Most commercial real estate teams already know how to look at a building’s physical condition. That is why a facility condition assessment (FCA) works well. The data-driven and systematic inventory of building and site infrastructure components helps building owners and executives understand its operational condition, document observed deficiencies and forecast the maintenance, repair and capital renewal costs over time.
But another building cost is just as important and does not always show up in an FCA: energy.
Commercial buildings can waste up to 30 percent of the energy they use, according to the U.S. Department of Energy. While that is bad news for a portfolio, it represents a significant opportunity to measurably reduce a facility’s operating expenses and improve tenant satisfaction and long-term asset performance, increasing overall building value.
The U.S. Environmental Protection Agency’s Energy Star program agrees. It reports that energy-efficient buildings deliver up to 30 percent higher sale prices, 15 percent higher rental premiums and 10 percent higher occupancy levels. Improving a building's energy efficiency requires measurement, and that is where an energy assessment comes in.
More than one-half of U.S. commercial buildings were built between 1960 and 1999. Many properties are operating with older envelopes, mechanical systems and control strategies. Even if equipment has been upgraded, a building’s so-called bones often reflect a different era of energy cost, tenant expectations and performance standards. Many owners can build real value by improving the way their existing buildings operate.
An energy assessment is a structured way to figure out:
An energy assessment helps answer the question every building owner asks at some point: Is this building using more energy than it needs to? It helps answer the question with data, not guesswork, and it moves energy from being a monthly utility bill problem to being a long-term asset management tool. The biggest value is that it creates a baseline owners can use to prioritize changes that actually matter.
Energy waste is not always linked to one big issue, such as a failing chiller. More often, a number of smaller issues stack up. Common drivers include:
An FCA is one of the best tools for understanding a facility’s physical condition and planning capital needs, but it will not always tell owners if schedules and setpoints match occupancy, if controls work correctly, if the facility is paying for demand spikes or if a building’s energy intensity is abnormal.
The FCA might reveal that the 12-year-old HVAC system is in fair condition. The energy assessment might indicate that the system is running five extra hours every weekday and that the building is cooling empty space. Both issues matter, but only one of them informs the monthly bill.
Build a baseline of targeted energy use vs. actual energy use. Every energy assessment should start with culling from the basics of an FCA: reviewing 12-24 months of utility bills; documenting building size, use type, operating hours and major energy systems; and noting known changes over the same period related to such issues as new tenants, expanded hours and equipment replacement. This process sets the baseline, which serves to prove the impact of energy efficiency choices and forecast return on investment (ROI).
Chart atypical use that points to inefficiencies. Atypical use can include electric use that stays high when building occupancy is low, gas use that spikes during shoulder seasons, weekend use that looks like weekday usage and utility bill spikes when occupancy is stable.
Benchmark energy use against similar buildings. Once baseline energy use is documented, the next step is to benchmark the building compared to others in the same general category to identify desired performance. The comparison could show that while building performance has improved year over year, it still is above average for energy use. It might look average, but there is still waste to eliminate. Numbers are objective, and comparison benchmarking is a reality check that can help owners plan communication to tenants.
Benchmarking is a best management practice. For building owners and executives looking to institutionalize it in their organizations, BOMA offers an excellent training module: the Building Energy Efficiency Program. It incorporates the latest industry trends, new technologies and best practices to help commercial building owners reduce energy consumption and improve the energy performance of real estate assets.
Identify the causes of excess energy use. Causes of higher energy bills typically involve:
Identify improvement options: low-cost vs capital investments. The goal is to prioritize the right moves at the right time and connect energy improvements to planned maintenance or capital projects.
The low-cost, operational improvements to evaluate can include schedule adjustments and start-stop strategies, sensor recalibration, override and broken controls fixes, tighter setpoint ranges, ventilation resets based on real occupancy, select equipment recommissioning and functional testing for performance drift.
Capital improvements that are budgeted and scheduled can deliver meaningful and long-term ROI. These can include insulation installation, envelope tightening, roof performance improvements, high-efficiency HVAC upgrades, lighting upgrades with controls, high-performance glazing or window replacement, water conservation fixtures and indoor air quality improvements.
Calculate potential savings and ROI. Appropriate energy performance supports leasing, renewals, tenant experience and long-term asset resilience. Owners can treat it like asset management with this framework:
While teams often focus only on replacement cycles, operations matter. Systems that run harder than they need to wear out faster. Energy assessments can support service-life extension by reducing unnecessary runtime, improving performance and catching issues early. Those benefits can defer capital projects and reduce cost of ownership. The results owners look for are straightforward: improved system operations, extended system service life, deferred capital expenditure, reduced operating expenses, reduced cost of ownership and increased occupant satisfaction.
The bottom line is that energy assessments turn energy efficiency into a practical asset strategy. If implementing energy efficiency and performance oversight throughout a portfolio feels overwhelming, owners do not need to worry. It is likely they are already doing pieces of it just by maintaining equipment, managing replacement cycles, trying to keep tenants comfortable and planning budgets years ahead.
It becomes an easier sell internally when owners document the process: measure outcomes; promote results — including budget saved, utility bill reduction and gallons of water saved; educate staff, tenants and vendors; and promote collaboration. That is the way energy moves from just being a bill to being a measurable value builder. In many buildings, the easiest money to save is the money the organization already is spending but does not need to.
Greg Walterscheid, eMBA, FMP, is a national director for the facilities consulting practice of Terracon, a consulting engineering firm.
