Monday, November 7, 2011

Philadelphia-area buildings ripe for energy updates

"Owners of Philadelphia-area commercial property spend 29 percent more on energy than the national average, making the region's aging buildings good candidates for retrofits.

According to a study of the region's 9,058 middle to larger commercial and industrial buildings, about 77 percent were built before 1990 and would benefit from energy-efficiency improvements.

The report was compiled by Econsult Corp. for the Greater Philadelphia Innovation Cluster for Energy-Efficient Buildings (GPIC), the year-old federally funded organization in the Navy Yard whose mission is to transform the building-retrofit industry.

"Based on all this data analysis, we found that about 7,000 properties, or 300 million square feet of space, meet the requirements for consideration of an energy retrofit," said Laurie Actman, GPIC's deputy director for management and administration. "That's a lot of potential activity moving forward."

The Econsult market study and a companion study of government policies that affect or impede building improvements are expected to form the baseline for GPIC's work, funded by $130 million in federal grants over five years.

"The purpose was really to identify what is the world of opportunity here, and what are the opportunities and hurdles in the policy world that we need to address in order to really create this market for retrofit in the region," Actman said.

The market is big. According to the federal government, buildings account for nearly 40 percent of U.S. energy consumption and carbon emissions - most of that is heating and cooling costs. Commercial buildings represent about one-fifth of U.S. energy consumption, with office space, retail space, and educational facilities representing about half of commercial-sector energy consumption.

The regional study looked at 9,058 structures between 20,000 and 100,000 square feet - the target for GPIC retrofits. The 77 percent of those structures that are more than 20 years old likely contain older heating and cooling systems.
Owners of commercial property in this region spend an average of $2.84 per square foot a year on energy, 29 percent above the $2.21 national average and fourth highest among 14 large cities studied.
To narrow the universe to identify the "lowest hanging fruit," the study filtered properties by their end use, construction materials, and shape. The optimal candidate for energy improvements would be an older, low-rise brick building.

Not all buildings consume energy equally. Flex-industrial buildings, including warehouses, account for about 53 percent of the structures studied. But they consume about half the energy per square foot as the average commercial building, such as an office.

The study identified 2,047 buildings as retail, hospitality, or health-care businesses, which consume more energy, according to federal statistics cited by Econsult.

The authors said that lower-rise buildings - with fewer than six floors - are more cost-effective candidates for improvements. Buildings that depend on electric lighting rather than daylight for interior illumination are good candidates for improvements.

Masonry buildings are likelier to have more exterior gaps and benefit from improvements rather than steel-and-glass buildings.

The authors narrowed the focus to those buildings owned by the 25 largest commercial landlords for the "purely practical" reason that it will be easier for GPIC to deal with a few owners of multiple properties if its goal is to maximize its impact.

It whittled the prime list down to 232 larger buildings totaling about 50 million square feet, mostly in the commercial corridors of inner-ring suburbs such as Pennsauken, Valley Forge, Plymouth Meeting, Malvern, and Mount Laurel. The buildings were also concentrated in industrial corridors in Thorofare, Bridgeport, Hamilton, Bristol, Northeast Philadelphia near Philadelphia International Airport, and at the Navy Yard.

Janet Milkman, executive director of the Delaware Valley Green Building Council, whose members do energy retrofits, said the report reinforces the argument that efficiency improvements are a more cost-effective way to reduce emissions of greenhouse gases than building new power-generation capacity.

"Reports like this demonstrate that it's a bigger resource even than solar energy and wind," she said.

Jim Lutz, a senior vice president of Liberty Property Trust, the region's largest commercial landlord, said the study helped frame GPIC's aim. Even without the study, he said, Liberty Property in recent years has upgraded 70 of its 735 buildings nationwide to Energy Star ratings.

But Lutz said that property owners sometimes lacked incentive to invest in energy retrofits - tenants typically pay the energy bills, not landlords. But he said upgrading a property for a new tenant could make sense if the costs can be built into a new lease.

The information GPIC is collecting can also help guide investment decisions, said Brad A. Molotsky, executive vice president of Brandywine Realty Trust, the region's second-largest commercial landlord.

"Data aggregation to allow for informed decision-making is very relevant and very helpful and, frankly, very welcome," he said.

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