A comprehensive new energy reduction program for office buildings makes the case that cutting emissions and making money aren’t mutually exclusive. The Urban Land Institute’s Tenant Energy Optimization Program, introduced at the group’s fall meeting in Dallas yesterday, offers a blueprint for drastically cutting energy usage by commercial tenants, and has the support of some of New York City’s biggest landlords and businesses, as well as the National Resource Defense Council, which helped launch the initiative.
“The greatest value added to the client is that they literally save money,” says Tamela Johnson, director of project management at Gardiner & Theobald, a New York-based global construction consultancy. “In addition, they’re saving energy for out planet. Who doesn’t want to do that?”
Anthony Malkin, chairman and CEO of the Empire State Realty Trust, which runs the Empire State Building, started the program as a means of greening the iconic skyscraper. He found that no program existed to award tenants for low-energy installation, and initiated tests that eventually included ten commercial tenants in the building and around New York City, such as Shutterstock, LinkedIn, Estee Lauder, Cushman & Wakefield, and Bloomberg.
The results satisfied multiple bottom lines: the installation of these energy-efficient systems saved tenants 30 to 50 percent on their energy bills ($3.5 million in total), with payback for the initial expense coming within the first three to five years, and worked in a variety of different sized offices. Since the building sector is one of the biggest contributors to carbon emissions—if U.S. buildings were a country, they would be the third largest energy consumer in the world—widespread adoption could have significant environmental impact.
“The lessons learned will change how tenant occupancy and energy consumption work,” Malkin says. “Helping with climate change and carbon reduction are great. But more importantly, this offers documented proof of major cost savings over the life of a lease.”
Ray Quartararo, head of Global Planning, Design, and Construction within Global Real Estate at JP Morgan Chase, was thrilled that this program didn’t just talk about environmental benefits, but showed definitive proof of a strong return on investment.
“It becomes a situation of, why wouldn’t you do this?” he says. “It becomes more and more synonymous with good design practices.
The program’s holistic series of steps to design and outfit tenant spaces to conserve power involve working with architects, designers and property managers from the start, during the buildout process, to evaluate energy performance measures and determine installations and initiatives that can conserve energy. While building owners can take steps to create a greener, more efficient environment, tenants in big towers and developments still account for more than half a building’s energy usage. Creating spaces that can be adopted for more efficient energy use, and educating tenants about the financial benefits of buying into the program, offer a practical, bottom-up solution to increasing awareness and action.
ULI Global Chief Executive Patrick Phillips says he hopes this program can become the norm, especially because its both scalable and replicable.
“The programs’ step-by-step process is an effective way for companies to cut their energy costs and boost their bottom line while achieving corporate goals related to sustainable, energy-efficient workplaces,” Malkin said. “It enhances their ability to attract, retain, and motivate workers who are healthier, happier, and more productive.
Malkin and others hope this stands as an example of private initiative influencing public policy. Where other initiatives may be nothing more than greenwashing, he stands behind the extensive research and data, believing that it shows the importance and impact of planning and doing the work. He wants to begin educating others about how these kind of designs and retrofits can make a big difference.
“This is better than the scavenger hunt for points you see with LEED,” Malkin says. “It offers significant results. We’re making this about profit.”