Few things in the American economy have undergone such drastic changes over the past few decades as the concept of the office workplace. Looking back at the times depicted on “Mad Men”, when men in suits smoked and drank in their well-appointed closed-door offices from 9 to 5, is like studying ancient history. Technology has transformed the concept of the “office” to the point where someone using free Wi-Fi at their local Starbucks has the same tools at their disposal as someone at a desk in a high-rise office building. In fact, Gallup reports that 43% of American workers spend at least some of their time working outside of a traditional office environment.
But despite this tectonic shift in the nature of the workplace, office buildings still comprise a significant portion of commercial sector structures. According to the American Council for an Energy Efficient Economy, office buildings account for 17% of all commercial buildings in the U.S. and consume 17% of all the energy used by that sector. That number is even more pronounced in California, where the independent organization Next 10 estimates that the electricity used by commercial office buildings represents 37% of the state’s total electric consumption. While this data shows the size and scope of the commercial office market, it’s alarming to note that 30% of the energy consumed by the average commercial building is wasted.
In a typical large office building, energy represents about 19% of total operating costs, with lighting, heating and cooling accounting for almost 70% of that energy use. Clearly, cutting energy consumption through investments in energy efficiency is a smart strategy for owners and managers of office buildings looking to increase profit margins by reducing operating costs. The good news is that the importance of energy efficiency is already recognized by most property managers. A recent survey by the Institute of Real Estate Management showed that nearly 80% of the property managers questioned stated that energy management is either “Important” or “Very Important”. And while 88% of that group cited “controlling expenses” as their primary reason for focusing on energy efficiency, about 47% mentioned “tenant demand and retention” as a secondary reason. This recognition that the benefits of energy efficiency go beyond simply cutting utility bills can lead to the more widespread implementation of energy saving measures.
With heating, cooling and lighting representing such a dominant share of energy use, it stands to reason that property managers should prioritize those areas in developing an energy efficiency strategy. A good place to start is with an automated energy management system that monitors and controls temperature and lighting levels. An automated control system will constantly monitor temperature and airflow levels throughout the building and automatically adjust the operation of blowers, condensers, compressors and fans to ensure maximum efficiency. Automated systems can also perform diagnostics that alert the owner or manager to parts of the heating and cooling system that may need maintenance or replacement. These alerts can prevent system breakdowns before they occur. Energy management functions can be incorporated into a more all-encompassing building control system which also monitors lighting, security, fire protection and other building operations.
If an automated energy management system is too costly or can’t be easily adapted into a building’s operations, there are lower cost alternatives. For example, programmable thermostats can be set to dial down heating and air conditioning during hours when offices aren’t occupied. Similarly, lighting sensors can be installed in storage rooms, restrooms, break areas and individual offices to automatically turn lights off when no motion is detected in those spaces.
Speaking of lighting, upgrading to LEDs is a cost-effective way to instantly reduce electric bills. LEDs use about 75% less electricity than incandescent bulbs and about 30% less than fluorescents. The other economic advantage of LEDs is their long life. LEDs need to be replaced much less often than other forms of lighting, significantly reducing capital costs and maintenance expenses. LEDs can provide light for 25,000 hours or more, compared to an incandescent bulb’s 1,000-hour lifespan or a fluorescent fixture’s 10,000 hours.
Energy efficiency upgrades offer benefits beyond cost savings. Better lighting quality and temperature control can improve employee health and productivity. In fact, a study by the California Energy Commission showed that call center workers and other office employees at the Sacramento Municipal Utility District (which knows a thing or two about energy) had productivity gains of between 2% and 5% with improvements in illumination, ventilation and temperature levels. Comfortable lighting and temperature levels also lead to fewer tenant complaints to management companies and result in higher tenant retention levels. These factors translate into higher profits for management companies, which save on labor costs for maintenance in response to tenant complaints and save on costs associated with attracting new tenants.
The value of buildings with improved energy efficiency also increases. The U.S. Department of Energy’s Better Buildings Challenge reports that Los Angeles area tenants were willing to pay about 25% more per square foot to rent space in an Energy Star certified building and about 35% more to rent in a LEED certified building. That advantage carries over to the value of the buildings themselves, with Los Angeles area Energy Star and LEED certified buildings boasting an average selling price of about 35% over non-certified buildings.
As with so many environmental issues, California has been in the forefront of making the commercial office segment more energy efficient. Tech companies are leading the way in procuring renewable energy for their operations and cutting energy consumption in their buildings. More than 350 companies have joined together in the Silicon Valley Working Group — whose membership ranges from small start-ups to brand-name technology firms – to advocate for issues that include environmentally-responsible energy policies.
One of the technology firms leading by example is Jupiter Networks, which has been working for more than a decade to improve the energy efficiency at its Sunnyvale headquarters and has now incorporated state-of-the-art energy technology in its new corporate campus. San Jose-based Adobe Systems is another firm that has implemented numerous energy efficiency projects over the years, allowing their benefits to build on one another. Most of those projects had paybacks of less than four years, with an overall average simple payback of less than a year and a half.
Even though the 21st century workplace can take many forms, office buildings still comprise a significant amount of the space in which Americans earn a living. By upgrading those buildings with energy efficiency improvements, owners and managers can reduce their operating expenses, improve tenant satisfaction, increase employee productivity and boost the value of their properties in the rental and sales markets. It’s an investment that pays off quickly…and in many ways.