Corporate real estate: energy improvements in existing buildings

Buildings account for approximately 40% of total global energy consumption, with its associated greenhouse gas emissions. Approximately 80% of North American buildings were constructed more than 15 years ago. Energy codes have become much more stringent, requiring designs to achieve energy savings of at least 25% compared with pre-2000 codes. However, the embodied energy in the existing buildings far exceeds the overall energy savings that could be gained replacing the old stock with new buildings operating to the more stringent codes.  Revitalising the existing, aging building stock therefore represents a significant opportunity to make energy savings.

Arup and Ryerson University interviewed a series of key decision-makers in Toronto’s commercial and institutional real estate market to investigate the perceived barriers and opportunities for owners of existing building portfolios. The interviews identified the key challenges and opportunities in the commercial and institutional real estate sector, particularly to improve the commercial and sustainability performance of the existing building stock.

The interviewees held a range of roles, including landlords, owner occupiers, developers, facilities managers, constructors, asset managers, architects, engineers, incentive programme designers, service providers and utilities. Each interviewee held a senior role in their organisation (national, provincial or local) and together the interviewees represented more than 250 years of industry experience.

Different sectors of the industry prioritise energy efficiency differently.  Building owners typically place less importance on investment in energy improvements than do facility managers.

Engagement of both the building’s occupiers and its operations staff is necessary for any energy reduction program to be successful.

Maintaining occupant comfort and productivity is critical in a retrofit.

Green building certifications are used as marketing tools but are not in themselves key drivers for programmes.

The detailed findings of the interviews provide nuanced insight into the key drivers, priorities and concerns of owners, tenants, incentive providers, facility managers and property managers of corporate real estate. They help set out the opportunities for tailoring building retrofitting to meet the most critical needs of different sectors in the corporate real estate industry.

Diverse drivers and pressures act upon building owners in relation to improving the energy performance and sustainability of existing buildings, particularly in the premium office market and in urban centres. Building owners and tenants face organisational, social, technical and economic barriers to achieving these improvements. Identifying and understanding these barriers can enable strategies to be developed to overcome them.

Key barriers include:
- increasing complexity of retrofits required to achieve incremental energy savings once the simple solutions have been implemented;
- difficulty in renovating or retrofitting existing buildings, particularly those where the façade, windows or internal finishes have heritage designations;
- lack of available data to inform decisions about energy savings: this was the most frequent response;
- financial disincentives for making energy efficiency improvements due to the configuration of leasing details;
- the cost ratios of energy, rents and occupants' salaries are typically about 1:10:100, so avoiding interruptions to staff productivity is prioritised.

Key enablers for improvement include:
- use of benchmarks and setting of targets;
- real-time monitoring of energy use;
- energy conservation incentives;
- use of new technologies, for example LED lighting.