How L.A.’s Green New Deal Will Impact Property Owners

Los Angeles has presented its own version of the Green New Deal. The sustainability plan is to increase the city’s current energy reduction goals. Overall, the plan aims to move the city’s power to 55% renewable energy sources by 2025, 80% by 2036, and 100% by 2045. For commercial real estate specifically, the plan requires property owners reduce building energy consumption by 22% per square foot by 2025, 34% by 2035 and 44% by 2050.

“As cities are passing or contemplating passing legislation to drive efficiency in buildings, from the owners’ perspective the base of goals is within a reasonable framework and can help them achieve attractive returns back from those investments,” Alec Manfre, CEO of smart building software company Bractlet, tells GlobeSt.com. “Overall, the goals that cities are setting out are exciting, and I think that owners can view them as a win-win for the city and its goals as well as the building and the value that is attached to them.”

Local green legislation is becoming more popular, but Manfre says that cities need to make sure to balance the needs of environmental efforts and goals with the goals of the owner. “Something that cities need to keep in mind when drafting legislation is that not all buildings are the same,” he says. “I think that a lot of times, if you are not within the industry, you think it is easy or reasonable to reduce building consumption by 20% or 30%, but it is important to understand how the building was designed, the infrastructure and the demand on the buildings.”

Understanding the building usage is among the most important details for cities to consider. Office buildings are becoming denser and tenants need access to a broad range of tools and technology. “The type of tenant that owners have to satisfy has changed, and the density within the space has changed,” adds Manfre. “That has put different loads on the systems. When you are looking at ways to enact policy, you have to keep that in mind.”

While the new legislation would make energy reduction a requirement, many owners have already started down that path, largely because they see the benefits of more efficient systems. However, for some owners, implementing changes can be challenging. “In large commercial buildings, there are many ways that equipment and systems can be run more efficiently and more effectively,” Manfre. “For building owners looking at buildings, that can be a daunting task. The technology that they have at their disposable to drive those types of optimizations can be challenging.”

Companies like Bractlet, however, are on hand to help guide owners through energy upgrades and the new legislation. “We set out to create a business that created value despite regulation. That can always help,” says Manfre. “To truly solve reduction in emissions or to create energy efficiency, you have to be able to make a strong economic argument. The focus of our business is helping them understand how to use energy efficiency and cost savings to drive better value. If you can impact those economics, that makes what we are trying to do scalable.”