Benchmarking Anchors Energy Efficiency Retrofit Finance…and Returns

 

For us, 2009 is already shaping up to be “The Year of Energy Efficiency Retrofits”. Constrained credit markets mean that growing organic cash flow within the existing building portfolio is a real estate investor’s top priority.

So we now spend more time with owners applying an integrated finance approach that structures the right deployment of capital to pay for retrofits while creating the best combination of environmental and economic returns.

Great green finance for existing buildings actually begins with a solid benchmarking process, in order to establish where the opportunities for energy, water and operational improvement exist within the portfolio. This is necessary since operating cost reductions can be a key source of repayment for retrofit costs.

Benchmark Like a Pro

So what critical areas you should be looking at when thinking about your company’s own benchmarking practices?  We have our own experience, and also want to share recent comments from Nick Stolatis, of industry pacesetter TIAA-CREF, that really bring the message home. Nick dispensed hard-won benchmarking wisdom at a forum we sponsored last fall, experience gained while benchmarking their 200 building, 44 million square foot existing office portfolio:

1. Tap the experts. The knowledge and guidance of benchmarking experts will help you avoid potential pitfalls. The first time that TIAA-CREF benchmarked their portfolio performance via the Energy Star Portfolio Manager tool, they realized that more than 50% of their properties were not being benchmarked correctly, if at all. This cost them valuable time and money. With the help of third party consultants, they re-launched their benchmarking efforts. The consulting team, which had developed the Portfolio Manager tool, helped TIAA-CREF establish reporting protocols and additional tools to identify under-performing assets. The re-launched effort resulted in 100% program implementation.
2. Benchmarking is forever. Your asset managers and property managers (and all of their staff) need to understand that benchmarking is an ongoing weekly (if not daily) activity. As a portfolio manager, you need to make sure that they have the right tools and knowledge to consistently and accurately track building performance data.
3. Training is crucial. All asset managers and property management staff need to have adequate training in performing benchmarking tasks. TIAA-CREF, with the help and guidance of their consultants, set up a complete training program for staff, featuring periodic webinar tutorials.
4. Establish expectations. In addition to adequate training, staff needs to understand that these activities are a requirement of their position, not an optional task.
5. Don’t overlook the low-hanging fruit. Benchmarking can take months, even years, to provide an accurate picture of your portfolio’s energy and water performance. In the meantime, there are a number of low-cost/no-cost measures that can be implemented across all property types. For TIAA-CREF, replacing any existing T-12 bulbs with T-8 (only high efficiency) or T-5 bulbs was an easy way to reduce energy use by 30% per bulb, at no additional cost.

Learn About Benchmarking and more from Energy Efficiency Retrofit Specialists

Finally, if you are working to retrofit your existing portfolio, you should attend the Financing Energy Efficiency Retrofits workshop at the upcoming Green Building Finance and Investment Forum – West. During this workshop, top industry leaders will be presenting the newest best practices on financing mechanisms, case studies of successful building retrofits, the nuts and bolts of LEED-EBOM certification and new regulatory initiatives that make sharing building energy information more transparent. Here is the link to the agenda and registration information.

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