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Learn about unlocking new energy savings by bridging the gap between owners and tenants. Discover the benefits of ENERGY STAR for Tenant Spaces and the Tenant Energy Optimization Program. Gain insights from industry experts on sustainability practices to enhance energy efficiency in commercial spaces. This session offers valuable information for landlords and tenants looking to create energy-efficient buildings and reduce operating costs.
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Bridging the Owner-Tenant Divide to Unlock New Energy Savings Monday, June 24, 2019: 4:00 PM - 5:00 PM
Speakers Eric Duchon LaSalle Investment Management Eric TildenCushman & Wakefield Marta Schantz Urban Land Institute Craig HaglundUS EPA ENERGY STAR
The Owner’s Perspective Eric Duchon, LaSalle Investment Management
ENERGY STAR Tenant Spaces Craig Haglund, US EPA
Why ENERGY STAR Tenant Recognition? • ENERGY STAR’s objective measure of whole building efficiency has motivated change in the market, but barriers remain, especially in multi-tenanted buildings • Tenant activity often accounts for the majority of energy use in multi-tenanted buildings • Efficiency can save tenants money, directly or indirectly • Recognition highlights leaders, who show the way for everyone else
Energy Efficiency Improvement Act of 2015 Directed EPA to develop recognition for energy efficient commercial tenant spaces • Design & Construction (D&C) • To be proposed after DOE study on feasibility of high performance design and construction in tenant spaces • Study published April 30, 2016 • Occupancy-Based • Modeled on 1-100 ENERGY STAR score for whole buildings • Requires data collected by Energy Information Administration, available 2021 at earliest
2017-2018 Pilot • EPA proposed recognition criteria in 2016, and launched pilot for office spaces in summer 2017 • Office tenants only • Broad and diverse group of Charter Tenants • Over 140 spaces, and 70 organizations • Represent 25 states, plus DC and Puerto Rico • Include occupied tenant space, as well as in design and build/fit-out • On June 12, 2018, EPA announced recognition for 51 Charter Tenant spaces • 2,000 sq’ to over 1.3M sq’ • 15 states
Charter Tenants • Automatic Controls Company, Inc. • CodeGreen Solutions • COOKFOX Architects • CRB • Cushman & Wakefield • DOE Office of Legacy Management • DNV GL Energy • Empire State Realty Trust HQ • Event Network, LLC. • Forest City Realty Trust, Inc. • Harvard Pilgrim Health Care • Hines (East & Midwest Regions) • HKS, Architects • HNTB Corporation • JCDecaux • JLL • JPMorgan Chase • Kilroy Realty Corporation • LaSalle Investment Management • Legrand NA • LinkedIn • MG2 Corporation • Morgan Stanley • Related Companies • Robert A.M. Stern Architects • Rocky Mountain Institute • Salesforce • Samsung Electronics America • Satori Energy • Servidyne, LLC • Shorenstein • Skanska USA • TowerPinkster • USAA Real Estate • Ventas, Inc. • Verizon • Vornado Realty Trust • Wells Fargo • Zeal Optics
Tenant interface embedded within Portfolio Manager. Sample Property Sample Tenant Space Building Information added, followed by tenant space on a suite by suite basis.
Sample Tenant Space Sample Tenant Space Adding suite characteristics. Adding equipment information. Used for both energy estimate and equipment requirements
Sample Tenant Space Sample Tenant Space Adding lighting inventory Need to know fixtures, wattage, and controls Summary page details individual suite results. Option to apply for recognition
All suites listed in table for tenant space “home page” Option to apply appears once all criteria are satisfied Sample Tenant Space Sample Tenant Space Application can be generated. Licensed Professional (PE or RA) needs to perform site visit and sign off
Tenant Energy Optimization Program (TEOP) Marta Schantz, Urban Land Institute (ULI) Greenprint
ULI Greenprint: “Reducing Carbon, Building Value” Founded in 2009 Worldwide alliance of leading real estate owners and financial institutions committed to improving the environmental performance of buildings Member-driven initiative with the goal of reducing greenhouse gas emissions by 50% by 2030 Includes ~30 companies representing 8,000 properties totaling 164 million square meters across 28 countries
Annual Tenant Expenses ($/Square Foot) $3 $30 $300
Tenant Efficiency Programs in the Market Tenant Energy Optimization Program Green Lease Leaders ENERGY STAR for Tenant Spaces LEED ID+C & WELL Standards FitwelCertification Landlord-Tenant Energy Partnership
Tenant Energy Optimization Program (TEOP) • Free and open program • A returns-driven, 10-step process to embed energy efficiency decisions into tenant space design and construction • Piloted in 10 tenant fit-outs, documented in case studies • Energy savings of 30 – 50% • Payback period of 3 – 5 years • Average IRR of 25%
What is a Green Lease? Reduce energy use: from 11-22% Reduce utility bills: up to $0.51 / ft2
Example Green Lease Clauses/Provisions “Landlord and tenant shall provide a point of contact to discuss issues related to sustainability and energy. Issues include, but not limited to retrofit projects, billing issues, energy efficiency upgrades, and data access.” “Any and all Tenant Improvement Work and/or Alterations will be performed in accordance with Landlord sustainability practices that the Tenant has accepted as part of the lease agreement, namely the leased space fit-out must meet Environmental Protection Agency’s ENERGY STAR Tenant Space criteria.” Minimum Efficiency Fit-Out Sustainability POCs
Green Lease Leader Credits 1. Track tenant space energy use 2. Track tenant space water use 3. Request whole-building ENERGY STAR score from landlord annually 4. Ensure transaction management team receives energy training 5. Implement tenant energy management best practices 6. Purchase on-site renewables if offered by landlord and competitively priced 7. Accept cost recovery for efficiency upgrades benefitting tenant 8. Include requests for energy information in Site Selection Questionnaire 9. Demonstrate innovation in leasing
TEOP Helps Prepare for DOE “Green Lease Leader” and EPA “Tenant Star” Recognition
The Tenant’s Perspective Eric Tilden, Cushman & Wakefield
GLOBAL OCCUPIER SERVICES Strategic consulting Portfolio administration Transaction management Project and development services Integrated facilities management CAPITAL MARKETS Investment sales Equity, debt, and structured finance Corporate finance and investment banking VALUATION & ADVISORY Appraisal management Diligence advisory Dispute analysis and litigation support Financial reporting Property tax services Valuation/Portfolio valuation PROJECT & DEVELOPMENT SERVICES Program, project, and construction management Development services and master planning advisory Procurement and bid management Schedule and budget management Cost consultancy and value engineering Space and occupancy planning Sustainability Workplace consultancy INVESTMENT & ASSET MANAGEMENT Segregated portfolio management Asset management Fund creation and management Indirect investing Fund investment strategy TENANT REPRESENTATION Strategic consulting Occupancy workplace strategy Acquisitions, dispositions, and build-to-suits Market, demographic, and labor analysis Lease restructuring; subleasing services Lease auditing AGENCY LEASING Strategic asset analysis Comprehensive property positioning Broker relationship campaigns Prospective tenant analysis and canvassing programs Letter of intent and lease negotiation Regular client reporting Coordination of additional real estate services ASSET SERVICES Engineering and maintenance Accounting and financial reporting Contract and vendor maintenance Lease compliance and administration Property management Construction management Strategic account management Sustainability FACILITY SERVICES Janitorial Maintenance Critical environments Landscaping Office services
DO IT DURING FITOUT PRE-DEVELOPMENT DEVELOPMENT Site/Space Planning Goal Setting Concept Design Information Accessibility OCCUPANCY Final Design Coordination Construction Dashboard Development Operations and Reporting
DC FITOUT COST BREAKDOWN 66% 58% 52% 20% 18% 18% 15% 10% 9% 16% 10% 8% FURNITURE FIT OUT SOFT COSTS A/V, IT MOVE SOFT COSTS FIT OUT FURNITURE A/V, IT MOVE $95.12 $36.75 $33.51 $18.75 $12.54 $23.32 $76.58 $20.74 A/V, IT MOVE FURNITURE SOFT COSTS FIT OUT $14.76 $9.17 $7.20 $59.97 LOW MEDIUM HIGH
REAL-TIME TENANT METERING “selected submetering solution easy to deploy”