3 ways monitoring building performance can help you innovate

 

While some property owners may look upon increasing building energy performance requirements as a burden, we think that early adaptation of your portfolio to these new regulations opens up opportunities to innovate within your platform.

As reported by The Real Estate Development Law Blog, Washington State’s SB 5854,  following the “lead” of USGBC’s Building Performance Initiative and California’s AB 1103, will (when passed) require the use of Energy Star Portfolio Manager as its benchmarking tool for calculation and reporting of building energy performance data to be provided to a prospective buyer, lessee or lender.

The promised benefit is more effective market transformation via reporting transparency on existing buildings. However, we also know about lots of frustration from owners, who find additional regulations for existing buildings to be burdensome.

But it doesn’t have to be that way.

In fact, early compliance with these new regulations might open up unique opportunities for property owners to get ahead of the pack in achieving competitive advantage for their firms.

How to create opportunities from compliance…

The September 2009 Harvard Business Review focuses on sustainability and innovation. In it, authors Nimudolu, Rangaswami and Prahalad lay out the typical phases companies go through to build a sustainability platform.  Interestingly, that process begins at the place where many portfolio owners are at now today – compliance with new regulation.

They argue that early adaptation of a property portfolio to comply with anticipated sustainability regulation opens up the potential for innovation in several ways:

1.    First mover advantage: First movers on compliance gain knowledge and time to experiment. Adopting emerging energy reporting compliance standards (whether binding or not) provides property owners critical time to develop solutions best suited to their portfolios and fosters genuine best practices.

2.    Lower overall costs of compliance: Conforming to the highest compliance standards allows for scale benefits across markets and better insulates diversified portfolios from changing legal regimes. Attempting to  create and manage different compliance approaches based on lowest local thresholds is costly and inefficient.

3.    Critical stakeholder development: Early adoption of the tougher building performance reporting standards sets the stage for better relationship building with city officials in the markets where the company operates. Property owners with building performance data in hand will become preferred partners of city officials because they are able to prove that they are the better partner than their competitors. This creates meaningful advantages in terms of future permitting and entitlement actions, as well as allowing those owners preferred status in helping the city adopt other emerging standards.

Embracing building energy reporting early across your portfolio can be a catalyst for innovation that spurs market leadership, enhancing asset value sooner and better than your competitors. Early adopters to emerging building performance measurement requirements will position their businesses to outpace the competition and secure deeper relationships with capital sources and policy makers.

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