Commercial building operators are learning that green is more than a color as they cash in on effeciencies and savings that help the bottom line.

Written by Matt Hudgins for National Real Estate Investor

At the EPA’s Region 8 headquarters in Denver, custodial crews perform all of their cleaning tasks during daylight hours. Janitorial teams working among the building’s office workers empty trash cans, disinfect kitchen areas and even clean carpets using quiet, backpack-style vacuum units.

It is a mild inconvenience for tenants that pays off in energy savings to the tune of $250,000 per year, according to property manager Amy Smith, who estimates the daytime janitorial arrangement is saving 80 cents per sq. ft. in utility bills annually. Smith is a senior property manager at The Opus Group, which built and now manages the building that the EPA leases. “Because the janitors work 8 to 5, we literally are able to shut off every light in the building except emergency lighting at 6 p.m., and we are not open on weekends,” Smith says.

Commercial landlords are learning that sustainability has as much to do with management as it does with architectural design. By refining their own green operations, Opus and other innovative property managers are lighting the way for the nation’s landlords to minimize the impact of their commercial buildings on the environment. “You can have the most technologically advanced building, but if that building is not properly managed, it’s not going to perform well,” says Jiri Skopek, managing director of sustainability at real estate services provider Jones Lang LaSalle. “You can also have some buildings that are old clunkers, but they have excellent managers who know how to tweak them. Those buildings might actually perform better than new buildings.”

COMMAND PERFORMANCE
Rethinking a building’s operations has the potential to increase an asset’s value. At a Morgan Stanley office building in New York, a new approach to the heating, ventilation and air conditioning (HVAC) system reduced utility costs while adding a state-of-the-art mechanical system that is expected to cut power consumption there by 900,000 kilowatt hours annually. Hines Property Management realized the 17-year-old central chiller used to cool Morgan Stanley’s 750,000 sq. ft. building lacked the efficiency of newer systems, and asked Piscataway, N.J.-based energy service company Trane Inc. to come up with alternatives. Trane helps landlords plan and implement efficient heating, ventilation and air strategies.

Trane’s solution, completed last year, is a thermal storage system that creates ice during the night and then uses that ice to cool air during peak usage hours when power is most expensive. The New York State Energy Research & Development Authority (NYSERDA), the local utility provider, charges a reduced rate for the building’s consumption during off-peak hours. The high efficiency provided by a relatively new mechanical system slashes overall energy consumption. To help Morgan Stanley reduce its demand for electricity during peak hours, the utility company provided $314,500 in incentives for the project, says Scott Lenger, director of commercial real estate and lodging markets at Trane. “The project reduced NYSERDA‘s carbon output for consumption at the building,” Lenger says. “They equated it to planting 1.5 million acres of trees.” It also saves Morgan Stanley more than $550,000 annually.

For a client in California, Trane is installing an automation system that will give property managers greater control over its HVAC and lighting systems. Rather than heat or cool the entire building on weekends, the client can now provide air conditioning only to the floors where tenants are working. Sensors monitor carbon dioxide levels to let building managers know when it’s safe to slow down the ventilation system and use less power, just as light receptors turn the lights up or down to supplement sunlight coming through the windows.

GREEN TEAMS
Most conventional office buildings must run their lights and climate control machinery for night cleaning crews well after their tenants’ working day has ended. Daytime cleaning yields the ultimate savings by eliminating the need for power usage strictly for cleaning. Few tenants, however, are willing to accept the daily presence of a cleaning crew during business hours, says Madeleine Abel, vice president of property management at Rockville, Md.-based BECO Management Inc.

Abel is a volunteer leader in charge of green initiatives at the Institute of Real Estate Management, a Chicago-based trade group. An offshoot of daytime cleaning is gang cleaning. Everyone from floor buffers to trash collectors operate as a group, one floor at a time in a rolling fashion. That enables managers to turn off all but emergency lighting and climate control except on the floor being cleaned. The practice reduces power consumption to a fraction of the cost of operating the entire space.
At the EPA regional headquarters in Denver, Smith suggests that property managers introduce daytime cleaning gradually. “If most of your tenants are gone by 6 p.m., don’t wait until 8 p.m. to bring your janitors in,” she says. “Bring them in at 5:30 so they can be ready to rumble at 6.” Over time a landlord can introduce daytime cleaning as leases renew. “You’re getting your janitorial crew in earlier and earlier,” Smith says. “Eventually you’ll have 100% daytime janitorial.”

MOVEMENT TO MAINSTREAM
Some of the most effective property management practices, such as floor-by-floor heating and cooling during periods of reduced building use, aren’t possible in older buildings without costly upgrades. To encourage building owners to make those changes where necessary, the Building Owners and Managers Association (BOMA) has been working with the Clinton Climate Initiative to establish easier ways to tackle retrofits.

President Bill Clinton launched the Clinton Climate Initiative in 2006 to help cities and organizations reduce practices that may harm the environment. Brenna Walraven, managing director of national property management at USAA Real Estate Co., is heading BOMA‘s partnership with the Clinton Climate Initiative.

The key, she says, is to keep the cost of green property upgrades in line with the savings.

For example, an energy service company replacing the HVAC system at an office complex guarantees via an energy performance contract that the landlord will save $100,000 annually in power costs.

Rather than bill the building owner for the $540,000 project in a lump sum, the service provider agrees to take $90,000 in payment each year for six years, provided it performs as expected. If the new system doesn’t deliver the promised savings, the contract delineates how the service provider will compensate the property owner for the shortfall.

That’s the sort of cost-effective approach to sustainability that building owners and managers are looking for, Walraven says.

“Fundamentally, green is about being efficient and eliminating waste,” she says. “It should cost you less, not more.”
The U.S. Green Building Council hopes more landlords implement and maintain sustainable management practices such as those measured in the Leadership in Energy and Environmental Design for existing buildings program, or LEED EB.

In fact, LEED EB is all about maximizing the efficiency of a building — no matter the age — without major renovation. Conversion of an existing structure to conform to the latest green building standards falls under LEED for new construction rather than LEED EB, according to Marc Heisterkamp, director of commercial real estate for the council. What’s the difference? LEED EB measures performance rather than hardware and materials. While LEED for new construction examines how much construction waste is diverted from landfills, the existing buildings program looks at how much trash generated by a building’s occupants can be eliminated or recycled. A property owner can apply to the U.S. Green Building Council annually for recertification in LEED for existing buildings as a way to demonstrate that an asset is indeed still green and not simply resting on its laurels of an earlier certification. While annual recertification is optional, LEED EB expires after five years, so that reapplying becomes a must for properties that want to keep the certification.

MAINTAINING SYNCHRONICITY
Conservation measures that constitute green building vary widely. A rigorous water conservation program may be the hallmark of a sustainable building in Florida, where water systems are stretched thin. Air quality may take precedence for buildings in smog-challenged Los Angeles, while energy efficiency is paramount at a building in San Jose. Regardless of the specific resources being conserved at a given property, what really makes a building green is efficiency, says Miami-based attorney Estrellita S. Sibila. A property manager is ultimately responsible for ensuring the building’s various systems are operating at peak performance, says Sibila, who specializes in green-building practices.

“A green building is designed so that all the different components work together in an optimized fashion,” says Estrellita S. Sibila, JD, LL.M. “If the property management company doesn’t understand how all that works together, there could be failures.”

Consider an HVAC system engineered to perform in an office building with shaded windows and a lighting system designed to produce as little heat as possible. Problems can arise if a tenant replaces the lights with fixtures that give off more heat, or a property manager replaces storm damaged windows with conventional materials that don’t insulate as well as those the building was designed to use. Either way, the air conditioning would be forced to operate longer to compensate for the additional heat and fall short of the owner’s power conservation goals.

The ability to monitor a building’s performance over time gives property managers an important tool for improving green practices, according to Skopek of Jones Lang LaSalle. Skopek was the CEO of ECD Energy, which Jones Lang LaSalle acquired earlier this year. ECD Energy developed the technology underlying the Green Globes environmental rating system, which measures a building’s sustainable features and operations.

Using the Green Globes checklist, a property manager can benchmark a property for comparison with others in a portfolio or monitor its performance over time. The online tool also provides a report complete with hyperlinks to additional information that explains the processes covered in the checklist. The technology of green building may be new, but the responsibility for ensuring building performance is long familiar to property managers. “Our value has increased absolutely and significantly, and will continue to do so because we will be the green experts,” says Abel of BECO Management. “It’s going to be the property managers who have to keep the operating expenses down and meet the demands that society is requiring.”

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