Real estate veteran Jeffrey M. Miller, who recently joined Lee'sNew Jersey industrial division as a senior vice president, willspearhead the new group as executive vice president. Miller bringshis experience as principal of Quadrillion RE, an energyconsultancy he founded in 2008, to the new role.

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According to Miller, "The building sector consumes more energythan any other--in fact, it exceeds transportation and consumesabout 8.6 quadrillion BTUs per year--and we have a uniqueopportunity now to improve properties while lowering occupancycosts through energy upgrades."

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He coins the relationship between real estate and the energysector as a "joining at the hip." The bottom line is, well, tomaximizing tenants' bottom line. "We can encourage tenants to staylonger at a building if their lease is coming due in a year ortwo," Miller tells GlobeSt.com. "With some joint investment betweentenant and landlord, we can extend that lease out for another fouror five years simply by trimming the expenses for the tenant."

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Miller reveals that the company plans to develop buildingperformance ratings for industrial assets, which, he adds, "havelittle to do with LEED." Instead, the focus is on energy efficiencyand largely solar. "At the end of the day, landlords who do make aninvestment in their property and build up 'energy equity' candemonstrate and monetize the delta between other buildings andtheir own high performance model. And if there's a 50-cent spread,owners will either be able to lease up their properties quicker orachieve a higher yield."

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While Miller notes that other real estate firms have energyefficiency groups, "it's usually back of shop. Our goal is to bringthe energy conversation into the upfront transaction when ownersand tenants are addressing their capital needs." This is especiallyimportant in the industrial market because there is almost never afacility management team, rather the properties that are managed onsite. "

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But how receptive is the industry to green growth? "More so thanin the past," says Miller. "In a down economy, people are lookingto cut costs at any turn." He tells GlobeSt.com that there aredifferent costs and returns depending on the project, and itdepends largely on location. With solar, for instance, the spreadbetween solar energy costs in the region and existing rates is key."Solar also has a different ROI than other efficiencyprograms."

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Owning a solar facility is also an option for companies--asidefrom REITs whose tax structure removes them from the running. Andit's a very tax-rich environment. "If you're looking for taxshelter, purchasing one of these solar facilities is a greatopportunity and you can potentially have a 50% return in year one,with the entire capital investment paid off in the first five orsix years."

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Also worth noting is that the state has stimulus funds from theAmerican Recovery & Reinvestment Act, $300 million of which aresolely for energy projects.

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In fact, the state has been a leader in the solar market foryears. Living up to its moniker, New Jersey is the number one solarmarket in the country per capita and the seventh largest solarmarket in the world. "Especially with large-scale solar, the statehas moved away from a rebate program," says Miller. "Instead it isdoling out performance-based incentives."

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New Jersey has a very aggressive Solar Renewable EnergyCertificates program, which is basically the monetization of carbonreduction. "You can sell SRECs into long-term, three- and five-yearcontracts and then obtain bank financing," Millers tellsGlobeSt.com. "All utilities in the state have a proactiveobligation by law to buy a certain percentage of their yearly salesthrough SREC. The penalty for not making this purchase is $711,while SRECs are trading at $653. It's commodity pricing and that'sgoing to change month-to-month depending on supply and demand, butthat's helping to subsidize the installation of large-scalesolar."

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