Three words have always been considered the keys to real estate success: location, location, location. While location is still important, two new words, energy efficiency, have become essential as well, not only to property owners but to tenants too. Energy efficient buildings not only save money, they also support corporate sustainability programs and can help companies meet requirements such as benchmarking required by city codes and regulations.
According to the Environmental Protection Agency’s (EPA’s) Energy Star® program, just a 10-percent reduction in energy consumption could result in a 1.5-percent increase in net operating income (NOI).
Thus, in “a 200,000 square-foot commercial building paying $2 per square foot in energy costs, a 10-percent reduction in energy consumption can translate into an additional $40,000 of NOI. At a cap rate of 8 percent, this can mean a potential asset boost of $500,000.”
These potentially significant savings are not lost on many large and small real estate portfolio owners who have made energy efficiency a corporate sustainability goal. These companies are taking advantage of a growing number of partnering opportunities with government programs, industry associations, and non-profit advocacy groups to ramp up their programs and save millions of dollars in the process.
In addition, they are raising the bar for the entire commercial real estate industry to do the same if they want to remain competitive.
At the federal level, two main programs are available for commercial property owners. The oldest is the EPA’s Energy Star® program that provides very diverse resources, tools, and technical assistance for leveraging energy effective solutions for commercial real estate, as well as many other industry sectors. In 2013, Energy Star’s® National Building Competition registered more than 3,200 competitors and winners in several categories will be recognized for their energy efficiency innovations and achievements.
The Department of Energy (DOE) also offers excellent resources for commercial building energy efficiency programs and its new Better Buildings Challenge program had more than 110 partners in 2013, more than half of which were commercial and industrial entities. The program’s commercial real estate portfolio commitments alone represented 25 percent of the total floor areas of all partners, ranging in size from five million to 100 million square feet. The DOE also spearheads funding opportunities and incentive programs and provides information about federal tax incentives.
Regionally, there are several programs that operate in partnership with national programs like Better Buildings and/or Energy Star® but offer more localized resources that address energy efficiency resources and initiatives at the state and municipal levels. These groups are called Regional Energy Efficiency Organizations (REEOs) and include:
- Northeast Energy Efficiency Partnership (NEEP)
- Southeast Energy Efficiency Alliance (SEEA),
- Southwest Energy Efficiency Project (SWEEP),
- South-central Partnership for Energy Efficiency as a Resource (SPEER),
- Northwest Energy Efficiency Alliance (NEEA), and
- Midwest Energy Efficiency Alliance (MEEA)
REEOs in turn partner with member state and local governments, utilities, companies, non-profit foundations and advocacy groups, and academic and technical research institutions to share news and information, create best practices and drive policy change. Many also have their own initiatives designed to assist the commercial building sector with specific aspects such as lighting and retrofits.
Through these organizations, building owners can quickly access technical information about different energy efficiency policies and programs in their area including building codes, building operator certifications, region-specific tools and data, emerging technologies, and conferences.
These are just a few of the growing number of excellent resources available to commercial buildings owners and operators looking learn how to improve energy efficiency.