The recent United Nations report stating that global warming is “very likely” a human caused problem all but disproves the arguments of naysayers who put global warming down to cyclical climate changes that are normal and beyond the influence of humans. It’s here, it’s real, and the residents of this planet have to deal with it.
Regardless of whether or not facility professionals agree with this conclusion, this news impacts nearly every industry, especially commercial real estate. In the U.S. alone, buildings account for 48% of energy consumption. With nearly 800 million metric tons of carbon emissions, the Buildings sector outpaces both the Transportation and Industry sectors in emissions.
For many facility managers the news is concerning, because there is a perception that changes—such as implementing green building practices and energy efficient operation strategies—are simply too expensive. The other argument is that the return on investment (ROI) is either too distant or even non-existent.
But the data is increasingly disproving this argument. Some indicators prove that reducing energy and resource consumption through sustainable practices can actually have a positive impact on the bottom line as well as a high return on investment. And as more and more green building data becomes available (coupled with the increasing demand for such buildings), the business argument for implementing sustainable practices should only strengthen.
Case Study: Adobe Headquarters
One such example of good business through green design involves the Adobe headquarters complex in San Jose, CA. The three buildings recently received the U.S. Green Building Council (USGBC) Leadership in Energy and Environmental Design for Existing Buildings (LEED-EB) Platinum certification.
In many ways, this was an unprecedented achievement. When the first of the three buildings (the West Tower) was awarded LEED-EB status in July 2006, it was the first EB building to achieve this recognition.
Interestingly, while efforts were an environmental success, many wondered if the efforts by Cushman & Wakefield (C&W) on Adobe’s behalf were being done for anything but “good corporate citizen” benefits. Since the facility opened, Adobe and C&W have demonstrated that the efforts to achieve the highest level of sustainable certification through LEED have been a very wise business decision. It has also translated into a good benefit for the employees and the environment—a shining example of architect and green design guru Bill McDonough’s triple bottom line (the financial, environmental, and social/people benefits reporting of a company) for a true win, win, win strategy.
To date, Adobe has invested approximately $1.4 million for energy and environmental retrofits. These retrofits have resulted in approximately $1.2 million in annual savings and $380,000 in rebates, for a total ROI of approximately 121%.
In addition to the many energy efficiency improvements, C&W implemented other environmentally beneficial projects, including: drought tolerant landscaping; an irrigation system linked to local weather stations (which automatically adjusts according to real time weather conditions); and sensors to monitor carbon monoxide levels and adjust operation of building exhaust fans accordingly. Adobe also increased its use of outdoor air and enhanced the overall maintenance of its air systems, resulting in better indoor air quality (IAQ) for all of its employees.
George Denise, CPM, FMA, RPA, of C&W manages the Adobe properties and has been an outstanding leader in driving the business case for high performance sustainable building operations. “Adobe didn’t just rely on retrofits to achieve these savings,” he explains. It also took advantage of the low hanging fruit—energy efficient strategies with little or no upfront cost. We trimmed $68,000 by reducing the run time for garage fans and saved $52,000 simply by changing out inefficient lighting.” [For more on energy efficient lighting, see “Brighter Days Ahead” by Jillian Ruffino.]
“We improved operations by finding ways to be more efficient,” Denise continues. “To date, Adobe has reduced electricity by 35%, natural gas by 41%, domestic water by 22%, and irrigation water use by 76%. Adobe also recycles or composts up to 95% of solid waste.”
More importantly, for all of the efforts and investments with such a short payback and high ROI, these improvements will pay lasting returns to Adobe financially, in terms of employee comfort and retention and in terms of the environment.
Case Study: Joe Serna, Jr./Cal/EPA Headquarters
Sometimes simple efficiency can go a long way. By implementing a creative approach to reducing energy consumption at another high-rise office property, the Joe Serna Jr./Cal/EPA Headquarters Building in Sacramento is recognized today as one of the most energy efficient and sustainable commercial office developments in the country. [This facility has been covered in several TFM articles (most recently January 2007) which are available online through the search tool on this page.]
The developer and managing property company, Thomas Properties Group, Inc. (TPG), incorporated state of the art green building practices in the 950,000 square foot office building. All levels of services—maintenance, janitorial, equipment replacement, tenant improvements—incorporate sustainable practices and materials.
“We found that these practices are not only good for the environment, but they’re also good for business,” says Craig Sheehy, director of property management, TPG.
The building is using far less electricity since a daytime janitorial schedule was implemented in 2002. That, combined with other techniques such as shutting off staff lighting at 6:00 p.m., has reduced electricity consumption by 8%—a utility savings of $100,000 annually.
An added benefit of the daytime janitorial service has been a 70% reduction in janitorial complaints, which approximately equates to $110,000 in reduced labor costs. “The daytime hours have also reduced janitorial staff turnover,” says Sheehy. “This saves us training expenses, and it gives our janitorial staff a better quality of life. For the first time, many of them are able to tuck their kids into bed at night.”
TPG employs several other sustainable strategies, from waterless urinals to a sophisticated recycling system that saves the building tens of thousands of dollars and eliminates waste. By using “worm bins,” TPG has significantly reduced landfill material.
With this system, worms digest organic material, turning it into a nutrient rich soil byproduct that is used in landscaping around the building. The bottom line savings of the Joe Serna Jr./Cal/EPA building adds up to approximately $1.50 per square foot less than the average in downtown Sacramento.
Case Study: The Hearst Tower
New York City is also finding that green can be golden. The recently constructed Hearst Tower in the Columbus Circle neighborhood was the first office building in New York City to receive the Gold LEED certification for Core and Shell in October 2006. [For TFM’s coverage of this facility, see “Grounded In Green” by Anne Vazquez, October 2006.]
Design elements throughout the 46 story structure incorporate green elements right down to the diagrid frame of the Tower. Since it contains roughly 20% less steel than would a conventional perimeter frame, this approach saved approximately 2,000 tons of steel. More than 90% of the structural steel used contains recycled material.
The glass that wraps around the exterior of the building has a special low-E coating. This treatment allows for internal spaces to be flooded with natural light while keeping out heat causing solar radiation.
Hearst Tower’s high efficiency heating and air conditioning equipment uses outside air for cooling and ventilation for 75% of the year. The roof is designed to collect rainwater, which is harvested to replace water lost to evaporation in the air-conditioning system.
Brian Schwagerl, vice president of real estate and facilities planning for Hearst, explains how the systems are already paying back in many ways. “Our first bills related to energy consumption prove that we are seeing a payback that will be on schedule.”
Paying Back Big Dividends
At Denver Place, the immediate energy reduction resulted in a savings or $250,000.
Going green is often easier when a utility company provides rebate money to offset initial investment costs. Amerimar Realty Management Company-Colorado decided it was time to invest in retrofits in 1996 when utility costs for Denver Place exceeded $1 million for the first time ever.
The initial investment for the retrofits was $1.3 million, of which $550,000 was funded by the Public Service Company of Colorado through its demand side management program. The program offers incentives to big energy consumers.
“It’s a classic win-win situation,” says Lori Carter, property manager for Amerimar Realty Management Company at Denver Place. “We received financial assistance to implement energy saving retrofits, and the utility company took needed energy off the grid, helping to avoid building new power plants.
Says Carter, “When we began using no cost/low cost strategies in 1997, the savings went to $350,000 a year.”
Those savings have continued to increase, and in 2005 Denver Place saved more than $500,000 in energy costs. The two numbers combined resulted in a year-and-a-half payback and an approximately 59% return on investment.
Making the business case for going green is now achievable. As energy prices rise and employees become more selective about where they work, operating costs and productivity gains are more important than ever before.
Regardless of personal opinions about climate change, building occupants, insurance companies, local, state, and even federal governments are increasingly going to require high performance sustainable buildings. [For more on this subject, see “Questioning Boston’s LEED-ership” by Jeff Crane.]
If commercial real estate can reduce energy consumption by 10% over the next 10 years, facility managers across the country should be able to reduce costs by $24 billion and cut greenhouse gas emissions equivalent to the emissions from 15 million cars. That’s a significant and attainable goal that may best be achieved through a combination of strategies—green design, retrofits, green technologies, and no cost/low cost energy efficiency operating strategies.
Walraven is BOMA International chairman-elect and executive managing director, national property management, for USAA Real Estate Company.