Energy Efficiency and Real Estate: Opportunities for Investors (take two)

In a post last week, we summarized a Mercer and Ceres report, Energy efficiency and real estate: Opportunities for investors. The report equips real estate investors and property managers with a pragmatic framework, and anecdotal evidence, to make informed decisions about how to implement energy-efficiency initiatives, with a central theme: If you’re not investing in energy efficiency, you are leaving money on the table. Corroborating music to our ears.

The report concludes with eight terse and meaningful morsels:

• Energy efficient buildings offer a measurable financial benefit over non-green buildings, in the form of higher rent, occupancy, valuation and lower operating costs
• No- or low-cost energy efficiency improvements can have quick and dramatic impacts on property operating costs
• Poorly performing buildings represent an opportunity for a significant investment gain when it comes to energy efficiency
• Additional improvements require planning, partnerships and initial investments, but can also decrease operating expenses and raise resale and leasing value
• Investment managers and products that consider energy efficiency and green building practices are increasingly available to investors
• Barriers to implementing energy efficiency improvements are eroding as demand grows, research on the benefits continues, and supporting products and services improve feasibility and cost-effectiveness
• A growing number of strong networks, initiatives and tools are helping investors, owners and property managers measure and improve energy performance and prioritize new projects and programs
• All of the above factors facilitate indirect approaches to energy efficiency improvements, which provide further opportunities to investors

As Energy Efficiency Booms, Buildings Get a Brain

The Cleantech Group recently released a comprehensive analysis of energy efficiency innovations in commercial office buildings. The findings are promising -- and lucrative -- for commercial building owners, managers and developers, let alone smart energy investors.

“Commercial office buildings consume 40% of the electricity produced in the U.S. and 18% of total U.S. energy,” said Sheeraz Haji, president of the Cleantech Group. “Our analysis shows that energy efficiency is poised to overtake solar as a top investment category in 2010, and commercial buildings represent a prime target. Lower investment costs, financial incentives, and faster payback periods are fueling product competition as data-driven technologies battle over the building’s brain.”

As we opined in a previous post, commercial, industrial and municipal buildings are dumb, inefficient and, above all, wasteful. If you own or manage a building (or a portfolio of buildings), you are unnecessarily wasting money every day. But, if your building has a brain -- if it's intelligent and you are intelligent in your management of your asset -- you, well, get smart. Andrew DeGuire, vice president, strategy and acquisitions with Johnson Controls, explains:

True building efficiency can only be achieved when executives take a more holistic view of their portfolio of buildings. Robust building control systems can be networked within buildings and across a portfolio to integrate security, lighting and HVAC with other enterprise applications, providing real-time data to track performance, decrease operating costs, and set future efficiency goals.

According to the Cleantech report, the focus on performance is driving an information and communication technologies invasion of buildings to enable greater visibility and control as vendors compete to be the gateway to building intelligence. Data-driven energy efficiency products and services look poised to grow, including low-powered Wi-Fi sensors, energy management software, building automation, and smart lighting and windows.

We could not agree more. A decade ago, few computers and information systems were networked; now, it's commonplace. Today, few buildings (and their energy-consuming equipment, specifically lighting and cooling systems) are networked. Ten years from now, we may look back and chortle at the back-then arcane -- boy, they were dumb! -- and wasteful condition of buildings.