Building Operating Management

LEED-EB Helps Reverse Financial, Environmental Consequences of Underperforming Energy Systems

A primary goal of LEED for Existing Buildings is to reverse the financial and environmental consequences of underperforming energy systems. Energy is the single largest and most manageable operating expense in a facility. Yet most buildings suffer from control, equipment, sensor and other problems that reduce performance and significantly increase energy costs.

To test a building's systems and identify where to make repairs or changes, facility managers should first implement a retrocommissioning process. A study titled "Retrocommissioning: Program Strategies to Capture Energy Savings in Existing Buildings" published by the American Council for an Energy-efficient Economy showed that retrocommissioning could yield cost-effective savings of between 5 and 20 percent with a typical payback of 2 years or less.

According to Great Britain's Royal Institute of Chartered Surveyors (RICS), opportunities are often missed to improve the sustainable performance of existing buildings because the cost of such work is wrongly perceived to outweigh the cost saving benefits.

The growing demand among public and private users for space in green buildings further supports consideration of LEED-EBOM certification. The federal government and jurisdictions across the country are increasingly mandating that public and private building stock meet green standards.

The private demand for green buildings has accelerated as well because saving energy and lowering greenhouse gas emissions have become civic virtues. Shareholders, employees and customers increasingly expect their corporations, employers, landlords, retailers and hotels to share their sustainability values.

One recent study by RREEF Research concluded that, in the years ahead, less efficient conventional buildings are likely to have their market value discounted as a result of lower rents and higher vacancies as tenants increasingly migrate to more modern, green buildings.

A green building tipping point may already be at hand. A study of 10,000 buildings released in 2009 titled "Doing Well By Doing Good? Green Office Buildings" by the University of California at Berkeley found that buildings with a "green rating" commanded rental rates roughly 3 percent higher per square foot than otherwise identical buildings. The study controlled for the quality and the specific location of office buildings. Premiums in effective rents were found to be even higher — above 6 percent. Selling prices of green buildings also were higher by about 16 percent.

In short, investments in energy efficiency and other sustainable practices that may be necessary to achieve LEED-EBOM certification appear to offer real value, and may in fact be essential to competitive survival, to owners of existing buildings, especially if energy prices rise and more green building stock comes online.

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  posted on 4/1/2010   Article Use Policy

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