As the economy continues to improve, albeit slowly, commercial real estate (CRE) in 2013 has many competing priorities but no doubt number one is filling vacancies and retaining tenants in commercial real estate properties. CRE has increased competition due to the large number of legacy vacancies and incredible pressure to keep operating costs as low as possible.
This pressure is forcing the best to be great and the great to find new and innovative ways to differentiate themselves and attract tenants.
Sustainability as a Differentiator
In this market, the operative question is: how can I turn a letter of intent into an executed lease agreement? One answer is sustainability.
The question that plagues most managers and owners when they begin to consider implementing sustainability is: where do I start? Should I pursue LEED EB certification, ENERGY STAR certification, or just call my waste hauler and ask them to give me a bigger bin for recycling?
With so many options, and so much information available, this can be an intimidating process. In addition to the many options available to “go green,” property owners and managers are busier than ever so there is a limited amount of time for research.
With tight budgets, an owner may balk at exploring sustainability. Who can blame an owner who is hesitant to shell out money when they don’t know what they’re buying?
But in reality an owner can reduce operating expenses by lowering energy costs and reducing water usage through a well-implemented sustainability program.
Start With the Basics
The term “sustainability” can seem daunting to an owner just getting started. They envision undertaking a large and costly project and they don’t know what might be involved. That uncertainty and discomfort isn’t necessary.
Take it slowly when starting a sustainability initiative and begin with the basics. Invest wisely. Ask your sustainability consultant to provide you with a preliminary investigation of what you might need. Think of it as a Triple Filter: Does the building perform well with energy usage, water consumption and indoor air quality?
The consultant should perform a site visit at the building and investigate the systems. How much water and electricity (and gas) is being used? Meet with the stakeholders in the building – from the owner to the security staff to the building engineers. Everyone involved should provide input.
The results of the Triple Filter study can help guide the sustainability program to its most productive outcome. If you learn a building is not using more water than it should and has good indoor air quality, but the energy performance is really low, then tailor the program to save money on your annual utility bill.
Start with a basic benchmark and set reachable goals, as opposed to solving everything from the outset.
Set Realistic Goals
There is no reason to spend valuable time and money implementing a program if you can’t measure the results. Benchmarking or understanding how a building is currently performing is essential to setting goals. If you don’t know where you’re starting you can’t possibly know where you’re going.
For example, you might want to set a goal of saving 10% annually on your water bill. But first you need to know your current water usage. In this market, tenants can be selective. Owners who can demonstrate to tenants that will save on their basic operating costs through sustainability will have a leg up on the competition.
Once the first sustainability project is successfully completed, owners can more confidently plan for the future. Sustainability is about continual improvement.
Perhaps the initial investigation uncovered the need for a capital project improvement with a two-year payback but the money isn’t in the budget this year. An owner can begin to gather information now to accurately budget for the sustainability program in FY 2014.
In a market that isn’t getting easier, implementing a smart sustainability program can set a building apart from its competitors by making improvements that save money and attract tenants.
Rachel Sowards is a Practice Area Manager, LEED® AP, with Paladino DC, the East Coast office of Paladino and Company.