Invesco.
“We act as the smart building primary care provider,” Hendler said. And the company’s growth is poised to continue, he added, thanks to the ongoing construction boom in major markets and sustainability trends. Not to mention the ever-evolving technology that it uses to monitor building performance and guide its clients.
“We were always about making data real-time and actionable,” Hendler said. “We’ve only gotten better at it because technology has gotten better on different fronts.”
Logical Buildings, which was incorporated in late 2012 under the name Energy Technology Savings, spent its first two years proving the theory of how simple, smart building technology could help property owners improve their bottom line and make their buildings more resilient. Its first case study came from a well-known multifamily owner in New Jersey, Roseland Residential Trust, whose principals at the time partnered with Hendler to launch the business.
The company landed its first third-party client in 2015, when it was hired by AvalonBay to conduct two pilot projects in New York City. Those projects began as they now do for all of Logical Buildings’ clients — with what Hendler describes as a smart building evaluation, a top-to-bottom assessment of how the property consumes energy, how the on-site staff interacts with the building systems and other performance trends.
Then comes a financial returns analysis that shows what an owner can invest in order to find cost savings, such as installing hardware that allows managers to control energy usage within a building’s common spaces. That can also mean participating in energy efficiency programs through the utility or the government, which can generate revenue for the landlord, while determining if the building is in the proper rate class.
“We can now have that discussion because we’re actually collaborating with the utility, with their data to determine what’s most appropriate for this building,” said Hendler, who spent more than 20 years in the energy sector before co-founding Logical Buildings.
The firm’s ability to measure building performance is improving by the day, thanks to the growth of WiFi-enabled sensors and other so-called internet of things devices, which can be placed throughout a property and measure temperature, humidity and other variables. That creates additional data beyond what Logical Buildings can glean from utility meters.
As Hendler notes, Logical Buildings chose early on to be “hardware-agnostic,” he said, in the interest of being flexible and adaptable for its clients.
“We see that each building is its own case study in terms of its indigenous requirements of what it needs,” he said. “So let’s do what’s best for that building and pick the hardware that is best for that building as well.”
To that end, Logical Buildings had to ensure that its cloud-based platform was compatible with devices from any number of manufacturers, including Samsung, Honeywell or Google.
“Let them be there for us to integrate the products that are most fitting for this particular property,” Hendler said. “Our requests are that they’re interoperable — and most of them are — and that they have an API (application programing interface), so we can talk cloud to cloud with their devices. And most of them are.
“Maybe three years ago, not all of them were, but that’s been the trend — to be interoperable, to be cloud-to-cloud — and that’s been great for us because now we can really do what’s in the interest of the owner or the property manager.”
Logical Buildings’ platform has evolved in its own right. The firm’s earliest app, known as Sensors, has given way to a mobile interface known as SmartKit AI that debuted last year and was immediately put to the test.
As it turned out, New Jersey recorded several heat waves last summer that led to so-called peak energy events, giving owners and property managers a chance to learn the app and use it at critical times.
But as Hendler noted, the firm has designed the platform to be useful and beneficial even when there is not an extreme weather event. The amount of information available — and the ability to adjust thermostats and other systems from a smartphone — means building managers can take steps to improve performance throughout the year.
“You don’t have to just rely on extremes, although that’s really valuable,” Hendler said. “There’s really about 20 hours of the year that are most impactful to your energy bill and we’ve been really good about being proactive with the buildings to make that visible for them, but there are things to now look at and get into the weeds on a daily basis.”
The technology, which can help detect faults in boilers and other systems, also enables building owners to react more quickly when something goes awry.
Technical as it may sound, Logical Buildings has placed a premium on making sure that SmartKit AI is user-friendly. Look no further than the fact that the app has a rewards platform, which allows managers to score points and win Amazon gift cards, for instance, by taking steps to reduce consumption. Users can also make profiles that are visible to others on the platform, generating the type of recognition and interaction that one might find on social media.
“When we first started visiting properties, we noticed everybody has a mobile device,” Hendler said. “English might not be your first language, but Candy Crush is. That’s what we saw and we said, ‘Let’s make this into ‘Kilowatt Crush.’ ”
Logical Buildings recently raised $3.5 million in venture funding to help it make an additional investment into SmartKit AI, while supporting its expansion to new markets and into the commercial sector. The company saw 60 new contracts and deployments in the fourth quarter of 2018 alone, which represented a 35 percent increase.
That growth comprised 10 new clients adopting the platform — including the likes of Stonehenge, Bozzuto, Dermot and L+M Development Partners — and existing clients such as AvalonBay, Invesco and Greystar expanding their services. The firm is now working on dozens of buildings in Boston and Washington, D.C., and last year expanded to California, Seattle and Texas, among several new markets.
Logical Buildings has also used its platform to help landlords right-size or integrate capital projects such as solar panels, batteries or cogeneration systems. The firm is now expanding that role by acting as a project manager for one of its major clients, which is installing an indoor battery storage system that will support a multifamily property in White Plains.
What’s more, Hendler said he sees “a whole new growth area” in the commercial sector, noting that many of the firm’s longtime multifamily clients also own industrial or office buildings that could benefit from the same type of treatment.
“Residential was a low-hanging fruit because we were focused on the common areas of large residential buildings and obviously that has a direct correlation to the bottom line of an owner,” he said, later adding: “Demand response and demand management are just as valuable to commercial as it is to the residential folks, and that’s been a big attraction on the commercial side.”
Its growing footprint has made it all the more important for Logical Buildings to have a voice within the energy sector. The firm has accumulated several designations that provide a seat at the table with government agencies such as the Federal Energy Regulatory Commission, which has licensed the company as a “power marketer.” That “enables us to transact and provide guidance on energy, capacity and ancillary services and engage in a stakeholder process at the FERC level” during a time of rapid change within the industry, Hendler said.
The firm is also active with entities such as the New York State Energy Research and Development Authority and PJM Interconnection, the regional grid operator that serves New Jersey and a dozen other states. By raising its profile, he said, the company ensures that building owners are better represented on key issues such as the decentralization and digitalization of the grid, along with individual states’ efforts to increase renewable energy.
“(By) being a stakeholder in that process, we’re able to provide an owner point of view at the table because a lot of times you’re sitting at the table and you have a lot of regulatory people, lawyers and others — and they’re not at where the rubber meets the road,” he said. “And we’re there with the guys who run the buildings, day in and day out, (so we can say) ‘These are the market constraints that they need to be aware of as the market develops and becomes more interoperable.”
Logical Buildings has undoubtedly benefited from the multifamily boom of recent years, but capitalizing on the trend has meant having a team that can outfit existing buildings with the right technology and provide predevelopment services for newer projects.
Led by Abhay Ambati, the firm’s senior vice president of technology services, the company has done exactly that in New Jersey and elsewhere. CEO Jeff Hendler said the team helps owners “create a blanket of connectivity” that accommodates WiFi-enabled sensors and other technology that can feed building performance data to its SmartKit AI platform.
The firm has also gotten involved from the earliest stages at the first phase of Journal Squared, a 54-story residential tower in Jersey City by Kushner Real Estate Group, and RiverHouse 11, a 295-unit building in Weehawken. For the latter, Logical Buildings also advised Roseland Residential Trust on how to right-size a 35 kilowatt cogeneration system at the property, which generates electricity but also gives off excess heat that is used to heat domestic hot water, the pool in the summer and floors in the winter.
To that end, Logical Buildings sees great value in using its platform to provide guidance to clients for capital projects such as solar, generators and battery storage systems.
“Having that information enables the owner to be in the driver’s seat to make a financial decision,” Hendler said. “Until we showed up, they really didn’t know their true load profile. They didn’t have the EKG. They didn’t get to go to the doctor and have the stress test, have their temperature taken, have their blood pressure taken.
“That’s really what all of these devices do and it’s specific for that building. Therefore when a solar vendor comes and he’s trying to sell you as much as he can, you can say, ‘I don’t need that much.’ And we’ve proven that. And it’s been a really big value.”