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As commercial property owners in California struggle to attract and retain tenants throughout all sectors, they are also faced with another daunting task: going green in a difficult economy. They want to make their existing buildings more marketable and realize savings from energy and other retrofits; however, it can be challenging to justify the initial capital investment.

Owners are also feeling pressure mount externally. All indicators point to increases in both utility costs and regulations in California over the next few years. Regulation in some municipalities, such as San Francisco, already require non-residential building owners over 50,000 square feet to provide energy benchmarking annually. During the next two years, the California Energy Commission will be establishing a schedule for compliance with AB 1103, which mandates energy benchmarking throughout the state for non-residential buildings. Understanding how a building uses energy compared to similar properties creates opportunities beyond compliance. It also reveals ways to strategically decrease a building’s energy consumption, often with free consultation from the utility companies including PG&E, Southern California Edison and others.

Despite the impending regulations and legislation, there is still some good news. Engaging in energy efficiency, recycling and other sustainable initiatives in existing buildings doesn’t have to tie up a huge amount of capital. There are numerous state and local government and utility green building incentives and programs such as rebates for low-flush toilet rebates by the LA DWP as well as financing opportunities for retrofits from the vendors that handle the energy retrofit installation.

Installing energy-efficient lighting alone can reap immediate cost-saving benefits and oftentimes, there are rebates of which companies can take advantage. To illustrate, we completed a retrofit of the lighting in common area corridors of an 84,000-squarefoot office building in Monrovia recently. The cost of the retrofit was just $11,500 after a $10,400 rebate from Southern California Edison was applied. The landlord’s investment is expected to be returned within only two years.

Finally, combining best practices for tune-ups and low-cost upgrades on any building can make it greener and will promote increased cash flow and value. For property owners wary about making large, capital-intensive upgrades in this economy, a staged approach is recommended. It begins with a building tune-up, which would involve examining building equipment, systems and procedures to ensure the property is operating as efficiently as possible.

Ultimately, all commercial property owners are affected by green initiatives. Making impactful enhancements with modest capital and taking advantage of incentives to address issues now is important as sustainable demand and regulations are amplified in the coming months and years.

By Patrick Conn

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