Environmental improvements will bring down energy costs, rendering properties more appealing to tenants.
Landlords of retrofitted buildings will find it easier to attract and keep tenants. So says Heath Blount of Brightworks, a US sustainability consultancy firm with a particular interest in the built environment.
Lower energy bills are one reason, but not the only one. There’s reputation, too: “[Commercial] tenants are becoming much more interested in their impact”, says Blount. Having a space that consumes less is a natural fit with a high-profile stance on sustainability, and if you’ve made public boasts about its benefits, you’re likely to hang around.
Landlords who might once have balked at such renovations are now beginning to reconsider. The economic downturn prevented some major refurbishments from going ahead, as building owners grew reluctant to spend the necessary funds. But that’s changing, says Peter Belisle, President of the Energy and Sustainability Services Group at Jones Lang LeSalle, which carried out the retrofit for the Empire State Building. Why? “Because they [now] realise that the energy savings can be significant enough [to justify the cost].”
Blount agrees, pointing out that while finance for new construction has declined in the last few years, investment on existing buildings has actually grown. And it’s a trend likely to be sustained, says David Adams, a Director at Willmott Dixon Re-Thinking. He argues that a combination of legislation and rising energy costs will make retrofit increasingly appealing to both landlords and tenants.
One tenant’s retrofit can even bring down energy costs for others in the building
One tenant’s retrofit can even bring down energy costs for others in the building, a domino effect that landlords would clearly find attractive. Cosmetics company Avon pushed for energy-saving measures at its recently opened headquarters at 777 Third Avenue in Manhattan, installing individually controlled vents on its heating and cooling ducts. These vents have a knock-on effect for the whole building’s temperature regulation system, as Glenn Dibiase of building owner Sage Realty explains. “When [the vents] close, they put air pressure back into the system. That pressure causes the fans to slow down and use less electricity. Avon is not the only tenant on that system, so the efficiency of the vents and the fans working in tandem is passed on.” Louise Matthews, Vice President, Global Real Estate for Avon, described Sage as “extremely receptive” to such measures: it is even looking for ways to retrofit its other properties.
Energy efficiency legislation, from California’s Title 24 to the UK’s 2011 Energy Act, is set to prompt more co-operation between landlords and tenants in the future. But there’s no need to wait for it, says Adams: “There is the opportunity for landlords and tenants to work together and both gain.”
John Eischeid is a freelance writer based in New York.