Viewpoints

Energy competitions and rankings could equal 7-figure energy savings

Posted on May 3, 2019 in Viewpoints by Zoe Hughes

Energy challenges with a published ranking of performance could help drive significant energy savings at assets, members at the NAREIM Sustainability meeting heard this week.

Sharing best practices on ESG strategies, members heard how gamification had helped one firm save $3 million in energy bills over three years. The challenges were judged on simple utility bill data, with the best performing property managers giving dinner with the executive team, trophy, firm-wide recognition as being the top performer for one year. Property managers were both internal to the company and third-party property managers.

The key was frequent publication of the results, the meeting heard.

Other best practices included using catastrophe scoring – the metrics of earthquakes, weather, flood and terrorism – to assign a value to an asset, and help understand potential adjustments in insurance premium pricing.


 

Is the net wave of investor reporting asset-level energy consumption?

That was a question posed during the NAREIM Sustainability meeting held in Chicago this week, which heard investor perspectives on ESG policies and investments.

As investors use benchmarks such as GRESB and Energy Star, investors asked whether asset-level data would be part of enhanced LP reporting in the future – as a means of tracking asset-level changes and the performance of assets, and to use the data to support overarching LP sustainability and ESG strategies.

With 93 percent of real estate investment managers and institutional investors including ESG criteria in their investment decisions, the NAREIM Sustainability meeting heard that risk mitigation was an overriding factor driving ESG deals.

However, it’s not just investors that are driving the conversation – tenants are expected to become an increasingly important voice, not least as health and wellness becomes a larger part of the ESG strategy and as technology allows occupiers to test their own commercial real estate space for air quality and noise.


 

New energy cap mandates introduced in New York and Washington DC could result in fines for some property owners of six-figures per year, the NAREIM Sustainability meeting heard.

However discussions on the new regulations – which in NYC forces owners of buildings over 25,000-square-foot to limit carbon emissions from 2024 or face annual fines of $268 per metric ton of CO2 over the limit – saw members focus on the opportunities that could also be created from the rules.

The rules, which will result in the energy performance of buildings being more widely published, will help managers adopting more ESG and energy efficiency measures lease assets. One member also said the rules are also expected to push them away from triple net lease assets for certain property types, and towards full service leases. Others highlighted the adoption of solar arrays to properties.