Sustainable development: property managers can reduce energy use & expenses through green practices.

THINK ABOUT THIS THE NEXT TIME YOU TURN ON A LIGHT: According to the Energy Information Administration's Annual Energy Review 2007, energy consumed by residential and commercial sectors accounted for about 39.5 percent of that year's total U.S. energy consumption. Reducing that figure won't be easy, but applying sustainability measures can make a difference.

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Just what is sustainability? The most widely quoted meaning internationally is the "Brundtland Definition" from the 1987 Report of the World Commission on Environment and Development: Meeting the needs of the present without compromising the ability of future generations to meet their own needs.

"Sustainability is absolutely not going away," said Nick Stolatis, CPM[R], director, strategic initiatives, TIAA-CREF Global Real Estate in New York City. "It's about running properties efficiently, a reduction of waste and the proper utilization of energy. We're cognizant of our obligation to clients to operate their investments in a responsible fashion."

SUSTAINABILITY DRIVERS

A desire to protect the planet drives many people to join activist groups focused on green initiatives. But you don't have to be a full-time environmentalist to see merits in sustainability. Property managers have taken up sustainability measures because they can save money and attract tenants.

"With green practices we can reduce the environmental footprint of a property substantially while also improving its value and providing a competitive advantage," said Doug Gatlin, vice president of market development for the U.S. Green Building Council (USGBC) in Washington, D.C.

Although it's true that large scale green efforts such as building wind farms and harnessing solar energy can cost millions, one of the main drivers behind property managers' sustainability efforts can be cutting expenses.

Several years of experience have taught Craig Sheehy, CPM, LEED-AP, president and CEO of Envision Realty Services in Folsom, Calif., the truth of that statement. In 2003 he began incorporating green measures into the management of a 1-million-square-foot building.

"We changed the way we were operating, but we didn't have to step out of our comfort zone to do it," Sheehy said. "We saved water and energy, and eliminated the bad chemicals we were bringing into the building, and it resulted in huge savings."

Rising energy prices and dwindling water supplies were two main drivers for Steve Ring, CPM, LEED-AP, director of client solutions at Cushman & Wakefield, AMO[R], in San Francisco. But over the last couple of years Ring also has been driven by the increasing likelihood that potential tenants will be looking for spaces that meet the requirements of their companies' published social responsibility mission statements.

"In the private sector, large corporations have stated to stockholders that they follow sustainability practices and part of that is that they will only occupy buildings that have those in place," Ring said. "They are looking for recycling programs, material and resource purchasing programs, indoor air quality programs, and the biggie--energy conservation."

Even tenants who are not constrained by mission statements may be attracted to sustainability measures, Sheehy said. Another key driver for his company is the strong perception that sustainability measures in this slow economy may give properties a leg up on attracting and retaining tenants.

"In the future, people will be more and more interested in places that are healthy, give them higher motivation rates and a reason to want to come to work, and have a lesser ecological footprint," said Volker Hartkopf, director of the Center for Building Performance and Diagnostics at Carnegie Mellon University in Pittsburgh, where his research looks at how sustainability measures affect employee productivity.

For residential property managers who have been hit by rising vacancy rates, and ever greater move-in concessions, it may be difficult to justify upgrades that increase sustainability unless they provide a good payback within five years, said Greg Martin, CPM Emeritus, vice president and head of rental residential at Draper & Kramer, Inc., AMO, in Chicago. He recommends that property managers who are planning substantial investments first do careful return analyses.

"Following the green path is sexy, so there is some benefit to that," Martin said. "There are still people out there who are very concerned about their environment and might pay a higher rent for something truly sustainable. But there will be fewer in these times."

In a broader context, improving the American economy itself might be seen as a driver for sustainability measures. In a healthy economy, building repair jobs will not be outsourced to foreign countries, Hartkopf said. Instead, local workers will be hired for the jobs.

TRIAL & EFFORT

At Cummings Properties, headquartered in Woburn, Mass., traditions that began as frugality when the company was founded in 1970, fit perfectly with today's concerns about sustainability.

"We attribute our interest in sustainability to the DNA of the company," said John Wiseman, vice president of operations. "Our founder, Bill Cummings, paid attention to thriftiness and followed the old New England saying: Use it up [and] wear it out, before you throw it away."

Cummings has always embraced the idea of recycling materials. The company negotiates energy contracts, replaces pumps that cannot be repaired with more energy-efficient models and standardizes building components to allow for interchangeability.

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On a larger scale, Cummings completed the construction of Trade Center 128--550,000 square feet of office space in Woburn, Mass.--in 2008 and installed a photovoltaic solar array atop its parking structure. The array itself cost about $1 million; upgrades to the roof supporting it cost another $1 million. When a 30 percent federal tax credit and Massachusetts technology incentives are applied, the company anticipates a three-year payback, said Jim Trudeau, design manager.

Sheehy began his sustainability efforts by brainstorming potential no-cost/low-cost measures with his building's engineering and maintenance staff. Savings resulted from attention to three basics: water use, energy use and waste disposal.

To conserve water, for example, Envision Realty placed rain sensors in the ground that measure whether or not irrigation is needed. The company switched to waterless urinals and attached low-flow faucet aerators in sinks. A two-dollar aerator can save hundreds of thousands of gallons of water, Sheehy said.

Envision also replaced every 32-watt light bulb that burned out with a 28-watt bulb, and installed motion sensors in stairwells that previously had been lighted 24/7. In cold weather, thermostat temperatures were dropped two degrees, and in warm weather, they were raised two degrees.

"You have to try things out," Sheehy said. "People can't recognize a two-degree temperature difference as long as there is air flowing. And if the tenants don't like it, they'll call."

In a continuing effort to cut energy usage--and by extension save money--Sheehy examined janitorial services. Nighttime cleaning meant lighting as many as 13 floors simultaneously. Switching the majority of janitorial tasks to daytime hours reduced energy costs by about $100,000 per year.

Further examination of building hours can lead to additional savings. Some building leases require services on Saturday and Sunday, but buildings are often empty on week-ends, making ventilation and lighting unnecessary. Considering hours of operation was an important step for Stolatis. He discovered buildings with Saturday hours, but no Saturday activity. He checked with tenants and was able to leave some buildings turned off over entire weekends. He calculates a resulting 3- to 5- percent savings on energy operations.

Stolatis participated in the Energy Star Change a Light, Change the World Campaign 2007-2008, passing out 255,000 compact fluorescent bulbs to tenants and residents. Put into use, these could save 117-million kilowatt hours, the equivalent of taking 16,700 cars off the road for a year.

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"Too many people today look immediately for a capital project when they are looking for ways to save energy," Stolatis said. "With small changes, the savings may not amount to more than a couple of percentage points, but in aggregate you can get savings without spending any money in the normal course of business."

On the residential side, sensors placed around buildings and connected to microprocessors can regulate heating and cooling. That way half the residents won't be opening their windows to cool off while the other half is shivering, Martin said.

Once sustainability measures are in place, education comes into play. Martin educates employees about using cleaning products that are environmentally friendly. He also reminds them that using more isn't always better. Martin has put together an awareness program to teach residents about recycling.

Recycling is one of the more pressing sustainability issues to address, Wiseman said. Once a commitment is made to set aside areas for recycling, managers must reinforce its value, educate tenants and send memos reminding them to recycle.

Ring uses meetings over morning coffee, and his company newsletter to educate tenants. He would like to take these efforts a step further by setting up building kiosks providing questions and answers about sustainability measures.

"Recycling is a group effort between landlords and tenants," Ring said. "It's the tenants' habits that really make recycling work or not work. They don't have an organization, so you have to reach each one as best you can."