High-Performance Building Spaces
CMI has identified a uniquely effective angle on achieving scaled energy efficiency retrofit market: active engagement with Energy Service Companies (e.g., Johnson Controls), broker/managers (e.g., Jones Lang Lasalle), property owners (e.g., Malkin Holdings, Vornado) and core tenants as a critical driver of overall demand for commercial building retrofits. By timing the implementation of energy efficiency measures so that they coincide with a tenant space fit-out (during a move or lease renewal) they represent only marginal cost in the context of the overall project, thereby meaningfully shortening the financial payback. In parallel, CMI is encouraging tenants to demand a core building retrofit of the building owner at the same time, thereby further scaling up the market.
Goldman Sachs and The Rockefeller Foundation agreed to finance the project on a 3-year basis, starting in Feb 2011, subject to milestones and deliverables. The core of the initiative is the development of a replicable retrofit model that presents a compelling business case both to tenants and building owners. By launching, documenting and subsequent messaging of representative retrofit projects we will demonstrate the value that can be achieved by:
- tenants, from energy savings and increased productivity, as a result of high performance buildouts/ retrofits of their work spaces (and potentially of central building system improvements); and
- building owners, from increased tenant demand, increased asset value and energy savings, as a result of retrofitting their buildings' central systems and addressing the split incentive.
The Project team is targeting large commercial tenants (>100,000 sq. ft.), across various building types, who are looking to either move to a new leased space or renew an existing lease, and is encouraging these tenants to participate in the Project by incorporating advanced energy conservation measures (ECMs) and indoor environmental quality (IEQ) principles into the initial build-out of their spaces, or the retrofit of their existing spaces at lease renewal. The Project team will:
- Execute a number of demonstration build-outs/ retrofits, in most cases integrated with a high level LEED Commercial Interior certification, in order to develop a replicable and scalable model for the installation of highly efficient tenant improvements.
- Define a repeatable process to assist tenants in selecting an appropriate and cost effective set of ECMs and IEQ principles to include in the build-out or retrofit of their leased space.
- Apply and test the accuracy of various quantitative analytical tools to predict achievable energy savings from the buildouts/retrofits.
- Incorporate, where possible, energy aligned lease principles in lease negotiations to ensure owner's and tenant's respective interests in the ECM costs and benefits are properly aligned.
- Design and implement innovative financing models for the demonstration projects (e.g., energy services performance contracting, off-balance sheet models, credit enhancement, aggregation/warehousing and secondary market executions).
- Include advanced metering technology, and develop, implement and consistently apply best practices for the ongoing measurement and verification of energy savings produced by the ECMs, utilizing continuous commissioning technology (where appropriate) to ensure optimized savings.
- Develop methods to track human resources impacts resulting from incorporating superior IEQ principles (e.g., productivity gains, fewer sick days, increased employee retention).
- Produce case studies of the demonstration projects, including transparent and rigorous accounting of ECMs undertaken and return on investment, and any documentable productivity gains, which should present a compelling business case to major space users of the economic value achievable through high-performance buildouts.
- Implement a strategic communications and education strategy for broad dissemination of the case studies.
Potential Integrated Building Approach
We will aim to identify buildings which provide an opportunity to pursue an integrated building retrofit approach. The demonstration project for these buildings would include retrofits of both the central systems and one or more major tenant spaces, and would likely include external financing. An integrated building project could also integrate energy efficiency leases, through which the costs and benefits of the central system retrofits would be equitably allocated between the landlord and the tenants.
To date CMI has signed three high-profile tenants as project participants, and is engaged in advanced conversations with a number of others. We estimate the annual capacity to be approximately five tenant/building projects.
For more detail on the project, please visit our Clinton Global Initiative Commitment website.
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