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For Energy Efficiency, Better to Retrofit than Build New

Dec 5, 2017 8:52:00 AM

Competition in commercial real estate is high and projected to remain high. New-builds and renovations are attractive to tenants seeking more open floorplans, more daylight, more amenities and better energy efficiency. In fact, when tenants want to lower their energy costs, gain insight into their own energy consumption and improve indoor air quality in their space, they usually look to new-builds and renovated spaces soon after discovering that they have little control over such things in their current space.

However, retrofitting existing buildings with energy efficiency and other green upgrades is often the better choice, and it can help property managers attract tenants and fill a vacancy quicker.

That New, Energy-Efficient Building Might Not Be All That Green

A report called "The Greenest Building: Quantifying the Environmental Value of Building Reuse," showed without a doubt that it's greener to retrofit an old building than construct a new green building. Commissioned by Preservation Green Lab, a project of the National Trust for Historic Preservation, it was also supported by The Summit Foundation in partnership with Skanska Group, Cascadia Green Building Council, Green Building Services and Quantis International.

A major finding of the report was that, depending on geography in the U.S., it takes between 25 and 42 years for a new, energy-efficient commercial office building that is 30% more efficient than an average-performing existing building to overcome the negative climate change impacts related to the construction process. However, the report also found that it takes just 12 to 19 years for a warehouse-to-office conversion to overcome the negative impacts of the construction process.

Existing vs New Energy-Efficient Buildings

All the fabrication, shipping, construction and installation of new materials packs on climate change impacts that far outweigh those necessary to provide better air-sealing, insulation, water systems, ventilation systems and windows to existing buildings. Additionally, many existing buildings are in better, more central locations than where new green buildings must be built (often outside the central business district), which causes fewer auto exhaust emissions from commuters.

Energy-Efficiency Retrofits Offer Great ROI

Adding better thermal controls and water controls to existing buildings with good bones often provides for paybacks of less than five years and even fewer in many cases. Energy savings from better insulation, lighting and HVAC upgrades are often so significant that your ROI can be achieved in 3 years or fewer on each project.

Got vacancy? Vacancies offer you the opportunity to accomplish these projects without disturbing tenants. And, each of these retrofit projects provide selling points to prospective tenants who are looking for a greener office environment that can help to increase worker productivity while keeping operational costs down.

However, a wireless IoT-based building controls system can also be quickly installed with little disruption to current tenants, and completing an energy efficiency retrofit across an entire building at once will provide for greater economies of scale and better data to conduct a pilot and experience the full functionality of a building automation system.

How Will You Pay for a Retrofit?

It may be possible to use common area maintenance (CAM) funds for an energy-efficiency retrofit, or you might wait to first attract a prospective tenant and offer this type of retrofit as part of the tenant improvement package. If neither of these options are appealing, it may make sense to manage costs by retrofitting one vacant space or floor at a time. You may also be able to secure green building financial incentives from your city, county, state or utility provider. In most states, each of these agents has incentives to help their constituents become more energy efficient.

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