VANCOUVER, B.C.—“There is a good opportunity for energy efficiency, but taking the idea to actuality is something different.” So said James Gray-Donald, vice president of sustainability at Bentall Kennedy in a panel Thursday morning.
Gray-Donald served on a panel at ULI's Spring conference, titled “Investing in Energy Efficiency: Unlocking Value for Real Estate Owners.” He noted numerous papers have been written on the challenges of making a building energy efficient—challenges such as lack of information, underwriting deal size, etc. But recognizing the challenges and addressing them is key to unlocking value to owners.
“There are many causes of inaction,” he explained. “Failure to provide a compelling business case is one of the obstacles that have been indentified in blocking building retrofits.”
In your own portfolio, he said, ensuring executive awareness is important. And creating enough of a belief to at least measure and benchmark energy efficiency value is the first step, he explained. The third step, is setting portfolio targets for clarity. “Setting a goal means you do more.” You can't stuff a goal at executives, he said. “You have to prepare them by declaring a reasonable target.”
The fourth step is linking compensation to performance, Gray-Donald explained. “You need solid data and the incentives need to be meaningful.” But sometimes data doesn't tell the whole story, he said. Aligning lease clauses to enable retrofits is a fifth step, he added. The sixth step is to include impacts on asset values.
The seventh step, according to Gray-Donald, is to take a portfolio approach. “Taking a portfolio approach will maximize returns on effort and cost.” Energy efficiency retrofits have shown attractive returns on investments, even for short-term investors, he added.
“Hopefully more real estate companies across the board will adopt those seven steps,” said moderator Helen Gurfel, executive director of the ULI Greenprint Center for Building Performance.
Kate Brown, group director, sustainability, Grosvenor Group, noted that some of the steps Gray-Donald mentioned really resonate with Grosvenor. “Human behavior in many instances isn't rational…it needs that sense of urgency to generate an action,” she said.
“In the scale of opportunities, it is enormous,” she explained. The business case information has been in the public domain for a while, but it is a perception of risk. “It hasn't been looked at as a safe or comfortable space for some time, so the key is getting to that place of comfort to implement.”
Brown said that companies need to relate it to their personal drivers. “Finding the right benchmark for your organization is critical,” she added.
“You cannot manage what you can't measure,” explained panelist Nicholas E. Stolatis, director of strategic initiatives asset management at TIAA-CREF. “Benchmarking is key.”
Accurate benchmarking is a scorecard item within the property management space, and needs to be done regularly, he said. “It is a wonderful thing to have all assets benchmarked and be able to generate a report on it.”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
