Beyond our years: The PAE Living Building is the 2022 Smart Building of the Year

Amid a mounting climate crisis and evolving workforce, commercial buildings can no longer rely on their lease rates or skyline presence as a determinant of success. They need to operate efficiently, improve their performance continually, and attract and retain tenants. They need to be smart.

Smart buildings elude a simple, encompassing definition, but the most effective examples share common traits. They use a building management system (BMS) and sensors; they integrate systems, share information digitally, and automate key processes. They can accommodate emerging and evolving technologies, like artificial intelligence and IoT, and use data to drive decisions.

With this extensive checklist, smart buildings done holistically are a rarity. As such, Smart Buildings Technology’s jury of three industry experts faced a daunting task in selecting our first-ever Smart Building of the Year honoree from a project short list compiled by our editors. Yet our jurors found one project that demonstrably leveraged intelligent planning, design, construction, operations, and technology to foster positive outcomes for its owners, its occupants, the greater community, and the natural environment.

The PAE Living Building is a five-story, 58,000-square-foot mixed-use building in Portland, Ore. Completed in June 2022, it is designed to produce more electricity than it needs, collect its own potable water, and treat its wastewater—outcomes made possible by its design and integration of smart technology.

Privately developed and funded as a speculative office building through the partnership of Downtown Development Group, PAE, Edlen & Co., ZGF Architects, Walsh Construction Co., and Apex Real Estate Partners, the project began in March 2018 without a formal design charter. Instead, as noted in The PAE Living Building: Developer, Nature Inspired (Ecotone Publishing, 2022), its objectives and program were established by a set of nonnegotiables.

First, the building had to stand for 500 years—not an easy feat for its location on the Cascadia subduction zone. Furthermore, it required the structural and technological flexibility to evolve with occupants’ needs. The building had to honor the historic character of its neighborhood while supporting Portland and Multnomah County’s goal to transition all community energy sources to renewables by 2050.

And lastly, the PAE Living Building had to drive its own return on investment, creating a replicable, financially solvent model. “The hope is that we can show a path to more of these in the future,” says locally based ZGF principal Justin Brooks. For PAE, the project’s namesake engineer and technology designer, the building is more than a new headquarters. It is a smart investment.

Goals for posterity

The brick building sits on a former parking lot in Portland’s Skidmore/Old Town neighborhood, a National Historic Landmark. In striving for simplicity, ZGF drew on the neighborhood’s early 19th and 20th century buildings, Brooks says. High ceilings for the ground floor and tall operable windows and contiguous floor plates throughout draw in natural light.

Creative paths to net-positive energy

Version 3.1 of the International Living Future Institute’s Living Building Challenge (LBC) requires a building to be net positive, generating at least 105% of its energy needs. Even with an efficient passive design and projected energy use intensity of 19.5 kBtu per square foot per year—53% better than the city’s code—the PAE Living Building wouldn’t make it alone.

Portland’s downtown grid configuration, like that of many cities, caps the amount of renewable energy that any single building can backfeed to the network to 49 kilowatts. This threshold—equivalent to 10% of the utility’s lowest annual grid demand—is a protective measure to ensure surplus energy does not disrupt power service, says PAE technical associate Craig Collins. But it effectively limits the size of a photovoltaic array.

The design team needed to get creative. PAE’s leadership team reached out to Portland General Electric (PGE) officials. Over two years of meetings, PAE detailed its microgrid approach and petitioned for a novel net-metering agreement. Eventually, PGE approved an engineering review of an interconnection agreement that grants an exception to the typical power-sharing arrangement. If successfully commissioned, as expected, the deal will allow PAE to maximize energy production from a 133-kilowatt rooftop photovoltaic (PV) array built and installed by local firm EC Co. using inverters from Solar Edge, in Israel, and modules from REC Group, in Norway.

As part of the agreement, that on-site battery in the basement will act as a timed-release energy buffer, storing surplus energy from the PV array and discharging it to PGE’s net-metering grid in the evening. In the summer, Collins says, the battery might store electricity from roughly 10 a.m. to 3 p.m., when the photovoltaics might generate more energy than the grid can tolerate. A smart microgrid system sourced by local electric contractor EC Electric from integration partner Schneider Electric will ensure this energy transfer remains within range. The microgrid operates on a standalone network but can communicate via Ethernet with the BMS, by Automated Logic, if the PAE Living Building needs to operate independently and shed energy loads to match the battery capacity should a grid-level emergency occur.

But even with its PV array and microgrid, the building needed to produce more energy. Serendipitously, the team found a solution in north Portland at Renaissance Commons, an affordable housing development, also built by Walsh Construction. PAE forged a partnership with owner Reach Community Development to install a 215-kilowatt solar array on their roof. The array supplements PAE Living Building’s energy generation and offsets about $20,000 in annual electricity bills for Reach.

“We still achieved our energy goals,” Brune says, “but now we also have a social benefit in our community, where affordable housing is a huge deal.”

Water and HVAC systems, elevated

PAE Living Building’s intelligence goes beyond its technical and digital achievements to its strategic use of smart, integrated systems to convey resources efficiently through the building. Take the rainwater harvesting system. Rainwater collected on the 11,000-square-foot roof travels through a system of drains and pipes to an underground 71,000-gallon cistern. Pumps send the water through a treatment system of carbon filters, ultraviolet light, and chlorine and then to sinks and showers.

Recovered greywater rinses toilets and irrigates exterior landscaping. Liquid waste from urinals is channeled through a dedicated drain line to a recovery tank, where it is processed to create liquid and powdered fertilizer with an annual estimated market value of $55,000.

Rainwater and treated water levels are tracked via sensors and sent via BACnet MS/TP to the BMS, which Brune describes as “nothing fancy”—though he may be underselling it. Everything in the building is automated in real time, and no user input is needed to run the building or the microgrid. The BMS also communicates via BACnet with an energy-performance and fault detection and diagnostic platform from CopperTree Analytics, in British Columbia. That platform draws metering data from nearly every electrical feeder and branch circuit in the building via Modbus TCP.

“If we want to know what the second-floor lighting on the north side is doing, we know,” Collins says. “And we can then aggregate those branch circuits into use groups—lighting, receptacles, computers, and so forth—and look at how each is performing.”

“A smart building should be as environmentally benign as possible and take advantage of automation to help provide cost-saving measures and pay attention to natural resources and carbon emissions. The fact that the PAE Building Living Building has figured out a water solution, along with all the different sustainability [achievements], puts it leaps and bounds ahead.”

—Carrie Goetz, 2022 Smart Building of the Year Award juror

Among the monitored use groups are the rooftop air-source heat pumps and radiant floors that help condition the building. An LG Multi V Series variable refrigerant flow (VRF) system serves indoor fan coil units and Hydro Kits, which produce the hot water and chilled water piped beneath 3-inch radiant concrete floor slabs. For each of the nine zones with a VRF fan coil unit, a dedicated space sensor monitors temperature and carbon dioxide. The sensors, which the facility operators can adjust to occupants' preferences, are located throughout the first floor and in large conference rooms on upper floors. Their set points and schedules integrate into the BMS through BACnet.

During the cooling season, when outdoor temperatures drop beneath programmable set points, the sensors trigger the opening of the casement windows’ upper, awning-style sashes; lower sashes are manually operable. This night flushing helps cool the building while keeping the air fresh for occupants.

Making the most of IT/OT and amenities

As a tenant as well as the MEP engineer and IT/OT manager, PAE has a uniquely high level of agency to monitor and adjust the performance of its namesake building. “We’re babysitting the building all the time, looking for ways in which things are going off trend or ways in which we could improve,” Collins says.

The PAE Living Building’s IT design stemmed from a values-driven business decision. Plug loads are typically a major source of energy consumption in commercial buildings. All PAE employees use laptops as their primary computing devices, which eliminates energy consumption from desktop CPUs left on overnight. Maintaining a Wi-Fi only network on PAE’s three floors—one of which is partially subleased—reduces substantially the use of cabling, pathways, and network switches, says PAE senior associate Ryan Sennett.

An internal PAE study found that the cabling topology for a Wi-Fi-only network over a conventional two-cable data drop to every desk will reduce power consumption by 12,877 kilowatt-hours annually; eliminate 50,000 feet of Category 6A cabling; and save $213,000 in network equipment, cabling, and photovoltaic system costs. Where cabling was needed, PAE specified Superior Essex 10GAIN XP CAT 6A LSHF and CAT 6+ LSHF CMR to comply with the LBC’s Red List of materials to avoid.

To further save energy, PAE used wireless access controls and Power over Ethernet (PoE) door locks by Assa Abloy. Operated by a PoE network switch, the locks save an estimated 12 watts per door over a conventional access system. Occupants gain entry using digitally credentialed ID cards and reserve workspaces with a room-booking app by Condeco.

Storage for the access control software and video surveillance cameras is handled with a 200-watt local server in the main distribution frame. Though a cloud server could yield nominal energy benefits, Sennett says, PAE found cloud-storage subscription fees far exceeded anticipated savings. By reducing IT network loads, PAE eliminated the need for dedicated cooling systems for the first-floor cabling rack and fourth-floor intermediate distribution frame.

Still, the amenity that occupants seem to appreciate the most is the building’s abundant natural light. Shea Sterner, an associate for PAE’s in-house lighting design practice Luma, says the architectural lighting control system by Encelium automatically dims electric light through photosensor set points. Electric light levels are set to zero or very low.

Because occupants have expressed satisfaction with the amount of available natural light, Sterner says, “We don’t automatically turn any office light on, even to 50%. It’s typical in lighting design to overlight a space and then set a high-end trim to reduce it down to your target pass levels. We did not do that.” Employees can override luminaire levels within their task area.

SensiLUM wireless integrated sensors in open office areas and corridors send data to the system controller network via MQTT. The sensors use a REST API and contact closures to send data to the BMS. MQTT, while common overseas and increasingly the leading messaging telemetry in IoT, has been slower to gain traction in North America, Sterner says, though future updates may enable its operation without an API wrapper.

As a secondary benefit, the wireless sensors keep the CLT ceiling uncluttered and reduce the use of copper conduit and wiring. In egress areas where building code requires lighting to remain always on during occupied hours, such as stairwells, wireless relay packs reduce luminaire levels to 25% after 10 minutes of vacancy and ramp levels up when someone enters the space.

Of all the building’s lighting innovations, Sterner is most fond of the gamified DMX lighting system that beckons workers to the feature stairwell instead of the elevator. A Raspberry Pi controller programmed by Sterner directs the system. A sensor at the stairwell base tracks foot traffic and adjusts the lighting color based on daily usage. Starting at white in the morning, the LEDs turn blue, green, and amber as more people use the staircase.

“[Y]ou can open an iPhone app and see the traffic history [and] the current traffic count,” Sterner says. During events, users can also use the app to “change all the color values of the visual programming.”

“My desire with the Smart Building of the Year award is that others will be able to learn from the winning project. The PAE Living Building is a great learning tool. It has metrics that a layperson can understand. It also forces a conversation to define better what is ‘smart’ so that a ‘smart building’ doesn’t become another slap-on label for buildings. This project can help influence change.”

—June Grant, 2022 Smart Building of the Year Award juror

Creating a replicable developer-led model

For developers, the most compelling aspect of the PAE Living Building may be its ownership and financing model. It is not uncommon for commercial buildings to be funded with a balance of debt and equity and jointly owned by their investors, whose equity shares are a proxy for their commitment. In this case, 38% of the cost of the $40.2 million building came from equity investors. These include PAE, ZGF, Edlen & Co., and Apex, which invested their professional fees; Downtown Development Group, which invested the value of the land; and Walsh Construction, which invested a portion of its fees and cash.

“We started out having much of the total equity that we needed, raised,” says Edlen & Co. co-founder Jill Sherman. “That mitigated risk because we needed to find far fewer outside investors.”

Two additional factors helped sweeten the deal. First, PAE proposed the idea of making the space its headquarters, agreeing to occupy or sublease 80% of the building and pay a 10% above-market rent premium in exchange for the building’s anticipated benefits to employee productivity, recruitment, and retention. Second, the project’s location in an opportunity zone created under the Tax Cuts and Jobs Act of 2017 meant that individual investors could get a tax benefit on accumulated capital gains on the assets, with full tax exemption for those who held the investments for at least 10 years. The tax break helped ensure an internal rate of return of roughly 10%—the lower end of what investors might expect for a comparable project, but financially viable.

Today, the building is 82% leased, above the 70% average for downtown Portland. It is shared by PAE, Earth Advantage, New Buildings Institute, and Beneficial State Bank.

The developer-led model is important for its replicability. “Not every building can be funded by a public institution or a foundation,” Sherman says. “The majority of the buildings that get built are built by private development, and among those that get built, investors want a return on their investment.”

Still, one award-winning, net-positive, regenerative, and smart building is not enough, ZGF’s Brooks notes: “You need 50,000 of these. This has to become our default approach to the built environment.”

Project credits

• Owner: First and Pine LLC
• Developer: Edlen & Co.
• Architect: ZGF Architects
• Architect of record: ZGF Architects
• Lighting designer: Luma Lighting Design
• Interior designer: ZGF Architects
• Landscape designer: ZGF Architects
• Structural engineer: KPFF
• Civil engineer: KPFF
• MEP Engineer: PAE
• Smart building consultant: PAE
• Sustainability consultant: PAE
• Building data monitoring and analysis: PAE
• Construction manager: Walsh Construction Co.
• General contractor: Walsh Construction Co.
• Landscape architect: ZGF Architects
• IT/OT installer/contractor: PAE
• Commissioning: PAE
• Water treatment (Rainwater and Composting): BioHabitats
• Living Building Challenge Red List materials research: Brightworks Sustainability, Integrated Eco Strategy
• Real estate partner: Apex Real Estate Partners
• Building envelope consultant: RDH
• Land investment: Downtown Development Group

Meet our 2022 jurors

Jeff Carpenter, PE, RCDD, is a senior principal at IMEG, where he's also the vice president of India Operations and leader of the firm’s Technology Team. Jeff’s expertise includes Fortune 500 corporate office complexes, mission critical data centers, greenfield hospitals, medical facilities, and higher education and government institutions. He not only oversees IMEG’s India operations but also is responsible for client relations, staff development, project delivery, and quality control for all technology design services. Based in the Des Moines, Iowa, area, Jeff graduated from Iowa State University with a bachelor’s degree in electrical engineering. He is a member of the Healthcare Information and Management Systems Society, BICSI, and the International Communications Industries Association.

Carrie Goetz is principal and CTO at StrategITcom, based in Dunedin, Fla. She has 40-plus years of global experience designing, running, and auditing data centers, IT departments, and intelligent buildings. Carrie is fractional CTO to multiple companies, an international keynote speaker, and published in 69 countries in more than 250 publications. She holds an honorary doctorate in mission critical operations, RCDD/NTS, PSP, CNID, CDCP, CSM-Agile, AWS CCP, and is a Master Infrastructure Mason with 40-plus certifications throughout her career.  She served on the WIMCO national education committee and is a long-time participant in 7x24 Exchange, AFCOM and Data Center Institute board of advisers, Mission Critical Advisory Board, Women in Data Centers, Cnet Technical Curriculum Advisory Board, NEDAS Advisory Board,  BICSI, and Women in BICSI.

June Grant, RA, NOMA, is a visionary architect, founder, and design principal at BlinkLAB architecture, a boutique research-based architecture and urban design studio in Oakland, Calif., that rethinks conventional approaches. Launched in 2015, BlinkLAB was created based on June's 20 years' experience in architecture, design and urban regeneration of cities and communities. Her design approach rests on an avid belief in cultural empathy, data research and new technologies as integral to design futures and design solutions. June is also the immediate past-president of the San Francisco Chapter of the National Organization of Minority Architects; board member of ACADIA, a YBCA100 honoree, 2020 CEDAW Human Rights honoree, and the 2020, 10th annual J. Max Bond Jr. lecturer.

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