For decades, water has been treated as a background utility in commercial real estate: reliable, inexpensive, and low priority. But rising costs, climate-driven scarcity, and escalating insurance claims are making water one of the property sector’s most underestimated risks.
Water is the lifeblood of a building. It flows through every system, shaping costs, energy use, health, and sustainability performance. Yet buildings waste, on average, a quarter of the water they consume, with some wasting as much as 70%. The result is higher utility bills and excessive carbon emissions. Along with wasted water, there’s also catastrophic water damage from undetected leaks that add up quickly and lead to pipe failures.
This Insights by Blueprint report examines how IoT sensors, AI analytics, and real-time dashboards are transforming water from a hidden liability into a managed asset. We’ll look at operator-specific case studies of successes and failures of smart water monitoring implementations. By reframing water management as a driver of risk mitigation, ESG performance, and asset value, CRE leaders can unlock both immediate ROI and long-term resilience.
Hidden waste within buildings
Water waste has always been an issue for drought-impacted and water-scarce areas such as the US West. But today it’s a problem at virtually all commercial real estate properties, regardless of region, according to Yaron Dycian, Chief Product and Strategy Officer at WINT Water Intelligence. WINT utilizes AI, IoT, and advanced analytics to monitor water systems in buildings, detecting leaks and water waste.
“What we’ve observed over and over again is that buildings waste approximately a quarter of the water that goes into them,” Dycian says. “We’ve seen good buildings where it’s only 10% and we’ve seen horrific ones where it’s 70%.”
The natural reaction to such figures is disbelief. “People’s immediate reaction (mine was too) is, ‘How can that be? How can so much water go to waste?” Dycian says. The answer lies in the difference between intermittent consumption and continuous leaks.
Legitimate water use, such as handwashing, flushing toilets, and refilling tanks, is sporadic and time-bound. For example, a sink may run for a minute, while a toilet tank refills in three minutes. By contrast, leaks flow constantly.
“A leaky toilet will run for days, running at about 100 gallons an hour,” Dycian notes. Even a slightly open tap will run indefinitely until someone notices and shuts it off. This imbalance means that leaks can eclipse legitimate usage. Over time, they accumulate into massive volumes of waste that remain largely invisible to building operators.
When waste averages 25%, the financial and environmental consequences are stark. Consider a property consuming one million gallons annually: 250,000 gallons could be lost to leaks and unnoticed inefficiencies. In the worst cases, where waste reaches 70%, the problem is far more costly.
Rate escalation & market variability
Michael Gilbert, Director of Sustainability at Fairstead, a vertically integrated real estate firm specializing in affordable housing development, ownership, and management, views water management as a significant, yet untapped, opportunity.
“Historically, water was inexpensive compared to energy,” Gilbert explains. “And unlike energy, water in the U.S. has a much more localized approach, with each city and municipality setting its own rules. There’s no unified national approach.”
According to Gilbert, water rates are rising across the country, though costs differ widely among the 28 states where Fairstead operates. That variability, he says, only underscores the importance of proactive management. “If you’re not actively monitoring for leaks, you’re wasting a ton of money,” Gilbert warns.
Another complication for CRE operators is the manner in which facilities are billed. Under flat or broadly uniform tariff structures, there’s little direct financial reward for cutting water usage. By contrast, metered (volumetric) billing places a clearer cost on each gallon consumed, which can provide stronger incentives to reduce waste.
Gilbert observes that many municipalities are moving toward metered or more sophisticated pricing regimes, and this shift may increasingly prompt commercial real estate operators to adopt better leak detection and consumption management.
Core components of smart water systems
Smart water management systems are digital platforms and devices that monitor, analyze, and control water usage in real-time. Unlike traditional meters or manual inspections, these systems rely on IoT sensors, wireless communication, and AI-powered analytics to provide an ongoing, detailed picture of water consumption and potential risks across a property or portfolio.
At their core, these systems include:
- Smart meters & flow sensors: Devices that track consumption at the building, system, or unit level.
- Leak detection technology: These sensors track unusual changes in pressure, flow, or sound within a system. Many are paired with automatic shutoff valves designed to stop the problem before it causes significant damage.
- Data dashboards and analytics: Digital platforms collect and organize meter readings, turning them into insights that operators can act on. In many cases, they connect directly with building management systems (BMS) to streamline oversight and management.
- Irrigation optimization tools: Software and controllers that adjust outdoor water use based on weather, soil moisture, and plant needs.
The value proposition
Water’s impact on energy use is bigger than many realize. Yaron Dycian of WINT Water Intelligence notes that roughly 30% of a building’s energy consumption is tied to water, primarily through heating and cooling systems.
This includes chilled water lines that feed air conditioning systems, as well as radiators and subfloor heating networks that deliver hot water. Reducing inefficiencies in these systems, therefore, delivers both water and energy savings.
Beyond cost and sustainability, water carries health risks. Outbreaks of waterborne pathogens, such as Legionella, underscore the importance of caution. When water sits still in pipes that aren’t properly maintained, or when leaks go overlooked, it creates conditions where harmful bacteria multiply, posing risks to the health of people in the building.
To address these challenges, some CRE owners are turning to smart water tech that includes sensor-based monitoring. The approach starts with mapping a building’s water system and installing flow meters and temperature sensors in strategic locations.
The value comes not just from measurement, but from interpretation. “That ability to decipher the continuous flow of data from the pipes is what allows us to provide all these benefits,” Dycian says. By analyzing real-time data streams, operators identify leaks, optimize system performance, reduce carbon emissions, and safeguard occupant health.
Of course, detecting leaks is only half the battle. Property teams also need a clear process for addressing and repairing them fast. “Leak detection technology has been a success for us, and we’ve been very aggressive with water management,” said Michael Gilbert, Director of Energy and Sustainability at Fairstead. “But just as important has been creating a structured response plan for our facilities teams to ensure every leak, big or small, actually gets fixed.”
Key ROI drivers of smart water tech
Smart water systems are gaining traction in commercial real estate because they deliver tangible financial returns alongside ESG benefits. While the exact payback varies by asset type and deployment scale, most operators find that water systems achieve ROI faster than many other sustainability investments.
Payback periods
In favorable cases, smart water and leak detection systems in commercial real estate have demonstrated payback periods of 1 to 3 years. Case studies from multifamily and office portfolios demonstrate that rapid returns are achievable when savings are generated from a combination of avoided damage, reduced repair costs, lower insurance premiums, and recurring operational savings.
When it comes to bigger projects (campus-wide systems, major retrofits, or solutions tied directly into a BMS), payback usually takes four to five years. The upfront costs are higher and the integration more complex, but over time, the savings and efficiencies make the investment worthwhile.
The real advantage comes after the system pays for itself. From that point on, it continues to deliver value year after year through lower water and energy bills, fewer costly plumbing failures, and reduced risk for both insurers and lenders.
That said, actual payback timelines vary widely depending on building type, plumbing complexity, frequency of leaks, local water rates, and the depth of integration.
Published case studies often represent best-case scenarios or pilot projects where tenant engagement, insurance incentives, or unusually high leak risk accelerated returns. In practice, owners should evaluate systems with an eye toward both resilience value and direct ROI. Even in cases with longer payback horizons, the ability to mitigate catastrophic water losses makes smart water systems a compelling investment beyond a “green” add-on.
Where ROI is the strongest
The ROI for advanced water monitoring and leak detection systems is most evident in environments where the impact of leaks is particularly pronounced.
Healthcare properties offer some of the clearest examples. Hospitals, with their multimillion-dollar imaging equipment, are particularly vulnerable. However, even smaller facilities, such as clinics, face costly disruptions.
“You don’t have $5 million MRI machines. You have desks, chairs, and possibly some basic equipment. And still, you shut down a building like that, it is extremely expensive because a physician’s time is so expensive,” Yaron Dycian of WINT Water Intelligence says.
The same logic applies to professional services offices. Whether it is physicians or lawyers, lost operating time translates directly into significant financial losses. “Even in that scenario, it is very painful to have even a day of shutdown, which water will easily do to you,” Dycian notes.
Beyond sensitivity, ROI is also strongest where water consumption is high. Cooling towers, irrigation systems, and mechanical systems can all generate hidden waste that accumulates quickly. At the Empire State Building, for example, the WINT Water Intelligence system detected a malfunctioning cooling tower that was continuously discharging water. “That was $100,000 a year of water costs going down the drain,” Dycian says.
The risk is not limited to occupied facilities. Construction projects are also vulnerable to costly, hidden leaks. In one recent case at a Harvard facility under construction, the WINT system repeatedly flagged a problem. “It became a little bit of a heated discussion because they were insisting nothing was going on. And we insisted something’s going on,” Dycian says.
After an on-site inspection, the team discovered a subterranean pipe break leaking water into the ground at a rate of $16,000 per month. Left undetected, the problem could easily have escalated into hundreds of thousands of dollars in losses.
Insurance & risk management
Water damage from infrastructure failures now costs the insurance industry more annually than natural disasters. According to Zurich North America, water damage was the leading cause of property loss in office buildings and other commercial structures in 2021. In fact, 57% of all claims Zurich processes each year are related to water.
While dramatic floods and record-breaking storms dominate headlines, it’s the everyday incidents, such as leaking pipes, failed appliances, and HVAC malfunctions, that are quietly driving up insurance premiums across the commercial real estate sector.
Insurers are responding to smart water management in various ways. Sometimes they require buildings to install the technology outright. At other times, they offer financial incentives, such as lower premiums or reduced deductibles, to encourage adoption.
Either way, the message is clear: insurers recognize that proactive water monitoring reduces risk and lowers the cost of claims.
Yaron Dycian of WINT notes that Munich Re, the world’s third-largest insurer, has evaluated his company’s technology. Their research provided concrete evidence of its effectiveness.
They identified two measures that matter most to insurers:
- Reduction in the number of claims – When the WINT Water Intelligence system was installed, there were 73% fewer claims.
- Reduction in payouts – Even more striking, payouts were reduced by 90%.
Operational efficiency gains
Smart water systems often lead to substantial savings by identifying inefficiencies that traditional meters miss. With real-time monitoring, they bring hidden problems to the surface, such as:
- Overwatering in landscaping or irrigation systems. For instance, the Campbell Union School District, located in the San Francisco Bay Area, switched to smart irrigation controllers, resulting in $111,000 in savings over six months and a reduction in water usage by 36 million gallons.
- Cooling tower inefficiencies. Cooling towers can quietly waste vast amounts of water and energy if they’re not managed properly. Adjusting blowdown, monitoring dissolved solids, and detecting leaks or control failures early make a significant difference.
- Unit-level anomalies in multifamily or hospitality settings. In affordable housing pilots, real-time tracking helps identify leaks, inefficient fixtures, or running toilets, enabling quicker remediation and reducing waste.
By identifying these issues, operators not only reduce water usage but also cut the energy required for heating or cooling that water, and avoid undue wear on plumbing infrastructure. This translates into lower utility bills, fewer maintenance interventions, and deferred capital replacements. For many building owners, a relatively modest investment in smart water monitoring pays for itself via these compounded operational savings.
Sustainability metrics
In today’s capital markets, proven water savings are a crucial component of ESG performance. Smart water systems, equipped with metering, leak detection, and real-time analytics, provide clear, verifiable data on the amount of water a building uses and saves. That transparency makes it easier for owners to demonstrate progress, stay compliant, and earn certifications such as LEED, WELL, and BREEAM, where water efficiency and performance tracking are key.
Because many green bonds, blue bonds, and sustainability-linked loans now require outcome-based metrics, verified water reductions strengthen an issuer’s ability to access and price such capital. The OECD notes that global issuance of water- or blue-labelled sustainable bonds has expanded significantly in recent years, although it still accounts for a relatively small share of overall green issuance.
For investors and tenants, documented water savings increase transparency and credibility in sustainability claims. Smart water systems move water from an “invisible input” to a measurable KPI. This data reduces information asymmetry, strengthens ESG disclosures, and more directly links operational resource efficiency to climate and resilience goals.
In drought-prone regions, smart water efficiency also serves as a preemptive risk mitigation strategy. Regulators are increasingly adopting restrictions, volumetric pricing, or mandates on water performance. Assets that are already tracking and optimizing water usage are better positioned to meet evolving regulations and lower compliance liabilities.
Proof and pitfalls from the field
Shiny marketing brochures make smart water systems look like a silver bullet, but the real world tells a different story. Implementation is rarely straightforward, and success depends on far more than the technology itself. The following case studies show both sides of the coin: one where a careful, data-driven rollout delivered clear results, and another where a vendor’s missteps derailed even a well-funded effort.
Greystar’s smart water win
Greystar is rolling out Watergate’s smart water system in its student housing communities to address two significant issues: the high cost of water damage and the need to encourage residents to use water more efficiently.
The results from the pilot, conducted across three buildings in Islington (a district in North London), were impressive. Greystar and Watergate reported:
- £111,000+ (US $149,500) in annual savings through reduced water consumption, energy bills, insurance, and maintenance costs
- A 68% reduction in water usage, equivalent to 2 million litres (528,000 gallons) saved monthly, and
- Twenty-six tonnes of annual CO₂e reductions identified (57,000 pounds of CO₂e).
“We believe smart water technology enables us to positively influence resident behavior around water consumption, supporting greater efficiency and sustainability,” says Philip Hirst, Director of Sustainability at Greystar. “We’ve also experienced several water leaks across our student assets, resulting in resident decanting, increased insurance claims, and loss of revenue.”
The Watergate system offered an opportunity to both prevent future leak-related disruptions and empower property teams with automated tools to manage water use proactively. The technology enables remote shutdown and provides unit-level insights into consumption patterns, water temperature, and system anomalies, offering critical data for both sustainability reporting and health and safety monitoring.
When deciding where to expand the program, Greystar dug into water usage across its student housing properties. They compared what each site was actually using against what should be expected based on room counts and typical utility rates.
By leveraging the data, Greystar was able to maximize its return on investment, focusing on properties where leaks or inefficiencies were driving the most significant waste and costs.
Daily engagement with the Watergate platform varies by role. Maintenance staff primarily rely on the mobile app for real-time alerts and responses, while community managers use the web-based dashboard to monitor performance trends.
Training efforts have been geared toward transforming site teams from reactive responders into proactive stewards. By reviewing system-generated overnight diagnostics, teams can now catch abnormalities before they escalate.
While Greystar hasn’t yet secured premium discounts, it is actively working with insurance brokers and Watergate to build the business case.
“This includes the development of case studies that demonstrate the savings achieved and the impact on asset value retention,” Hirst says. The goal is to quantify risk mitigation and present a compelling argument to carriers for premium reductions tied to the adoption of the system.
Looking ahead, Greystar is evaluating a wider rollout across student and non-student assets. The plan encompasses both operational and financial considerations, including installation costs versus long-term savings, plumbing variations, staff willingness, and resident engagement.
“We believe senior housing, in particular, presents a valuable opportunity where both leak prevention and water temperature monitoring can play a critical role in safeguarding health and safety,” Hirst says.
Hirst encourages other multifamily operators to think long-term with water tech. “While there may be upfront challenges, such as infrastructure variations, budgeting for unforeseen requirements, and staff training, the benefits in terms of reduced insurance risk, operational efficiency, and improved sustainability outcomes make the investment worthwhile,” he says.
A Texas-sized smart water failure
Not every smart water deployment goes smoothly. In Plano, Texas, the city invested approximately $10.6 million in an advanced water metering/transmission infrastructure contract with Aclara (via Core & Main) to modernize billing and improve operational efficiency.
In late 2024, a vendor firmware update malfunctioned, disabling transmission in over 73,000 meter transmission units (representing a significant share of the network) and rendering automated meter-reading capability unavailable for tens of thousands of customer accounts.
- The city reverted to manual meter reading, approving $765,000 over a two-year period for additional staffing.
- Residents raised concerns about billing accuracy, the loss of hourly usage data via the portal, and inadequate communication from the utility.
- City officials said they were exploring cost recovery from the vendor, but no formal litigation had been confirmed in the publicly reported coverage.
This failure happened in a municipal water system, but the takeaway is just as relevant for commercial real estate. Reliable vendors, stable firmware, consistent maintenance, and long-term service support matter just as much as the hardware.
When any of these pieces break down, the ripple effects can be significant, including lost trust from stakeholders, unexpected operational costs, and disruptions to billing or monitoring—the very problems smart water systems are meant to solve.
Stop the drip
Water is no longer a background utility. It’s an operational, financial, and ESG lever hiding in plain sight. The winning CRE operators will treat water like energy circa 2010: instrument it, analyze it, act on it, and finance it.
What you can do next:
- Start with risk maps, not gadgets. Identify the highest-exposure assets (such as claim history, cooling towers, aging risers, and irrigation) and pilot them first.
- Instrument for decisions. Pair flow/temperature meters with auto-shutoff where damage risk is highest; pipe the data into your BMS/CMMS so alerts trigger work orders, not emails.
- Make the ROI stack. Combine avoided loss, premium incentives, and utility savings; pursue green financing where verified water KPIs lower the cost of capital.
- Secure the lifecycle. Demand SLAs for firmware, calibration, and replacements; require open APIs to avoid lock-in and ease portfolio rollouts.
- Align the owners. Build a cross-functional team (facilities, asset management, sustainability, risk/insurance, IT) with shared KPIs and quarterly reviews.
Smart water technology turns an unmanaged liability into a managed asset. Done well, it delivers fast payback, credible ESG gains, and fewer bad-day phone calls. The cost of waiting is compounding waste and avoidable claims. The upside is durable resilience and NOI you can measure.
-Nick Pipitone
