Greening Tenant/Landlord Processes: Demonstrating Transformation in the Industry

In owner-occupied facilities, it is easy to justify the incorporation of high-performance building features because commonly recognized hard and soft benefits (cost savings, productivity gains and improved occupant health, etc.) are directly recovered by the investment entity. Developers or owners of multi-tenant office buildings and retail developments, on the other hand, encounter both perceived and real barriers that often prevent the inclusion of high-performance, climactic responsive features in new or retrofit projects. Good design, proper lease formulations, market education and intelligent operation will help overcome these barriers and allow the benefits of high-performance buildings to be realized and shared amongst various stakeholders. To demonstrate this process, strategies were analyzed for a multi-tenant building in Glenwood Springs, Colorado. The Alpine Professional Building (APB) is a three-story, 18,537 gross square foot building that was originally built in 1950 and was remodeled in 1981. The building has fifteen tenants, ranging from 143 SF of leased space to an entire floor. The HVAC systems are in need of upgrading and little has been done to the building beyond typical maintenance to keep systems in operation. This is a fairly typical scenario across the industry, which enables this analysis to be widely applicable and adaptable. Building walkthroughs, surveys, utility bill analysis and energy analysis concluded that an upgrade was needed consisting of the following package of measures: improved occupant control (thought tenant education and digital thermostats), upgrading the light fixtures in the common areas and tenant spaces, and replacing the boiler. This package has a payback period under nine years would enable the building to achieve the ENERGY STAR label and can be profitable for both tenants and the landlord. The financial analysis evaluated four different methods of financing the upgrades so that both the tenant and landlord would benefit financially from the upgrades. The financial method recommended is the ‘CAM Adjustment method’ in which the landlord would provide the initial capital for the upgrades and recover those costs (plus interest) through adjustments to the Common Area Maintenance (CAM) fees. This method would have minimal tenant disruption and enable the landlord to bridge costs and savings across tenants during turnover. This paper also compares the four financing mechanisms and demonstrates their industry applicability through commonly applied energy conservation measures.Copyright © 2010 by ASME