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North Bay Business Journal

Monday, June 10, 2013, 6:30 am

Property owners boost income with green upgrades

Energy management helps control costs, comply with new law

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    Managers of commercial property are finding that upgrades to landscaping and building-environment control systems to reduce water and energy use, costly as they are, can reduce operating expenses and increase property income.

    Tossing the turf

    Carolyn Pistone

    “Many of the landlords I work with are smaller owners, and we go for the low-hanging fruit — landscaping,” said Carolyn Pistone of Green Key Commercial. She started the Petaluma-based property management company two years ago after managing the disposition of more than 1 million square feet of office and flex space formerly owned by Equity Office Properties in the city.

    Working with landscaping firm Cagwin & Dorward, Green Key helped one property owner convert a relatively small amount of turf to low-water landscaping and a walking path for less than $20,000. The project paid for itself in two years from lower spending on water, not counting the maintenance budget and water used for washing sprinkler overspray from windows and sidewalks, according to Ms. Pistone.

    Airport Business Center is having 40 acres of conventional landscaping removed at the main entrances to the business park and replaced with Bay-Friendly alternatives. (image credit: Marizco Landscape Management)

    At the Airport Business Center development next to Charles M. Schulz–Sonoma County Airport, a three-year effort to convert 40 acres of turf and other water-intense landscaping to lower-consumption options is ongoing.

    Using guidelines developed by Point Richmond-based Bay-Friendly Coalition, turf has been replaced at main entrances to the business park with colorful drought-tolerant foliage that’s native to the area, resulting in 62 percent less water use per year, according to Pierre Marizco, chief executive officer of Marizco Landscape Management, which has been doing the work.

    “More and more of our clients through education from us are budgeting more money to convert landscaping to something that is more sustainable for the purpose of reducing water bills and maintenance costs,” Mr. Marizco said.

    Higher tech for tech tenants

    To attract and keep tenants, Basin Street Properties is modernizing building-environment control systems to adapt to changing ways of doing business and to lower occupancy costs.

    “The old days of operating 8 to 5 are gone,” Ms. Burlingame said. “A lot of tenants have special needs for heating and cooling and power, because the business is structured to operate around the clock or have employees coming in at odd hours and working in tight quarters.”

    High-technology, automated environmental and lighting control systems can cost as much as a couple hundred thousand dollars yet allow for a leaner engineering team who can monitor and manage buildings remotely, so Basin Street is implementing as much as is economically feasible. Depending on the building design and mechanical systems, heating and cooling may have to be run for an entire building to accommodate certain tenants with extended hours, but other buildings can be adjusted to focus on where the tenant is.

    “When you have tenants that are paying a share of operating costs, you have to fairly distribute those costs,” Ms. Burlingame said.

    Basin Street is moving its portfolio to meet the U.S. Energy Department’s Energy Star standard, and some properties are being evaluated for certification under the Leadership in Energy and Environmental Design, or LEED, rating systems.

    The costs and benefits of LEED certification have been debated for several years. However, certification can make or break deals with prospective or current tenants that require it as part of policy, such as state and federal government entities, according to Ms. Burlingame.

    Getting a better understanding of building energy efficiency to improve property income can have a side benefit of complying with California’s new Nonresidential Buidling Energy Use Disclosure Program. Put into place through Assembly bills 1103 of 2007 and 541 of 2009 and adopted by the California Energy Commission in December, the program requires owners of nonresidential buildings to benchmark property energy use via the Energy Star Portfolio Manager online software (energystar.gov/istar/pmpam) and disclose that information as part of the sale, full-building lease and financing of the property.

    The program is being phased in for buildings larger than 50,000 square feet on July 1, larger than 10,000 square feet on Jan. 1 and bigger than 5,000 square feet on July 1, 2014 (see energy.ca.gov/ab1103).

    “We’re preparing to get ready to go through the process,” said Ed Lewis, director of property management for Keegan & Coppin, which has 13 property managers in Larkspur and Santa Rosa for 95 buildings with more than 800 tenants and about 2.7 million square feet. “A lot of work is involved.”

    That work involved includes collecting 12 months of utility bills, which the law requires utilities to provide and the Energy Star Portfolio Manager website is set to be updated this month to accommodate. Legal experts have been recommending that owners start including language in lease documents about cost-sharing and cooperation with compliance.

    Grappling with grease

    Sewer connections increasingly have been a large expense for North Bay restaurants and other businesses that both discharge relatively a lot of wastewater and have elements in it that can stress municipal treatment methods. The trend toward more pretreatment of wastewater before it reaches the sewer is extending into more intervention for greasy discharge.

    “We’re finding that agencies are requiring restaurants, bakeries and other such enterprises that generate grease to install not just grease traps but also grease interceptors, which often are big concrete tanks in the ground,” said Mr. Lewis of Keegan & Coppin. “I can understand why districts are doing this, because grease pumped out of a business corrodes and obstructs sewer lines.”

    So far, managed properties that have had to install such tanks at the Hamilton Landing development in Novato and in San Rafael. One installation cost between $30,000 and $35,000, according to Mr. Lewis.

    Yet soap and shampoo maker EO Products found in their recent manufacturing plant expansion move to San Rafael that by incorporating also-costly water-recycling systems, they were able to cut the amount of water going to the sewer by 80 percent.

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