Energy consumption is a cornerstone of the operating cost for commercial real estate assets. Monitoring and managing these consumption patterns can result in significant savings, which have the potential to impact a company’s bottom line and contribute to the broader sustainability goals of our society.
This article examines the importance of tracking energy usage, and explores tools like ENERGY STAR Portfolio Manager, as well as a few important green certifications that can help add value to your sustainability efforts, such as ENERGY STAR and ENERGY STAR NextGen.
According to the U.S. Department of Energy, commercial buildings over 500,000 square feet spent an average of 1.5 million dollars on energy expenditure and spent an average of $1.46 per square foot in 2018. By tracking energy usage, CRE professionals can identify inefficiencies and address them, saving costs in the process. Additionally, tracking energy usage can also contribute to the property’s value. Energy-efficient buildings typically command higher rental rates and have better occupancy rates than their less efficient counterparts. Sustainable buildings are also increasingly preferred by investors, enhancing their market value.
Finally, energy efficiency is critical to corporate social responsibility initiatives and sustainability goals from large tenants like Google, Meta, and Microsoft, among many others. As society becomes increasingly conscious of the environmental impact of businesses, companies that track and reduce their energy usage can demonstrate their commitment to sustainability, which can enhance their brand image and stakeholder relations.
To help CRE professionals track and manage their energy usage, the U.S. Environmental Protection Agency (EPA) offers the ENERGY STAR Portfolio Manager. This tool is a free, online interface that allows users to measure and track, share, and verify energy usage across all their properties. Portfolio Manager helps in identifying underperforming properties, setting investment priorities, and verifying efficiency improvements.
Beyond updating and maintaining Portfolio Manager, ENERGY STAR also offers certifications to recognize buildings that achieve superior energy performance. To earn an ENERGY STAR certification, a property must score a 75 or higher on EPA’s 1-100 ENERGY STAR score in Portfolio Manager, showing that the property performs in the top 25-percent of similar buildings nationwide. This score is calculated using the Commercial Building Energy Consumption Survey (CBECS), and the US Department of Energy’s Energy Information Administration (EIA) completed their release of the 2018 CBECS report in April this year.
In addition to the traditional ENERGY STAR Certification, EPA has recently introduced ENERGY STAR NextGen, a new certification program set to go live in 2024. ENERGY STAR NextGen was developed to help achieve net-zero emissions across the American economy by 2050 through decarbonization efforts. ENERGY STAR NextGen is focused on three categories, efficiency, renewable energy use, and electrification. Each category features its own set of requirements, and the program focuses on a reduction of greenhouse gas emissions. You can learn more about the upcoming ENERGY STAR NextGen program from CRE Insight Journal or from ENERGY STAR.
Leadership in Energy and Environmental Design (LEED) is another popular green certification administered by the U.S. Green Building Council (USGBC). LEED certifications recognize buildings that are designed, constructed, maintained, and operated for improved environmental and human health performance. This is a globally recognized certification, and the program provides frameworks and certifications for all property types and building phases.
LEED certifications focuse on several key areas, including sustainable sites, water efficiency, energy and atmosphere, materials and resources, indoor environmental quality, and innovation in design. LEED is the most widely used green certification in the world and has proven to be a mainstay of CRE, like ENERGY STAR, LEED certifications can enhance a property’s marketability and value.
Another notable certification is the Green Building Initiative’s (GBI) Green Globes, a nationally recognized green rating assessment, guidance, and certification program. Green Globes is unique in that it tackles three separate areas of certification, environmental sustainability, health & wellness, and resilience across all property types in CRE.
This program can also be customized to address building types, location, budget, and even occupancy needs. Additionally, Green Globes is built on codes and guidance documents from the American Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE), the International Codes Council (ICC), and the International Association of Plumbing & Mechanical Officials (IAPMO), among others. Green Globes can be used to certify new construction as it is being built, or benchmark existing properties through their easy-to-use program platform.
Monitoring energy usage in CRE is a critical part of an energy efficiency plan. By monitoring your energy usage, you will be able to identify inefficiencies and track the implementation of improvements. Energy tracking software and programs provide key insights in understanding the energy performance of a property, enabling data backed decisions on retrofits and sustainability program implementations in CRE. Energy tracking functions as both a cost-saving mechanism and a value-addition tool when used effectively.
Green certifications provide a comprehensive roadmap for sustainability in CRE. They outline industry-accepted best practices and encourage companies to continually improve their environmental performance. By meeting the criteria for certifications like ENERGY STAR, LEED, or Green Globes, CRE professionals can ensure their buildings meet recognized standards for environmental efficiency and sustainability.
These certifications serve as proof of a property’s commitment to sustainability, which can be particularly attractive to environmentally conscious tenants and investors. They also play a crucial role in demonstrating a company’s commitment to environmental responsibility, potentially enhancing its corporate reputation and public image.
The incorporation of energy tracking and green certifications in CRE strategy is a clear win-win. Not only does it allow businesses to enjoy cost savings and add value to their properties, but it also allows them to contribute to broader sustainability goals. As we continue to navigate the complexities of the modern environmental landscape, these practices are likely to become increasingly vital in ensuring the long-term success and sustainability of the CRE industry.
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