Benchmarking and the Implications of AB 1103
By: Easton Gardner, LEED AP - Wednesday, July 22, 2009
Source: Greener Dawn Inc.
What’s your building’s Score?
Energy Benchmarking is not only a good idea,
It’s Mandatory!
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Easton Gardner
LEED Project Manager
858.345.1672 | The green building movement has transformed from solar panels and low-VOC paint to a complete shift in commercial real estate transactions – are you ready for green negotiations? Savvy and cutting edge brokers, lawyers, and business analysts are scrambling to figure out how to put green into legal agreements, because it is quickly becoming a deal-closer or a deal-breaker.
Despite what jargon lawyers come up with, it is critical in this economy and real estate market that property owners and managers have a plan to deal with building performance issues, especially in California with AB 1103. |
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Tenant and buyer reps will be certain to leverage this mandate to get their clients a better deal – as it is very likely that this becomes the strongest point of negotiation available in this leasing/purchase landscape.
Scores are based on a scale of 1 to 100, with buildings that score closer to 100 having lower operating costs compared to similar buildings in the market. If your building doesn’t have a competitive Score, you will be experiencing longer leasing periods, lower occupancy rates, reduced rent rates, and a decline in asset value. The business case for an efficient building is too strong and risks are too high.
If you have leases expiring soon, or if you are delaying capital improvements and retrofits, you may want to re-examine the implications that building performance will have on upcoming transactions. Even if you have a LEED Certified building, you may find the building is not performing as designed.
Benchmarking will allow you to assess whether or not the building is providing the NOI you were expecting; and it is the first step to identifying opportunities for improvement. Owners of 1960’s office buildings may feel their hands are tied with no capital to make substantial renovations, but there are certainly low-cost strategies available to any building. |
Assembly Bill 1103
- Reporting began January 1, 2009
- Requires California utilities to report all commercial buildings’ energy use data to the EPA’s Energy Star Portfolio Manager.
- Reports a performance Score, compared to similar buildings, on a scale of 1 to 100.
- Effective January 1, 2010, this Score will be a Mandatory Disclosure to tenants, buyers or lenders.
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The ROI is easy to determine for tangible costs, but the value of mitigating risks associated with the green building movement may prove exponential. The water and energy crisis, air quality problems, commuting and transportation issues, carbon regulations, and social and environmental responsibility are just a few risks hitting headlines. Now is the time to implement improvements and reposition existing buildings on the market.
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Greener Dawn can help you navigate the opportunities and risks associated with green building by developing and implementing a strategic retrofit plan! |