Energy Star program topic of IREM "Energy Day" event

Real Estate Weekly, Oct 24, 2001 by Parke Chapman

The Institute of Real Estate Management (IREM) hosted "Energy Day" last week at the Williams Club. John Klein, president of the Environmental Consulting Services Corporation, discussed the EPA's Energy Star program during the morning session prior to a cocktail reception downstairs.

Energy Star is a rating system for buildings whereby energy performance is graded--any building that scores well is given an Energy Star plaque. These brass plaques are seen frequently on Class A office buildings. The Empire State Building has taken measures to reduce energy consumption, in hopes of acquiring an Energy Star Building Label.

Klein explained how the EPA "benchmarking" process takes a series of factors into account to get a score.

On average, utilities represent 30 percent of total office operating expenses for a multi-tenant office building. Reduced energy costs can lead to higher rents and occupancy.

"This is a great way to add value to a building while saving money," said Klein, a consultant to the EPA.

Preventing pollution is also part of the Energy Star program, and surprisingly this too can be profitable for owners.

Interested parties should send a letter to the EPA on company letterhead indicating that their building would like to be benchmarked. One prerequisite to enrollment is a commitment to improving the energy performance of a firm's real estate portfolio.

Klein even discussed the confusing nature of utilities billing--how meters are often wrong and hidden charges can inflate your monthly bills.

"There's no doubt that today energy efficiency has to be one of the highest priorities for the commercial real estate business. The Energy Star label symbolizes our deepest organizational commitment to making office buildings energy-efficient, financially viable and better places to work," said Douglas Durst, president of the Durst Organization.

With the coldest months of the year rapidly approaching, commercial owners have even more reason to think about energy issues. Heating a multi-tenant office building is not cheap.

Klein also discussed how to use "common sense" in reducing energy usage. On clear days when there is enough sunlight coming through an office's windows, turn off the lights. This is called "daylight harvesting," said Klein, mocking the trite expression for what he described as simply "turning off lights."

Much of Klein's advice was of the common-sense variety. He suggested that turning on all of the lights on the floor of a building was wasteful if only one person was working late.

"Lighting is a big deal," he said.

And Klein instructed owners to read their bills carefully, since meters are often wrong. He described two "cookie-cutter" buildings designed by the same person and located next to each other. For some reason their energy bills were always different.

"That's because of a faulty meter," he said.

Klein identified "energy abusing" owners as sitting on potential gold mines. Someone can come in and acquire these buildings and make them energy efficient, thereby cornering some profits by adding value.