Sustainability Goes Beyond Energy Bills

SAN DIEGO-In the last five to 10 years, sustainability in commercial real estate has taken off exponentially, and it will only continue to grow, said speakers at this week's NAIOP Development '13 conference here. Fortunately for building owners, the ROI on sustainability measures can go beyond a reduced energy bill to engender tenant loyalty and reduce other operational costs.

Some of the barriers that those promoting sustainability in commercial buildings face include skepticism from owners on how much they can really save vs. how much it costs to institute these measures in their buildings. The good news is that many sustainability measures are easy fixes that don't cost a lot, but do much to reduce operational costs, panelists said. Simple things like retrofitting light fixtures to accommodate money-saving fluorescent bulbs, paper and battery recycling and proper maintenance of HVAC systems are not difficult or expensive and can contribute considerable cost savings to owners' operational budgets, said John Hoffman, a director with Baker Tilly Virchow Krause LLP.

Monitoring systems can also bring significant ROI. Catherine Dannenbring, director of sustainability with Skanska USA Commercial Development, demonstrated how the firm uses an electronic dashboard monitoring system to track real-time energy usage in its buildings, an application that can prompt users to turn off lights and computers and unplug electric devices when not in use. And while installing solar panels may be the way to go for some building owners, some of these less elaborate methods can have significant impact on their bottom lines.

“We always say focus on the efficiencies before the renewables,” Dannenbring said, meaning that look for ways to save first with the systems already in place in a building before adding in new systems. Conservation has a very big place at the sustainability table.

As for whether tenants are basing their leasing decisions on how green a building is, the experts said this isn't happening on a widespread basis yet. “More tenants are asking for or expecting sustainable space, but it's still a small percentage,” said James Mazzarelli, Jr., SVP and regional director for Liberty Property Trust.

Still, investment in sustainability—whether the building is LEED-certified or not—can pay off in other ways, such as tax deductions, home credits and utilities rebates, said Hoffman. The panel recommends checking with state and local governments and utilities companies to determine what the payoffs are for these investments.