Posts Tagged ‘commercial real estate’

Urban Cowboys, Going Deeper with EEI

September 22nd, 2011 by Jim Crowder

UrbanLand Magazine recently turned out a thoughtful analysis, Energy Efficiency Markets Evolve Globally, of The 2011 Energy Efficiency Indicator (EEI) , the fifth time a global survey of real estate decision makers has been conducted by Johnson Controls. For the first time, ULI got into the research fracas with Johnson Controls, to analyze and release the results. The Building Advisor touched on the EEI a couple weeks back in Summer HVAC Wrap + BetterBricks Video, but nobody does serious data like ULI.

If you’re not familiar, the EEI is the last word, the “state of the union,” if you will, gauging the hearts and minds of of global executives and building owners responsible for energy management and investment decisions in commercial and public sector buildings. This year, the EEI surveyed 4,000 respondents in 13 countries on six continents and was conducted in eight languages. That’s a lot of bubbles to fill in completely with a #2 pencil!

‘Extremely’ or ‘Very’: Energy Efficiency Makes the Big Time

What you probably already know: as many as seven in ten executives globally say energy management is extremely important or very important to their organizations. Execs have pursued an average of nine different energy efficiency measures in the past year.

And what’s motivating them? Simply put, the rising cost of energy. We all know energy costs will keep on rising. It’s sort of like gravity – you can pretty much count on it. Up significantly in importance from 2010, however, is government incentives. With over half the states offering some kind of financial incentive for efficiency measures, execs are now listening. It’s sort of like getting cash back at the grocery store on a big ticket item: why not? Third biggest motivator was to enhance the branding of a building.

In fact, interest in certified green buildings doubled from 2010 and for the first time, certification efforts are more prevalent for existing buildings than new ones. Lower on the motivational list: reduction of greenhouse gas emissions, domestic energy security, and other government policies.

Now, the challenges: while the graphic to the left shows that 67% of executives surveyed report that they have allocated capital from their operating budget to energy efficiency in the last year, (yay!) significant market barriers to pursuing further investment (boo).

These barriers come in all colors and flavors, depending on market sector. From the report:

The five key barriers to energy efficiency investments reported in the survey are:

  • lack of awareness of opportunities for energy savings;
  • lack of technical expertise to design and complete projects;
  • lack of certainty that promised savings will be achieved;
  • inability of projects to meet the organization’s financial payback criteria; and
  • lack of available capital for investment in projects.

For the contractor serving small to midsize buildings, it is interesting to note that respondents with control over more square footage in larger facilities report having implemented more energy projects than those with smaller facilities. But trickledown is sure to follow.

Four is the Magic Number 

According to the EEI Survey, real estate organizations sharing the following four key strategic practices are most likely to get on the energy efficiency bandwagon, and implemented four times as many energy efficiency improvement measures as those that did not:

  • goals established for reduced energy use or carbon emissions;
  • energy use data measured and analyzed at least monthly;
  • added resources dedicated to improving energy efficiency through the hiring or retraining of staff, or the hiring of external service providers; and
  • external financing sources used for projects.

The Building Advisor can’t help making a couple of points here. For energy use data measured and analyzed at lease monthly, our Verify product for ongoing, continuous monitoring is the solutions. I mean, have you read what it did for J.E. Shekell in Smart Solutions (J.E. Shekell Uses Building Advice to Slash Energy Bills in Half ) or the NEWS (Facility Energy Audit Leads to Huge Savings)?

And in the second place, BuildingAdvice is like adding a team of expert management, sales, and engineering personnel acting as an extension of an HVAC Contractor’s current team to drive the development and ongoing execution of an energy services business. ‘Nuff said.

And Speaking of Incentives Changing the World

Sacramento development image by Michael Nagle/Bloomberg News

The Gray Lady’s Energy & Environment section reported  on a $650 million private sector investment in energy efficiency for existing buildings in this week’s article, Tax Plan to Turn Old Buildings ‘Green’ Finds Favor.

It’s getting around that a retrofit can typically cut a building’s energy use so much that the project pays for itself in as little as five years. A new tax arrangement in Miami and Sacramento allows property owners to upgrade their buildings at no upfront cost, typically cutting their energy use and their utility bills by a third.

Lockheed Martin, Barclays Bank and some other big boys, headed up by Ygrene Energy Fund of Santa Rosa, Calif., have formed a consortium that will invest $650 million in such upgrades over the next few years.

The article called waste in older buildings “one of the nation’s biggest energy problems” and cited energy as a sector that could eventually be worth billions.

The meat of the plan is pretty genius: the constortium is kind of like a strip mall serving all of your energy efficiency needs in one stop. Ygrene and its partners gain exclusive rights for five years to offer this type of energy upgrade to businesses in a particular community. Lockheed Martin does the engineering work. Short-term loans come from Barclays Capital to pay for the upgrades. Then, “Contractors will offer a warranty that the utility savings they have promised will actually materialize,” the article states. Insurance underwriter, Energi, of Peabody, Mass., backs up that warranty. It goes on from there.

Best of all, owners pay no upfront cost for energy efficient upgrades. Instead, a surcharge is attached to subsequent property tax bills for five to 20 years. However, as the surcharges are less than the savings, the upgrades pay for themselves. Really. The new approach could garner substantial private capital for many midsize and smaller businesses to get on the energy efficiency bus.

In the past three years, half the states have passed legislation permitting energy retrofits financed by property-tax surcharges, and hundreds of cities and counties are considering such programs. The new financing approach is called Property Assessed Clean Energy, or PACE financing. PACE saw some serious backlash last year when an arm of the federal government that oversees the mortgage market took a hostile stance toward such projects on residential property, on the grounds that they add risk to mortgages. But, the article notes, “So far, it appears that PACE programs for commercial properties pose fewer legal complications.”

Richard Branson by Michael Nagle/Bloomberg News

The consortium was put together by the Carbon War Room, a nonprofit environmental group based in Washington set up by Richard Branson, the British entrepreneur and billionaire, to tackle the world’s climate and energy problems in cost-saving ways.

Git Along, Little Doggie

“Perhaps the most serious risk,” the article notes, “is that fly-by-night contractors will be drawn to the new pot of money, pushing energy retrofits that are too costly or work poorly.

‘Contractors are cowboys,’ said Dennis Hunter, chairman of Ygrene. He promised close scrutiny of the ones selected for the Miami and Sacramento programs.”

What say ye to that, boys?

Ride ‘em, cowboy!

Cowboy image courtesy themurkyfringe.com.

HVAC Technology and the Online Water Cooler

June 16th, 2011 by Jim Crowder

Our friends at Software Advice have a great post up, Cut Apartment Energy Costs with Energy Monitoring Systems, which takes a look at how energy monitoring scales to the multifamily (apartment) building type. multifamily building

Though it smells like residential, multifamily is, of course, actually a commercial property type. When a multifamily owner wants to look at energy monitoring products, would s/he go for a whole building assessment through BuildingAdvice, or look into residential monitoring products like Google’s Powermeter or free Microsoft web application Hohm for each user? You tell us; that’s what blogs are for.

While Contracting Business columnist Vicki LaPlant touts the importance of social media, and commercial contractors are taking their rooftop service unit and replacement businesses to Facebook, The Building Advisor asks you to remember one thing: in the beginning, there were online bulletin boards.

hvac talk HVAC-TALK.com, a forum for online discussion hosted by Contracting Business that is by its own account, “a vibrant, active online community that connects HVAC professionals with a focus on the contracting marketplace.” If you, like me, dear reader, have your doubts about how many HVAC service contractors engage with social media and blogs, look no further. The new member introduction page has over 3,000 posts, the “Job Discussion” page is hopping of course, and just about all of the discussion pages have been commented on TODAY. Is this where all of our potential blog commenters are? Are online forums more suitable to the type of communication HVAC contractors are looking for? And why?

And while we’re on the topic of technology in the HVAC industry, you’ll notice the web video revolution sweeping our favorite publications. HPAC Engineering has a series on it’s front page, including this segment on Electro Static Technology on Shaft VFDs. Enjoy.

Images courtesy designhomesllc.com, HVAC-TalkHPAC Engineering.

Required energy efficiency

January 19th, 2011 by Jim Crowder

You probably know that the federal government is one of the largest occupiers of commercial real estate in the country. Maybe the largest. There are offices of various federal agencies everywhere.

Well, did you know that there is a requirement, part of the Energy Independence and Security Act, that federal agencies cannot occupy space unless it is Energy Star certified?  They are putting their money where their mouth is – if they are going to encourage businesses everywhere to become more energy efficient, they (as the largest occupier of real estate) should only use real estate that is efficient.

What does this mean for building owners and for service providers? For owners of commercial buildings, if you want to be able to lease space to the federal government, you need to get your building in shape by improving energy efficiency to the point where your Energy Star score is at least 75.  Find out about energy benchmarking here.

Otherwise, you risk losing tenants or never getting them as tenants in the first place. It sounds like exceptions will be made, but only if the owner/landlord agrees to implement energy conservation measures.

For contractors, it is an opportunity to help your customers. Because of this requirement, there are buildings in every market in America that will require improvements. If you as a contractor can’t provide services to benchmark and then improve energy efficiency in buildings, these building owners will be forced to find someone who can or else risk losing one of their largest tenants (see above where we talk about the fed being the largest occupier or real estate.)

Find out how you can provide these required services for your clients.

Here’s how this can go down: You show the property owner or manager (landlord) the projects it will take to get them to an Energy Star score of 75. The Federal Agency will use that as a the punch list to sign and move in. The landlord can weigh the Federal lease cash flow against the project list cost. In other words, they decide if it’s worth it (probably is in most cases.) You get the projects the landlord commits to.

Read more about the Energy Independence & Security Act here, including specific energy reduction goals for federal buildings.

Have You Seen Our Cool New Web Site?

December 3rd, 2010 by Jim Crowder

Ok, so, its not new anymore. We launched in November to quiet applause from the interwebs. But if you haven’t been to buildingadvice.us recently, there are some great new features we’d like to point out.

For one thing, our sleek new design, courtesy Synotac. Less text, more space…ahhh…efficiency visualized.

We’re also better organized at moving you through our web site in the most – er – efficient way possible. Are you a commercial building owner or manager? Commercial contractor? Or are you on the residential side as a contractor or homeowner? You’ll find yourself ushered in the right direction with only the sound of crepe soles on plush carpet swooshing you through to your intended destination.

And if you are used to our old website, you know that the products and services we’ve been rolling out in 2010 have mushroomed. At the new buildingadvice.us, you’ll find a concise menu of our major offerings.

From there, we break it down further: what KIND of BuildingAdvice fits your needs?

And if you, like so many people, are thinking about ongoing energy management (check out Tim Kensok, BuildingAdvice Vice President of Market Development, speaking on it in his October, 2010 article for automatedbuildings.com, “Energy Information Management: Beyond Savings Projections to Proof”), look no further:

I mean, how sleek can you get?

Even better, there are free resources available right on the web site, from our download library to a signup for our Building Monitor newsletters and hey, even a link to this blog.

We’ve got a special tab to watch for upcoming tradeshows and webinars, so you can keep up as we dish it out. For example, you can check out yesterday’s webinar, “How to Sell the VALUE of Energy Services” here.

What do you think?

Energy Efficiency Chatter: We Couldn’t Have Said It Better

September 3rd, 2010 by Jim Crowder

Is it us, or does it feel like it’s all about us lately?

Building Retrofits Need an Extreme Makeover -Reuters – “the industry as a whole needs a robust set of data on post-retrofit performance and payback before they will be convinced that the opportunity to reduce operating costs is real, the risks are low, and the ROI is high enough to justify investments in efficiency.”

Image by Ben Heine

How the Fate of PACE Could Influence the Clean Energy EconomyGreenBiz.com – PACE financing is a potentially revolutionary way to retrofit commercial, residential, and industrial properties with energy efficiency and renewable energy technologies. The program overcomes one of the largest hurdles to investment in clean energy — the upfront cost.”

Creating 625,000 jobs and saving $64 billion through energy efficiencyGrist – “Efficiency Works” [PDF], a major new report by Bracken Hendricks, Bill Campbell, and Pen Goodale, finds that a straightforward set of policies aimed at upgrading just 40 percent of the residential and commercial building stock in the United States would:

  • Create 625,000 sustained full-time jobs over a decade.
  • Spark $500 billion in new investments to upgrade 50 million homes and office buildings.
  • Generate as much as $64 billion a year in cost savings for U.S. ratepayers, freeing consumers to spend their money in more productive ways.

Universal Benchmarking Is Essential in the Fight Against Global WarmingHuffington Post – “We need the benchmark numbers to motivate change. Without them, how will we measure progress? How will we create the most effective policies and incentives?”

Image: Ben Heine’s photostream on Flickr

Pursuing a Property Portfolio in San Francisco: Marina Differentiates and Wins

August 19th, 2010 by Jim Crowder

Shell Ridge Property Management Co., Inc. maintains approximately 300,000 square feet of commercial space in the San Francisco Bay Area. Since 1980, Shell Ridge has specialized in asset management strategies for small medical offices. Its 15 buildings range from 40,000 to 100,000 square feet.

marina mechanicalShell Ridge’s medical office properties represent a desirable portfolio for mechanical contractors. Marina Mechanical, a 50-year-old company headquartered in San Leandro, Calif., began maintenance for a Pleasanton, Calif. Shell Ridge property five years ago. In the ensuing years of service, energy conservation was rarely discussed.

But when Marina began feeling heat from its competitors in the middle of a down market, it turned to its best customers to expand relationships.

Marina had obtained training on the BuildingAdvice energy services diagnostic platform in November of 2009, and began the process of leveraging its action-oriented reports as a differentiator.

Gamechanging Energy Services Offering

“We offered to show both the property manager and owner at Shell Ridge, some sample energy benchmarking and assessment reports,” says Denny Mann, Vice President of Service with Marina Mechanical, when explaining how he got the energy conversation started. “The property manager was actually very educated on energy benchmarking, and as a result, very interested. Once she saw the type of information the BuildingAdvice reports gave, she was extremely interested.”

“BuildingAdvice differentiated Marina from other mechanical contractors waiting to get their foot in the door,” says Denny.

Denny offered to do complimentary energy assessments on two Shell Ridge buildings. Shell Ridge has several buildings where Peak Day Pricing, a program of local utility Pacific Gas & Electric (PG&E), would come into play.

Peak Day Pricing (PDP) is PG&E’s demand response program, which acts as an incentive for business owners to curtail their facility’s energy use during times of peak usage. During the summer, PDP substantially raises energy prices on “event days” (above 98 degrees); businesses have a 24 hour notice when there will be an event to lower their energy usage for that day.  By charging a very high rate on event days, PG&E motivates customers to invest in strategies that will lower their consumption overall, and especially on the peak days.

Peak day pricing is specialized to the PGE territory, but not a unique phenomenon.

“Peak day pricing is definitely acting as a market stimulator for energy services and spurs client interest,” Denny said. “I think soon people will be lined up to get involved with energy reduction conversations.”

Taking Action

In going over the results of the assessment reports, conversations began about what Marina could do to help Shell Ridge avoid demand charges across the company’s property portfolio.

Which led to a second meeting with the owner, and an agreement to generate Energy Benchmarking Reports on all of the Shell Ridge properties to determine Energy Star scores.

“BuildingAdvice reports marked our transition from just being their mechanical contractor to forming a partnership. It completely transformed the relationship,” says Denny.

With portfolio-wide benchmarks on the docket, Marina took recommendations from the first two properties’ energy assessments to Shell Ridge ownership.

“BuildingAdvice helped us identify that the building was running when it didn’t need to be,” said Denny. Supply and reset strategies were created, so that the building was not not pouring 55 degree air into the interior when clients were not there, all of which were identified in the report.

Two low- and no-cost recommendations were approved and completed April of this year. Shell Ridge made the decision to complete the service based on the return on investment outlined in BuildingAdvice’s Energy Assessment Report. In addition to revisions to lighting and HVAC schedules based on peak day pricing, the report showed a seven-year payback on a demand control vent.

“We’re letting those changes take effect,” said Denny. After a 12-month period, savings achieved will be tabulated.

Next Steps and the Advent of Mandatory Energy Disclosure

As of late June, Marina wrapped up the energy benchmarking process on all of the Shell Ridge portfolio. Based on buildings’ Energy Star scores, Marina will make recommendations on which properties need energy assessments.

Looking ahead, the mandates of California’s Assembly Bill 1103 (AB 1103) state that non-residential business owners or their agents are required to input energy consumption and other building data into the Environmental Protection Agency’s Energy Star Portfolio Manager system, which generates an energy efficiency rating for the building.

As of January 1, 2010, AB 1103 mandated disclosure of a building’s energy data and rating of the previous year to prospective buyers and lessees of the entire building or lenders financing the entire building. That deadline has since been pushed back, and the task of devising a disclosure schedule has fallen to the California Energy Commission (CEC). The CEC is in the process of drafting a new compliance schedule; January 1, 2011 is speculated to be the new required disclosure date.

New York City, Washington DC and other regions have adopted similar required energy data disclosure. Smart owners and managers are on the move to meet deadlines.

Net Impact

The ability to offer energy services differentiates providers. Marina knew a competitor was making an aggressive play for service agreements in Shell Ridge’s multiple locations. Yet, in the same timeframe Marina stayed in discussions with Shell Ridge by centering their meetings around energy services through BuildingAdvice.

“After going through BuildingAdvice training, we quickly realized that being able to offer our customers a systematic, low-cost / no-cost approach to reducing their energy consumption would change the way we were viewed.”

BuildingAdvice has “helped us retain current business and significantly raised the bar on the services we offer.”

“Ask Your Doctor About BuildingAdvice.” No, wait a second, that’s not right.

July 1st, 2010 by Jim Crowder

“Ask your doctor about ____________.”

propecia website image

From the propecia.com web site

Do you remember the time before TV ads for prescription drugs? If so, you’ll remember the bit of shock you might have felt the first time you saw one: is that drug manufacturer talking straight to me? Why, yes it is. Do I need baldness/depression/etc. medication? Gee, maybe I do….

For better or for worse, consumers were given permission to take initiative in a field previously reserved for professional opinion.

In commercial building energy efficiency, “consumer permission” is definitely for the better. (See Building Advisor post “Yes, And…”) If contractors aren’t offering energy management systems (EMS) as part of their service agreements, their clients should ask for them.

EMSes are the new ESCOs.

The difference between the two is explained in a great article from Elisa Wood in the CleanTech blog post this week, “Energy Efficiency Service Companies Missed The Memo.” In it, Wood points out that EMS companies missed the memo on the recession – managing to improve revenues industry-wide while the economy fell due to municipal and government market stimuli.

But she brings up another interesting point: are building contractors missing the memo on seeing themselves as energy managers? Do mechanical contractors know they’re in the business of energy management as soon as they see themselves that way?

No one’s better positioned to offer energy management services than the building’s existing mechanical contractor or HVAC professional.

The current EMS market was called a “gold rush” by a recent study from Pike Research reported at SustainableBusiness.com, “Commercial Energy Management Systems Market to Surpass $6B by 2014.”

How’s this: “If your building contractor isn’t coming to you with energy management services, ask your mechanical contractor about BuildingAdvice.”

Too much?

Images courtesy Dan Eriksson’s photostream and propecia.com.