NRT
NRT | Green Benefits | ||
|
Apr 30, 2010 Green Benefits They're Beginning to Materialize
Are sustainability and energy efficiency upgrades playing a role in today’s down commercial real estate market? Definitely, say market analysts.
Since 2005, the nationwide difference in occupancy rates between Energy Star buildings and their peers has grown from almost zero to approximately 2.5 percent in 2009. The occupancy rate difference is 5.4 percent when LEED-certified buildings are compared to non-certified buildings.
National rental rate differences for Energy Star buildings vs. their peers have increased from $2.32 psf in 2005 to $4.73 psf in 2009. If only LEED-certified buildings are compared to non-certified buildings, the rental rate gulf is $9.06 psf. These are serious incentives for landlords to upgrade their office buildings.
Ways To Save
What retrofitting measures offer the most return on investment when either selling the building or attracting tenants and achieving higher rental and occupancy rates?
Energy savings is the obvious place to start. The larger wastes are in lighting, heating, ventilation, and air conditioning systems, and the thermal envelope of the building. More than 70 percent of existing buildings have not upgraded lighting, HVAC, insulation, or windows. Yet a 2006 U.S. Green Building Council survey found that building owners save 90 cents psf annually by retrofitting their properties, and earn back their investment in two to 2.5 years.
Before making any changes, building owners should find out where and how much energy is currently being used. Many utility companies will do a free or inexpensive energy audit to discover a building’s unique energy deficiencies and potential for improvement. Based on the energy audit findings, owners can then assess upgrade needs, estimate first costs and returns on the investments, and begin establishing priorities for upgrades.
Building envelopes can provide quick savings when renovated. Upgrading insulation can be a low-cost improvement with a fast return. Weather stripping and weather sealing, for example, quickly improves the building’s defenses. A more costly change that has a big impact on savings is the replacement of old windows and doors with new high-performance versions.
In 2009, the General Services Administration Workplace Performance Study concluded that if only 40 percent of GSA-owned buildings were retrofitted with properly sealed high-performance R4 windows with high visible transmission (60 percent or greater) to maximize daylight, the estimated annual energy savings would be $12.8 million. Upgrading windows also will contribute to human comfort and performance by reducing drafts and noise and improving end-user access to daylight and views. The greater efficiency will pay for the cost difference in three to five years, the study reported.
Lighting system upgrades range from simple changes to a complete replacement. Easy changes include reducing excessive or unneeded lighting. For example, on a small scale, one lamp can be removed from existing three-tube fluorescent systems, and for larger areas, occupancy sensors and time clocks can automatically reduce hours of lighting.
Experts say that if owners are considering a wholesale lighting replacement, they should look at reducing lighting power budgets and using high-efficiency low-mercury fluorescent systems, or even LED. The initial cost of LED technology is still pretty steep; however, the energy savings over time are significant — up to 70 percent. And it may make it worthwhile when considering LED’s incredibly long life. The reduced maintenance and costs savings associated with not having to re-lamp other systems can be a huge factor. Deregulated purchasing of electricity at lower rates is another area for great cost savings.
On a smaller scale, a creative way to reduce operating expenses is to go from a gross or full-service lease including electricity to a net lease with separate metering of electricity for each tenant. Studies show that tenants receiving individual utility bills consume an average of 21 percent less electricity.
Water reduction is another area of significant savings. One of the most beneficial changes can be in the retrofit of a building’s interior water fixtures. For example, efficient water faucets and toilets can provide a 67 percent return on investment in as little as 1.5 years.
Once changes have been made, it’s important to make sure they continue working as designed. A continuous monitoring system can be installed to diligently monitor the building’s energy use and also allow for system adjustments. The engineers are notified by automated text message whenever building systems stray from their set parameters. This process ensures that the building’s operational systems can be preemptively maintained.
Tenants and investors clearly are recognizing the value associated with sustainable upgrades, whether it affects the bottom line or improves their image with clients. With savings and returns like the examples given here, a more appropriate question might be, How can a landlord afford not to make green upgrades?
|
||