Energy & ESG
One California Plaza is an iconic office tower in the downtown Los Angeles submarket. However, the pursuit of sustainability sets off a fierce competition to stay at the forefront of innovation.
Only 60 days after the initial conversation, Enertiv had created a digital repository for all metering information, completed installation of the shadow meters, and deployed networking to flow data into the cloud in real time.
Enertiv is uniquely able to capture the data necessary to deliver an attractive payback period and quickly increase NOI in value add acquisitions. Within the first year, Enertiv identified over $80,000 in potential NOI (over $1M in asset value) for the TI Group in Texas.
“Enertiv has shown an ability to continuously innovative to meet our needs. Their platform has made our work easier at multiple levels of the organization.” -Richard Currenti, Executive Vice President and Director of Engineering at SL Green
By the first quarterly review, maintenance insights were coupled with a series of optimizations that combined to $75,000 in annual savings, a potential 440% return on the first year’s cost of ownership.
Commercial real estate landlords are approached all the time with proposals to retrofit their properties with more energy-efficient equipment. Data captured on an equipment-level by Enertiv can prioritize these investments and “ground truth” proposals against empirical cost and consumption data.
ESG 2.0 is the shift from goal setting and “action plans” to real-world execution. This necessitates taking into account the messy realities of operating commercial real estate.
In commercial real estate, technology focused on operational workflows has been adopted at the building or market level. While that has worked just fine, portfolios now need to aggregate this data to gain transparency and satisfy tenant and investor expectations
The COVID-19 vaccine has obvious ramifications for every property type. Time will tell how things like office occupancy levels shake out and the effects that flexible work schedules have, but if one thing is clear, it’s that indoor air quality is not going away anytime soon.
When evaluating technology, commercial real estate often tries comparing apples to orange. This guide doesn’t focus on features and capabilities. Instead, it aims to categorize types of solutions, why they exist, and which providers are in those categories to help map the market.
In order to continue to meet the demand for ESG disclosure, operations should be digitized so that reporting becomes a byproduct of routine workflows as opposed to a task in and of itself.
The “flight to quality” is happening across property types. The challenge is that the definition of “quality” has changed significantly in the last two years. This change generally falls into three broad categories: ESG reporting, building efficiency and health/wellness for occupants.
Most of the time, green leases are part of a larger sustainability/ESG strategy and therefore can be glossed over without fully understanding what they do (and where they fall short).
Tenant expectations have changed. Leading landlords are providing more than four walls and a roof. They are providing data and services that help tenants meet their goals.
The trend is clear: industrial owners need to gain access to utility data that is currently paid for (and thus controlled) by tenants.
It is expected that the SEC will have requirements around auditing carbon emission data, like financial data is audited currently. But the big question that needs to be answered is whether real estate owners will be expected to report on scope 3 emissions.
As the effects of climate change worsen over time, both the probability and damage to physical assets increases. Going forward, The SEC's climate disclosure rules will require companies to disclose any material physical risks related to climate change in their public filings.
In a year when utility costs have risen by 10% on average, focus needs to be on what can be done, right now, to bend the curve on controllable operating expenses.
To maximize the value of technology that supports the net zero journey, owners and operators should leverage the “jobs to be done” framework. First identify where technology can accomplish a specific task. True innovation happens when technology does that job better.
To make significant reductions, there will have to be improvements to the infrastructure on which buildings run. These fall into three broad categories: Conservation (eliminating waste), energy efficiency (improving baseline efficiency), low carbon fuel selection (electrification)
There are two key insights that the most sophisticated owners and operators have picked up on that, when taking advantage of, change the frame of the conversation and lead to meaningful reductions in consumption.
Building operators must be part of the ESG strategy and yet, they cannot be expected to drop their core responsibilities. Technology will work best when it automates “new work” related to ESG, and augments standard workflows to serve ESG goals.
Nearly every portfolio is under pressure to meet aggressive ESG goals. In fact, when all added up, it’s estimated that the industry will have to deploy $18 trillion to decarbonize their portfolios.
The realty for the vast majority of properties, definitely in multifamily but also in office, hospitality, retail and industrial, is that most workflows are still being done not only manually, on paper. Nowhere on the horizon is technology going to displace building operators.
The clock is ticking and there’s immense pressure to get it right so that the portfolio can continue to scale. What’s needed is a roadmap, a clear progression from the first step to the ultimate goal. So, let’s break ESG into three broad categories, each of which builds on the last.
The truth is, from a technology perspective, there’s always a natural tension between serving users and serving managers. It almost always boils down to robustness of reporting versus ease of use.
Landlords have been adopting tenant engagement apps to make amenities more accessible, but provide very little when it comes to making their energy data more accessible. Clearly, there’s a massive disconnect.
In triple net leased assets, tenants pay their utilities directly. When it comes to ESG, that means that the owner has little or no transparency or access to the data they need to satisfy investor’s increasingly tough requirements. There is no silver bullet, but there are strategies to pursue.
New York, Washington DC and Boston have already passed laws with financial penalties for inefficient buildings. This trend is only going to intensify, but there is a blueprint for how to future-proof a commercial portfolio.
Instead of hand-wringing over the ROI of real-time monitoring, leaders are recognizing that granular data provides the transparency necessary to make the capital investment decisions that will be necessary to hit aggressive targets.
A cursory look at the messaging from ESG frameworks offers some abstract ways that reporting might lead to better outcomes. It makes sense conceptually, but the specifics are vague. Here are three legitimate ways that ESG reporting leads to better financial performance.
Because of the breadth of our Buyer’s Guide, we could only go so deep on any individual category of technologies. Due to popular demand, this article will expand on one of those categories: energy section containing utility management and ESG technologies.
Long before ESG was the hot topic in commercial real estate, owners understood that their ability to save costs through energy efficiency was limited. Now, owners are being forced to look again at what can be done to influence tenant consumption.
The best thing to do in the face of extreme uncertainty is to become more flexible. To gain the ability to respond to whatever situation presents itself and to be able to make adjustments when that situation changes, however quickly or gradually it does.
Comparing technology solutions on an apples-to-apples basis continues to be difficult. Expertise in financial analysis, property management, or even building engineering doesn’t necessarily translate to understanding how technology could be deployed to streamline work and reduce costs.
Enertiv’s clients consist of REITs and private real estate companies. They own and/or operate a broad mix of properties. Their investment strategies and lease structures vary widely. Some are comfortable with technology, others are just getting started.
In each of the hundreds of assets that the Enertiv Platform has been deployed in, there have been at least one or two issues which stood in the way of maximizing net operating income. Now, finding and fixing as many of these issues as possible is gaining priority.
ESG has moved from a nice-to-have to an integral part of a responsible fiduciary. While COVID-19 will cause setbacks, owners and asset managers can benefit from more effective communication about the drivers of ESG metrics and their strategy going forward
See what equipment-level data reveals about how office and multifamily buildings are operating since reopening after COVID-19 shutdowns began. While some costs are higher as many owners feared, there are also some silver linings and encouraging signs.
One week ago, Enertiv sourced 5 data-driven insights for operating buildings during the COVID-19 outbreak. The obvious next step was to benchmark the hundreds of buildings in Enertiv’s dataset to determine to what extent these best practices were being implemented.
Enertiv has identified 5 data-driven insights to shave operating expenses during the COVID-19 outbreak by combining granular data from hundreds of buildings with the knowledge of some of the most sophisticated operators in commercial real estate.
Industry leaders have blazed a trail to meet the expectations of the modern market. Mistakes have been made and solutions have been found. The following is an overview of those insights.