Improving building energy efficiency at commercial real estate (CRE) properties continues to be a major focus for teams. From a cost to a tenant concern, CRE teams are keen to find better management and maintenance practices to boost their current energy efficiency practices.
Jerremy Spillman, Co-founder of Hank, HVAC Optimization Solution, and Brittany Asciolla, Sr. Product Marketing Manager, Sustainability, JLL Technologies, recently spoke on the webinar, “ROI of HVAC Optimization.” The two experts touched on energy efficiency and its impact on the following (and more):
- tenant satisfaction
- HVAC expense
- building operations software
Continue reading for their expert insights on the state of the commercial office along with real-time statistics and top priorities for improving building energy efficiency.
1. Top priority: Energy savings and expense reduction
As inflation remains unstable and the industry braces itself for a potential recession, a major challenge is finding a balance between cutting costs while maintaining energy efficiency standards.
“Right now, in pretty much anywhere across the portfolio of CRE, to really any industry, the big look is to energy efficiency and expense reduction, which really comes hand-in-hand as costs continue to rise,” said Spillman during the webinar.
“Data shows that more sustainable buildings attract higher quality tenants and allow for higher rents.” — Brittany Asciolla, JLL Technologies
His expert advice? “Look for a way to find reduction internally through energy and water efficiency. And then ask, ‘How can you attract people to your building?’”
Concurring with Spillman’s point, Asciolla said, “With HVAC optimization, you significantly reduce energy consumption and allow for increased air flow throughout the building.”
She said that means improved indoor air quality for tenants. It also leads to a reduction in carbon emissions, which has a positive environmental impact. And then for ownership, it translates to a significant reduction in energy costs.
“Plus, data shows that more sustainable buildings attract higher quality tenants and allow for higher rents,” Asciolla added.
Reducing costs and energy savings can be a major incentive for tenants to return to the office. How so? It opens the door for property teams to implement new, energy efficient practices that bring life back to buildings.
2. Top priority: Tenant comfort and satisfaction
To attract their employees back to the office, your tenants need to provide a workplace people want to come to every day. That means they’re looking to CRE owners and operators as partners to meet those goals. Simply put, the building must provide a better experience to woo workers away from the comforts of home.
“Once you have people in the building, how are you taking care of them? It is a very different place in the office sector than we’ve seen in the past. And being able to really focus on the tenant experience when they are in the building is key to retaining tenants,” said Spillman.
Research from Building Engines’ report, “The State of Commercial Real Estate Operations for 2023,” shows the top five priorities for tenant experience this year are:
- Tenant comfort issues (temperature-related)
- Upgrades to tenant amenities
- Faster responses to requests
- Enhanced health and safety protocols
- Better property management communication
Most notably on this list is priority No. 1, tenant comfort issues as it relates to building temperature. The biggest factor in this? HVAC.
“When you optimize HVAC systems, it allows for tighter control of the tenant set point, which will result in improved comfort for tenants and a reduction in the number of tenant comfort complaints for the on-site teams,” Asciolla said. “And happier tenants means they are more likely to renew their lease, which benefits ownership.”
3. Top priority: Reduce energy costs and HVAC energy consumption
Did you know HVAC operations account for 20% of overall CRE operating costs and 50% of total energy consumption for commercial buildings? The high cost of energy management in commercial offices can eat away at bottom lines.
“If energy costs are going up and actual operating income is going down, how do you make that work? How can you make sense of that when looking at the balance sheet of a building? And the number one culprit of that is HVAC,” Spillman said.
“The operating cost, preventive maintenance, standard maintenance, all these different things that go into HVAC, are probably the highest cost that you’re having to deal with on a day-to-day basis. And in addition to that, you have to look at the overall useful asset life of running this equipment,” he added.
“Where we see the biggest opportunity is HVAC optimization. Optimizing HVAC systems in commercial office buildings provides comfort, operational, and sustainability benefits for everyone from the tenants, to the on-site teams, to ownership and the environment,” Asciolla said.
A building that’s not sustainable can cost CRE teams even more. Property teams need to be keenly aware of the advantages to having energy efficient HVAC systems for commercial buildings. The best solution for this is utilizing technology built specifically for HVAC management in commercial buildings.
4. Top priority: Maximize existing building systems
It takes a lot for property teams to want to tap into new software solutions, learn new systems, or commit to another tech provider. Many want to utilize and make the most of the software they are currently using without taking on more costs.
Spillman said it best, “The focus of optimization is, ‘What can I improve without incurring additional capital costs?’”
Experts said CRE teams should keep the following in mind so they can get the most out of their existing building systems:
- Incur no additional capital costs
- Avoid paying for new versions of the same software
- Use a fault detection and analytics all-in-one platform
The best building system will provide you with enough data for you to know any issues before they occur, saving you time and money.
“The focus of optimization is, ‘What can I improve without incurring additional capital costs?’” — Jerremy Spillman, Hank
Spillman asked webinar attendees to consider the following, “How can I bring in data that already exists to tell me the health of my building, the health of my equipment, avoiding downtime in a building due to failed equipment that would directly be tied to sending tenants home?”
Ultimately, CRE building software can make or break your building operations. It also has the power to impact your tenant retention.
Improving building energy efficiency
In summary, the biggest takeaways for improving building energy efficiency include:
- Optimizing HVAC systems can help reduce energy expenses
- Tenant comfort and HVAC management are directly related to one another
- Improper HVAC management can negatively affect bottom lines
- Data from CRE software provides teams with the information they need to run better buildings
Learn more about what property teams can expect to see this year in the free report, “The State of Commercial Real Estate Building Operations for 2023.”