Tenant Energy Performance in Commercial Office Buildings

NRDC Center for Market Innovation

U.S. COMMERCIAL OFFICE REAL ESTATE IMPACT

12 billion square feet = $20 billion in annual energy costs

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TENANT OPPORTUNITY

Over 50% of a building’s energy use comes from tenant spaces in commercial office buildings

Optimize energy performance, quality of spaces and building services through owner/ tenant collaboration

Base building energy efficiency goals and performance recognition ratings are enhanced through better tenant energy performance

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TENANT OPPORTUNITY

Workplace quality, occupant comfort and satisfaction improvements are often cited as motivations for high performance tenant space.

Soft benefits have the potential for greater economic impact than energy cost savings.

A process of evaluating and quantifying soft benefits is necessary driver to increase the demand for high performance tenant space.

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VALUE PROPOSITION

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TENANTS:↓ energy consumption↓ operating & maintenance costs↑ workplace comfort↑ employee attraction/retention↑ occupant satisfaction↑ corporate responsibility &

investor recognition

REAL ESTATE OWNERS:↓ energy consumption↓ operations & maintenance cost↓ capital plan & infrastructure

upgrade cost↑ occupancy & tenant quality↑ tenant satisfaction↑ renewal probability↑ asset class, value & recognition

TENANT ENGAGEMENT

Challenges: 1) Data proving payback of energy

investments2) Project process/ execution expertise3) First cost funding solutions

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Optimizing energy performance at

time of build-out, renovation or capital work

maximizes ROI and minimizes

incremental cost and disruption

ENERGY SAVINGS OPPORTUNITIES

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Base Building Measures Tenant Space Measures0

10

20

30

40

50

60

Direct Digital Controls

Retrofit Chiller Plant

Lighting/ Day-light / Plugs

VAV AHUs

Windows

Energy Mgmt.Radiative Barrier

DCV

Case Study: Empire State Building

Annu

al E

nerg

y Sa

ving

s (m

illio

n kB

tu)

QUANTIFIABLE RESULTS

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Baseline energy use can be reduced by 30-50%, optimizing energy performance with a payback of 3-5 years, while providing a more comfortable and better performing building

QUANTIFIABLE RESULTS

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Baseline energy use can be reduced by 30-50% compared to:1) Existing office space2) Code standard new tenant space3) Code standard new tenant space + Pre-retrofit base building

Good Better Best

19.0%24.4%

29.8%34.9%

39.2%43.6%

Case Study: Coty, Empire State BuildingTenant Electricity Reduction (per Floor)

vs. Adjusted Baseline vs. ESB Baseline

QUANTIFIABLE RESULTS

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Baseline energy use can be reduced by 30-50% compared to:1) Existing office space2) Code compliant standards3) Code compliant standards + Pre-retrofit base building

Good: $23,983 Better: $26,760 Best: $29,571$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$14,178 $14,178 $14,178

$9,805 $12,581 $15,393

Case Study: Coty, Empire State BuildingAnnual Tenant Electricity Cost Savings (per Floor)

from ESB Retrofit from Coty EPMs

TENANT SPACE ENERGY SAVINGS OPPORTUNITIES

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Optimize energy performance by

addressing all end uses:

1) Reducing loads2) Installing efficient

equipment3) Managing behavior

LEASE CYCLE ENERGY OPTIMIZATION PROCESS

TENANT SPACE ENERGY SAVINGS OPPORTUNITIES

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Tenant Energy Performance Measures (EPMs)(Optimize results by packaging a group of measures)

Building Owner Support to Tenant EPMs(Showcase EPMs in a model office suite)

Strategies Provided by Building OwnerSub-metered by space/ floor/ net lease Provide specifications to tenant engineer

Building envelope (windows, window film, radiative barrier) Provide tear sheet with details on capital work EPMs

Strategies with No or Low Additional Incremental First Cost Select building with natural daylight access Locate equipment away from windows

Design open office layout Locate equipment in core, design pre built

Paint walls white or light colors to reflect light Paint walls white if space is ‘white boxed’

Seal perimeter walls/ openings Pre seal if perimeter if space is ‘white boxed’

Occupancy sensor/ vacancy sensor lighting controls Install in pre-build model space

Short Payback MeasuresHigh Efficiency Lighting Provide specifications and vendors list for competitive bids

Optimize HVAC Units Provide specifications and vendors list for competitive bids

Plug Load Management Provide list of technologies and strategies, meet after move-in

IT/ Server Room Load Management Provide best practices and temperature set points

Medium Payback MeasuresDaylight Harvesting Lighting Controls Provide specifications and vendors list for competitive bids

Demand Control Ventilation (CO2 Sensors) Coordinate building control systems

Ongoing Management End use sub-metering- Lighting, plug load, HVAC, IT loads Ensure building infrastructure supports

tie in of multiple electrical panels

Energy Modeling- Use energy predictive analysis during design, incentive filing, and measurement and verification

Provide whole building energy model to Tenant’s engineer

TENANT CASE STUDY: LF USA

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TENANT CASE STUDY: LF USA

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TENANT CASE STUDY: LF USA

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Phase 1 (3 Floors)

Energy Performance Measures

Annual Electricity Reduction (kWh/yr)

Percentage of Electricity

Use Reduction

from Baseline

Annual Electricity

Cost Savings

Incremental First Cost

Simple Payback

Daylight Harvesting Controls 30,968 3.9% $5,359 ($41,850) 7.8 yrs

High Efficiency Lighting 55,746 7.1% $9,646 ($30,000) 3.1 yrsRight Sized HVAC Units { 0 0% $0 $0 N/A }Demand Control Ventilation (CO2 Sensors)

21,147 2.7% $3,659 ($47,520) 13.0 yrs

Plug Load Management 103,713 13.2% $17,946 ($45,000) 2.5 yrsCombined EPM Package (Without incentives or energy modeling costs)

218,252 27.7% $37,766 ($164,370) 4.4 yrs

Net NYSERDA Incentives -- -- -- $36,940Energy Modeling Soft Costs -- -- -- ($6,600)Combined EPM Package (With Incentives and energy modeling costs)

218,252 27.7% $37,776 ($134,030) 3.5 yrs

TENANT CASE STUDY: LF USA

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Phase 1 Build-Out (3 Floors)

Leased Premises 137,400 sq. ft. Modeled Energy Reduction 28%Total Electricity Savings over Lease Term 3,273,780 kWhIncremental Implementation Cost (w/o incentives) $164,370 State Incentives (net of review and filing costs) $36,940 Energy Modeling Soft Cost $6,600 Adjusted Incremental Implementation Cost $134,030 ($0.98/ft2)Total Electricity Cost Savings over Lease Term $566,495 Present Value of Electricity Cost Savings over Lease Term $392,002 Net Present Value of Project Investment $257,972 Return on Investment (ROI) over Lease Term 192%Annual Rate of Return 27%Payback Period 3.5 years

TENANT CASE STUDY: LF USA

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Total Build-Out (9 Floors)

Square Footage 412,200 sq. ft. Modeled Energy Reduction 31%Total Electricity Savings over Lease Term 10,519,320 kWh Incremental Implementation Cost (w/o incentives) $511,110 State Incentives (net of review and filing costs) $124,876 Energy Modeling Soft Cost $19,800 Adjusted Incremental Implementation Cost $406,034 ($0.99/ft2)Total Electricity Cost Savings over Lease Term $1,813,733 Present Value of Electricity Cost Savings over Lease Term $1,255,062 Net Present Value of Project Investment $849,028 Return on Investment (ROI) over Lease Term 209%Annual Rate of Return 29%Payback Period 3.4 years

LESSONS LEARNED

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Make it easier to get to “yes”: Start early Involve top leadership/ decision makers Incorporate an integrated process Facilitate knowledge sharing Design tiers of performance solutions Provide economic frameworks Time and iterate the value analysis Document and measure results

LESSONS LEARNED

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Motivators: Recognition/ marketing Better workplace quality Energy cost savings

TENANT DEMONSTRATION PROJECTS

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1) LF USA: Empire State Building/ Malkin Holdings2) Coty: Empire State Building/ Malkin Holdings3) Bloomberg LP: 120 Park Avenue/ Global Holdings4) Reed Smith: 3 Logan/ Brandywine Realty Trust5) INTEC: 3 Flint Hill/ First Potomac Realty Trust6) Relay GSE: 40 W. 20th/ NRDC

TENANT RESOURCES

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Process guides: Energy Performance Opportunities in Commercial Buildings (10-step Lease Cycle Energy Optimization Process)Energy Performance Optimization (Project Development and Value Analysis Process)

Tools:Energy Modeling RFP TemplateEnergy Modeling Report TemplateIncremental Costing TemplateValue Analysis Calculator

Case Studies:Li & Fung USASKANSKANRDC DC

TENANT ENGAGEMENT SOLUTIONS

Challenges: 1) Data proving payback of energy investments2) Project process/ execution expertise3) First cost funding solutions

a) Tiered Tenant Improvement Allowanceb) 3rd Party Energy Service Agreement Modelc) NYCEEC Pilot

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FOR MORE INFORMATION:

http://www.nrdc.org/business/CGI/

Wendy FokProject Director, High Performance Tenant Demonstration ProjectCenter for Market Innovationwfok@nrdc.org

Greg HaleDirector of Efficiency FinanceCenter for Market Innovationghale@nrdc.org

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