Key Points

  • Investing in energy efficiency increases asset value and makes available space more attractive.
  • A phased approach to efficiency upgrades can help with financing and reduce tenant inconvenience.
  • Optimizing energy savings requires a collaborative effort between property managers and tenants.

Maximizing profits is often a primary goal of building owners and managers, so investing in energy efficiency may seem like a low priority, especially when tenants are responsible for their own energy costs. However, efficiency upgrades can increase cash flow by making available space more attractive to tenants. For commercial real estate, a 30 percent reduction in energy use can increase net operating income and building asset value by 5 percent, according to the U.S. Environmental Protection Agency (EPA).

Energy efficiency: one step at a time

To maximize energy savings, efficiency upgrades should be made throughout the entire property, not just in common areas. The upgrade process can be very expensive, however, and time consuming. A phased approach can help with financing and reduce any inconvenience to tenants.

Building recommissioning. Recommissioning is a systematic, documented process which ensures that building systems are operating according to the design intent, as well as the current needs of property owners and occupants. It’s also a great way to identify energy- saving opportunities. Recommissioning is an ongoing process that requires careful preparation and follow through.

For more information, see  Retrocommissioning from the EPA.

Lighting. Lighting accounts for 40 percent of electricity consumption in commercial buildings, according to the U.S. Department of Energy. While lighting upgrades can be expensive, they offer a quick payback, as well as an enhanced visual environment. For example, upgrading from T12 fluorescent lamps with magnetic ballasts to higher-efficiency, T8 lamps with electronic ballasts can yield energy savings of up to 25 percent.

Building envelope. By upgrading and sealing walls, roofs and windows, you can improve occupant comfort while reducing heating and cooling costs. Hire a qualified professional to ensure that building insulation levels match those recommended in ASHRAE 90.1 Energy Standard for Buildings Except Low-Rise Residential Buildings.

Fans and motors. Fans and motors account for another 40 percent of electricity use in commercial facilities. Converting constant volume systems to variable air volume units can reduce air flow by 40 percent and save a substantial amount of energy. Installing variable speed drives can lower fan speed and reduce energy use by half.

Heating and cooling systems.
Upgrading to more energy-efficient furnaces, boilers and air conditioning systems can reduce energy costs by up to 15 percent. Because of their complexity, boilers have a number of component retrofit options that can increase efficiency. Make sure your new system is sized properly; oversizing can waste energy.

Controls. For buildings where owners pay directly for energy use, a building energy management system can reduce energy costs while maintaining tenant comfort. In tenant-controlled buildings, installing programmable thermostats throughout the property will encourage tenants to control energy use according to their schedule. Installing occupancy sensors in restrooms and other common areas can reduce lighting costs.

Get everyone involved

While upgrades can provide savings, optimizing efficiency requires cooperation between building management and tenants. Education is key; whether your tenants pay directly for their utility use, or through rental or lease agreements, they need to understand that conserving energy benefits everyone. Start by forming an energy team including building management and tenant representatives.

Establish energy-saving goals and implement a strategy to carry them out.

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