Guidance for Energy Savings

(This story, in slightly different form, appeared in the Better Buildings Supplement of Real Estate Forum.)

ATLANTA-When developer Carter USA opened the doors to phase one of its 7.3-acre Piedmont West Medical Office Park in January 2009, it was nearly 50% leased. Fast-forward four years and the 264,000-square-foot, nine-story healthcare facility is 92% leased and stacking up awards and recognitions for its operational efficiencies.

Developed in conjunction with Piedmont Healthcare Inc., which occupies 91,000 square feet of the $90-million building, Piedmont West won the Building Owners and Managers Association's 2012 International TOBY award in the Medical Office Building category. The award is the highest level of recognition from BOMA.

“Some medical office buildings are just exam rooms and basic office space,” says Piedmont West chief engineer John Day of Cassidy Turley, the building's property manager. “In this building we have surgical centers, CT and PET scan machines, nuclear medicine machines, extra HVAC equipment. And all of this consumes much more energy. Energy conservation becomes a key part of the building-operations strategy in sophisticated medical office buildings like Piedmont West.” Indeed, engineering savings is a must in this energy-intensive building, which was constructed with green principles.

The Piedmont West Medical Office Building is home to Piedmont Healthcare's Cancer Center, the largest tenant at 138,605 square feet—or 54% of the building. The cancer center spans the entire spectrum of care from detection, diagnosis and research to treatment, education and support.

Piedmont West also hosts a state-of-the-art imaging center, outpatient center and radiation oncology services, reproductive medicine, gastroenterology, hematology, gynecology and urology practice, as well as plastic surgery and urgent care. Other large tenants include American Diabetes at 17,000 square feet, Morehouse School of Medicine at 23,000 feet, and Jenkins Clinic of Urology at 17,000 square feet. A mixed-use asset, the facility also includes 9,000 feet of retail.

Without an energy-efficient design, the cost of running the building would drain the profits of the total 11 tenants or force rents far above the market norm. Cassidy Turley was then and is now determined to find new technologies and best practices to keep costs down.

(This story, in slightly different form, appeared in the Better Buildings Supplement of Real Estate Forum.)

“We've made a commitment to support the BOMA 7-Point Challenge with the goal to reduce our overall energy consumption from a portfolio-wide level by 30% over a five-year period,” says Holly Hughes, a senior managing director and principal head of property and facility management at Cassidy. The BOMA program aims to help incentivize commercial real estate companies to make voluntary market-driven efforts to reduce the use of natural resources, non-renewable energy sources and waste production. BOMA also asks participating CRE firms to position themselves as leaders in sustainability and positively impact the planet by helping reduce the industry's role in global warming.

Beyond the 30% decrease in energy, Cassidy also committed to benchmarking energy performance and water usage through Energy Star metrics; provide sustainability education to engineers, owners and operators; perform energy audits to implement low-risk and low-cost strategies; and improve operations and building maintenance systems.

“Once the building came out of the ground, we continued to look for ways to increase efficiencies and create value for our tenants,” says Cassidy's Dan Joseph, property manager at Piedmont West. “Focusing on energy efficiency rings a large bell for our tenants. So we continue looking for ways to drive energy efficiency.”

Cassidy has taken specific measures to reach its energy management goals, including replacing tenants' standard incandescent light bulbs with compact fluorescent bulbs and further reducing the wattage of fluorescent bulbs for all lights. “Going with T5s saves energy and labor,” Day says. “We're down to 28 watts. That's the way the industry is headed.”

Engineers also wired all tenant lighting through the building's energy management source that contains a manual override capacity limited to two hours for tenant's after-hour usage. “Everything we do, we do with the goal of increasing our Energy Star rating,” says Joseph. “Anywhere we see even a small potential to save on energy consumption or expenses, we go after it—from low-hanging fruit to high-hanging fruit.”

From an ultra-practical standpoint, Cassidy Turley also works with tenants to administer proper nightly closing procedures, including shutting down computers, lighting, televisions and manually operated databases. Likewise, management requires all janitorial functions to be performed by an environmentally friendly cleaning service provider.

Other initiatives include installing occupancy sensors in all offices to reduce consumption when offices are not occupied and requiring tenants to submit after-hour and weekend HVAC requests for overtime. This method aims to make sure building systems are not operating unnecessarily. Finally, Cassidy audits the energy-management operation on an annual basis to drive maximum performance and to identify further improvement areas.

(This story, in slightly different form, appeared in the Better Buildings Supplement of Real Estate Forum.)

Medical office real estate activity has been hot in the Atlanta locations so far this year. In March, American Realty Capital Healthcare snapped up the 69,341-square-foot Northside East Cobb Medical Campus in Marietta for $19.2 million. North Georgia Health Systems began developing an $8.5-million, 23,000-square-foot outpatient center in Gainesville, GA this past March. That project, Medical Plaza 400, opened in May. In Duluth, GA, Gwinnett Medical Center is developing a 10-acre outpatient medical park across the street from its hospital campus. And WellStar Kennestone is planning a $23-million outpatient surgery center, also in Marietta. This is just some of the most recently announced activity in the region's medical office sector.

With competition rising, Cassidy Turley isn't resting on its energy-efficient laurels. The property managers are still looking for more ways to save energy consumption and costs. Day says the low-hanging fruit has been picked, but he continues to research any new technology or best practice that will further drive down energy consumption. These small efforts don't make a huge impact individually, he says, but they make a mark collectively.

As part of that research, Cassidy holds lunch-and-learn meetings with vendors who pitch new ways to save energy. Day and his team also visit other building sites to see first-hand how other properties are tackling energy issues. One upcoming initiative is in the 1,084-space parking lot.

“We have metal-halide lights in our parking lots now, but we're looking to make the switch to LED,” says Day. “We expect this will be another strong move toward energy savings. Our tenant retention is high because we provide a class A building and make it easy for them to feel good about participating in sustainable programs.” (The energy-savings program passes costs along to the medical practices.)

Once a year, Cassidy's senior technical team ticks off a 98-point checklist at all the properties in its portfolio to examine everything from accounting processes and financial reporting to safety compliance, preventive maintenance and energy consumption. Holly says those audits are passed along to clients for the sake of transparency. If something can be improved, Cassidy works to improve it.

“Every property that we manage is different,” she says. “This checklist provides us with a tool whereby we can identify best practices that can be shared throughout the portfolio. We don't assume that no news is good news. We take a proactive approach to deliver the best possible experience for our clients. That transparency builds trust with our clients.”