Examining Facility Management: Operations

Oct. 29, 2008
As we tread through economic uncertainty, re-evaluate our underwriting standards and investment criteria, and scrutinize every line-item expense, going green is making the business case to enhance the economic bottom line, increase marketability, and mitigate risk.

As we tread through economic uncertainty, re-evaluate our underwriting standards and investment criteria, and scrutinize every line-item expense, going green is making the business case to enhance the economic bottom line, increase marketability, and mitigate risk. This is the final article in a series of three on how to incorporate sustainability into real estate decisions in three primary categories: location, physical attributes, and operational practices.

Never has it been so important to make sustainable choices as we operate our real estate. Fundamentally, sustainability is about becoming more efficient with the use of energy, water, and natural resources. It’s about reducing cost by eliminating waste, conserving natural resources, and leveraging buying power to create a robust and sustainable secondary market for waste streams. It’s about mitigating risk by managing toxins – both inside and outside the building – and positioning real estate for a carbon-constrained market. It’s about improving the indoor environmental quality of buildings to enhance productivity and occupant well-being, whether in schools, hospitals, retail stores, or offices.

Clearly, we can’t rely on the economy to carry us anymore – nor can we use government regulations as our guide. It’s time for us to take full responsibility, both individually and collectively. To begin, we must make life-cycle choices. In other words, we must consider the full range of environmental damage and/or effect caused by our choices, from acquisition through disposition.

The Low-Hanging Fruit
As discussed in It’s a Bigger Deal than You Think, Part 2: Physical Attributes, due-diligence efforts need to be expanded to include the energy-efficiency rating of an asset before we make a deal. Equally important is knowing the energy efficiency of the asset we currently own, service, manage, or lease. Once we know the ENERGY STAR® score of the asset or its EUI (Energy Utilization Index – annual energy consumption in British thermal units/total conditioned square feet), we must then set forth a plan to improve the building’s energy efficiency. At a time when we need to tighten our belts without sacrificing tenant satisfaction or market share, identify the energy hogs that cut into your bottom line; in already-efficient buildings, increase cash flow and marketability via even greater energy efficiency.

Most LEED-EB O&M case studies conclude that the energy savings resulting from the re-commissioning process required by LEED not only pay for the cost to green and certify the asset, but continue to save money (pay dividends) in the utility line item. The payback is often in the first year, but may take up to 3 to 5 years, depending on the asset; however, it’s all gravy beyond the payback, and it’s good risk management as we move toward global de-carbonization.

Your best investment is having an independent third party re-commission the asset or conduct an ASHRAE Level II Energy Audit and, from that, set forth a plan to: A) implement no- and low-cost operational adjustments (this typically brings energy savings of anywhere from 7 percent to 28 percent, according to BOMA Intl.); B) develop an energy-awareness program for building occupants and educate, set goals, and measure the savings (BOMA Intl. reports that occupant behavior may result in energy savings of another 3.5 percent to 15.2 percent); and C) implement capital improvements considering payback, budget, and return constraints.

Water – We Can’t Live without It
The next step is to measure the building’s potable water consumption for each of its uses (plumbing, irrigation, cooling towers, food service, and other uses). This, too, can be tracked in EPA’s ENERGY STAR Portfolio Manager. Once measured, develop strategies to reduce consumption. Create 1- to 3-year plans to change out fixtures (the porcelain and the mechanisms) to high efficiency (1.28-gpf water closets and pint or waterless urinals). Payback is usually achieved within 3 years. Changing out seasonal beds with native and adaptive plants will not only bring butterflies, but will also bring immediate savings. Identify landscaped areas that can be left to nature to return to their original habitat, and reduce landscape maintenance and irrigation costs. If you’re replacing seasonal turf, try native grasses that take little or no irrigation, mowing, or chemicals. Capture rainwater from the roof or parking structures, and/or cooling tower condensate, and reuse it for irrigation. Some buildings are already required to capture runoff and treat it before sending it to the storm sewer – for immediate savings, use this water for irrigation.

Cities and states have varying rules about reusing rainwater, as well as a wide array of incentives for installing high-efficiency toilets and urinals, and for rain harvesting. Additionally, many water utilities will provide sewer charge credits or deducts for metering irrigation and cooling towers. Thoroughly investigate potential incentives, rebates, and regulations.

Waste – Don’t Underestimate Your Buying Power
In its annual commercial building surveys, Atlanta-based Kingsley Associates began asking tenants about the importance of green practices. In 2007, 53 percent of tenants said that green operational practices were either “important” or “very important” to them. That percentage rose to 58 percent in 2008. When asked which green practice(s) their company was most interested in seeing implemented at their buildings, 72 percent of respondents in 2007, and 76 percent in 2008, said that recycling was most important, followed by energy conservation, at 56 percent.

Start thinking about waste disposal at acquisition. When negotiating purchasing contracts, address end-of-life recycling. By managing what comes into the building, and negotiating purchasing contracts that include disposal, you create opportunities to reduce costs and the building’s environmental footprint, and can use your buying power to send a message to manufacturers, as well as drive the value of the building’s waste.

Recycling consumables will reduce waste-disposal fees and generate revenue. Buy paper made with post-consumer recycled content. Market demand for post-consumer recycled content paper drives up the value of white paper waste. In essence, by buying recycled content, you’re increasing the value of your waste in the secondary market.

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