Transparently Green: Landlords, Tenants, Gear Up for Local Law 84

In the spring, the Mayor’s Office of Long-Term Planning and Sustainability will release data for the first time revealing energy consumption in office buildings in the city.

By making such figures available to the public, Mr. Bloomberg hopes to essentially do to building owners what he has done with national food chains: incentivize them—or shame them, depending on your perspective—into significantly reducing their energy consumption.

“A customer will go into a restaurant now and they’ll say to themselves, ‘maybe I won’t have that doughnut that has 500 calories’,” said Constantine Kontokosta, a professor at New York University and director of its Center for The Sustainable Built Environment, a working group that is assisting the city with its analysis and release of the electrical consumption data.

“On the producer side, you have companies like Starbucks who are also responding to the disclosure, rearranging their offerings so they no longer have 1,000 calorie cupcakes but healthier fare.”

2012 03 12 final Transparently Green: Landlords, Tenants, Gear Up for Local Law 84

Illustration by Zack Nipper.

Making the electricity data public will do the same thing for Manhattan’s roughly 400 million square feet of office buildings. Making the numbers transparent will encourage a degree of healthy competition between landlords over whose building is most efficient. “They’re going to want to make sure their buildings can compete with their peers,” Mr. Kontokosta said.

There is little doubt that Mr. Kontokosta is correct. Commercial leasing brokers widely say that tenants in the city value properties that have LEED certification, a benchmark given to buildings that meet a host of criteria for efficiency and sustainability. Those same benchmarks, meanwhile, often result in a host of other benefits for tenants, like lower rates of absenteeism and sick days at work. “It’s better for them economically, since the bulk of their costs are on personnel,” he added.

The rub in all of this, however, is that landlords believe that while the data will reflect on their building’s energy consumption, it’s the tenants–not the owners–burning all that power.

“There’s concern that there is going to be the focus flat out on energy consumption and it’s not going to reflect how efficient a building really is,” said Steve Spinola, president of the Real Estate Board of New York.

Mr. Spinola was referring to office towers like One Bryant Park, a soaring 2.1-million-square-foot skyscraper developed in recent years by the Durst Organization. The building is widely regarded as one of the city’s most sophisticated office properties, with cutting edge environmental efficiency features that allowed it to earn LEED’s highest efficiency rating.

Yet about 800,000 square feet of its space is used by the building’s anchor tenant, Bank of America, as trading floors, a use that consumes tremendous loads of power. Compared to all but a handful of other buildings in the city that house similar functions, its power consumption will likely seem glaring even though the building itself is a paradigm of efficiency.  

“These are in a class of buildings that are what we are calling ultra high-performance properties,” Don Winston, the Durst Organization’s vice president of technical services, said.

“There is a very small sample of properties really of this type to compare it to,” Mr. Winston said, indicating that it has hence been difficult for the city to evaluate One Bryant Park in an objective way that would account for its high energy tenant and still  identify its level of efficiency.

For now, the city is dealing with this by omitting Energy Star ratings from the data it releases, a figure that essentially judges a building’s efficiency, for towers that have a significant amount of trading operations. One Bryant Park’s Energy Star rating won’t be the only one struck from the list: Several other office buildings, such as 1585 Broadway, which is home to Morgan Stanley; 383 Madison Avenue, which houses JPMorgan Chase; and 745 Seventh Avenue, the New York headquarters of Barclays; will also be left out for the time being.

In the meantime, Mr. Kontakosta and his research team at NYU, along with REBNY and other stakeholders, are working for a more equitable way to rate the efficiency of this select group of skyscrapers.

“It’s a very complex process to come up with a specialized methodology for these buildings that is reliable and accurate,” Mr. Kontakosta said.

Though landlords might feel unfairly stigmatized for their tenants’ energy consumption, Laurie Kerr, a senior advisor on buildings and energy for the city, said that it might push them to intervene in a situation that in the past they would have ignored.

“Without knowing how much energy is being used, there is no incentive to break this cycle,” Ms. Kerr said. “If there they are using too much energy, they will start to have that conversation with tenants.”

Some landlords are already moving to address the issue. Vornado, one of the city’s largest commercial landlords, has implemented a proprietary software system that allows tenants to view not only their own power consumption, but that of other tenants (the system protects the identity of the tenants it profiles).

Glen Weiss, a leasing director at Vornado, said that the capability is viewed as an attractive amenity by tenants and fosters a sense of best practices for power consumption habits among space users, just what the city hopes its electrical data will do for buildings in general. As a compliment to that data portal, Vornado offers to help tenants curb their appetites for power through consulting services it provides that help craft efficiency strategies.

“Tenants find it a major benefit,” Mr. Weiss said.

Vornado is not the only landlord to employ such sophisticated analysis and support. Brookfield Properties, another large owner, has a similar software platform, and the Durst Organization is developing one of its own.

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