Energy Efficiency in Commercial Real Estate

For over a decade, HR&A worked closely with the New York State Energy Research and Development Authority to design and manage some of the State’s most effective energy efficiency programs.

Reducing energy consumption in commercial buildings is vital to achieving New York State’s energy efficiency goals. In 1999, the nearly 600-million square feet of commercial office space in the State was responsible for 25 percent of its energy use and emissions. The Governor and former Mayor Bloomberg set goals of 15% electric efficiency savings by 2015, and 30% reduction in carbon emissions by 2030, respectively. Therefore, reducing energy consumption in commercial buildings is vital to achieving these goals.

From 2007-2012, HR&A worked closely with the New York State Energy Research and Development Authority (NYSERDA) to design and manage a marketing, outreach and technical assistance program, Commercial Real Estate Outreach (CREO), that led owners and managers through the diagnostic and financial planning work needed to identify a scope of improvements that would maximize both energy savings and return on investment.  As part of the program, HR&A developed a New York State-specific building benchmarking tool; a one-day walk-through energy audit; a lease analysis tool that evaluates how the costs and savings of potential measures will accrue to owners and tenants; and an action plan that summarizes the analyses, prioritizes recommended improvements, estimates costs and returns, and identifies applicable NYSERDA incentives. HR&A also assisted owners and managers with green leasing and marketing strategies and outreach to tenants. CREO proved to be one of the most effective energy efficiency programs advanced by the State.

In order to effectively identify outreach targets, HR&A produced and, following the Great Recession, updated a Market Analysis and Outreach Strategy for the state’s commercial office sector. The report evaluated the sector’s leading landlords, management companies, and their portfolios. The report explored four fundamental motivations for investing in energy efficiency: increased rents and/or decreased vacancy, decreased operating costs, enhanced green image, and compliance with impending governmental mandates. The report proposed a set of target landlords and tenants and suggested a marketing message for each.

We attribute our success to the fact that we provided dedicated Account Management for the 24 portfolios with whom we worked most intensively to facilitate uptake into NYSERDA’s core incentive programs. CREO was responsible for 227 NYSERDA program applications. In total, over 103 million square feet has been impacted by HR&A’s work, with $10 million in incentives disbursed and 13 million kWh saved.