Sunday, October 3, 2010

REITs Embrace Energy Efficiency in Property Portfolios

Real estate investment trusts (REITs) are embracing the principles of energy efficiency in their property portfolios, principally as a way to boost their bottom line. With new construction activity severely depressed due to the poor commercial real estate market and difficult economic times, greater focus has been directed toward renovation of existing buildings. Such renovation often represents an opportunity to improve energy efficiency, improve net operating income and increase building value. Liberty Property Trust, for example, recently rolled out an energy monitoring network to 130 of its properties nationwide after a pilot test demonstrated significant wasted energy. Liberty has embraced sustainability and green building techniques for its portfolio of 750 buildings. Many other REITs are doing similarly, including Simon Property Group, AMB Property, Macerich, ProLogis, Hines REIT, Vornado Realty Trust, HCP, Wells Real Estate Investment Trust, among others. There appears to be little question today that having a green building can be particularly advantageous when there is tight competition for space. For those firms providing energy consulting services, REITs should definitely be on the business development radar screen!

2 comments:

The Sustainability Analyst said...

Hi Tony,

Great ideas!
I was at your EDR Workshop in Irvine where you mentioned that the energy study/assessment portion of the work would most likely be tied with the property condition assessment scope. If one doesn't do PCAs, how can one be involved (generally for those doing ESAs what else can you do)?

Hari

Tony said...

While the most likely venue for conducting BEPAs is in the property condition report (where it certainly would be more cost effective to conduct), it is possible that a Phase I consultant may also be asked by a client to conduct a BEPA (e.g., What is the building's energy consumption?). If a Phase I consultant wants to be able to provide this service, it would be my recommendation that the consultant take an ASHRAE Level 1 energy auditor course to get familiar with the energy use collection process. Once confident that you can conduct a BEPA, you can speak with your clients to determine their level of interest. Remember, where building energy use disclosure [by the seller] is required by law, the prospective purchaser may want to do his or her own due diligence - real estate is still "buyer beware."