Energy Efficiency in Localized Spaces: Why Both Sides Win

Traditionally, energy efficiency has been a hot topic in localized spaces. It’s hard to get landlords and landlords to agree on how to split the cost of retrofitting a space. This has led to fewer upgrades being made to these buildings than to buildings owned by landlords.

This, like many other energy-related factors, is changing. The main reason is that greater savings can now be achieved by investing in energy-efficient technologies. Today, both sides of the aisle—landlords and tenants—want to become more efficient because it’s hard to avoid making investments. While in the past there were reasons to avoid retrofitting and retrofitting, there are now plenty of reasons to do so.

It can be a win-win situation, says Sarene Marshall, executive director of the Urban Land Institute (ULI). “If you’re a landlord and the tenant is paying for the energy they use, it’s in their interest to make the investment,”, she says. “And it’s also in the landlord’s interest because it’s attractive to tenants.”

This week, the ULI unveiled a program that aims to speed up that process. The Tenant Energy Optimization Program focuses on communication between tenants, building owners, real estate agents, project managers, architects and engineers, according to the organization.

The project’s premise was to reduce energy consumption at the Empire State Building in New York City. Companies — including Shutterstock, LinkedIn, Bloomberg and The Estee Lauder Companies — have since piloted 10 projects. According to ULI, savings were 30 to 50 percent over three to five years, and annual internal rates of return were 25 percent.

The program launched with a website describing the pilots. “We want to help managers and consultants … find ways to reduce energy consumption and save money,” Marshall said. “This is especially important if and when the economy crashes again. Every penny counts, thinking about it from that perspective.”

ULI’s ULI program aims to be practical and easy to implement for energy efficiency:

“The process consists of ten steps that involve locating a team and workspace, setting energy performance goals, modeling energy reduction options, calculating financial returns, making final decisions about implementation, developing a post-occupancy plan, constructing the space, executing the post-occupancy plan, and communicating the results.”

There are significant challenges in implementing energy efficiency in commercial spaces located due to the goals of both parties involved. However, the movement toward energy efficiency and sustainable development is becoming increasingly central to business and society, which is driving landlords and tenants to overcome these barriers and get the issue right.