October 2012                                                                         AND THE               BUILT ENVIRONME...
Executive Summary.....................................................................................3                   ...
In 2011, GreenBiz Group asked: What happens when four massive technologies                                                ...
POUNDS OF CO2 / DOLLAR OF GDP (2005)                                  2.0                                  1.5            ...
The Big Picture Enabled by technology, changing demographics and individual                                               ...
reported in the 2012 State of Green Business report found that telecommuting                              grew slightly in...
Floor Space per Employee                                       2010 675=      225      With 25 percent of               20...
introverts need some sort of privacy and seclusion to be productive.                                           Unfortunate...
ESREVER MIGRATION                               As urban environments become more livable, many corporations are reversing...
The Big Picture With the advent of always-on, high-speed and mobile                                                       ...
Transportation                               •	 Gas prices: There is no doubt that gas prices influence behavior in the sh...
aggressive efforts underway to upgrade truck and air fleets, which also includes                              fuel-switchi...
and recently debuted the service in San Francisco. Ford and Zipcar have jointly                                        lau...
The study lists six distinct types of WalkUPs: 1. Downtown; 2. Downtown                                            Adjacen...
After some initial (and ongoing) false-starts, ICT is beginning to catalyze the                                           ...
savings of up to $10,000 per employee can be realized through a comprehensive                              approach to tel...
also need to rethink its approach to facility management, recognizing that                                       people wi...
actions any company can take to trim its energy costs. Typical demand                                 management measures ...
Groom Energy’s Brilliant Graphic of the Building-Related IT Space                                         information. Thi...
Verge and the built environment report
Verge and the built environment report
Verge and the built environment report
Verge and the built environment report
Verge and the built environment report
Verge and the built environment report
Verge and the built environment report
Verge and the built environment report
Verge and the built environment report
Verge and the built environment report
Verge and the built environment report
Verge and the built environment report
Verge and the built environment report
Verge and the built environment report
Verge and the built environment report
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Verge and the built environment report

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Take a look at the growing trend of telework & in some reports how to save up to $10,000 per employee by integrating telecommuters into your business

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Transcript of "Verge and the built environment report"

  1. 1. October 2012 AND THE BUILT ENVIRONMENT by ROB WATSON CEO, EcoTech International & Sr. Contributor, GreenBiz.com Defining and accelerating the business of sustainability.
  2. 2. Executive Summary.....................................................................................3 Buildings: Doing More with Less.................................................................5 Transportation: Access Trumps Mobility....................................................10 Information and Communications: Catalyst & Enabler.............................15 Energy: Smarter and Decarbonized..........................................................20 Contents Infrastructure: Falling Apart.......................................................................24 It’s the Economy, Stupid (or Is It?).............................................................29 Coda: Optimizing the Whole....................................................................30 About the Author......................................................................................31 About the Sponsors...................................................................................32 About VERGE............................................................................................33 About GreenBiz Group..............................................................................34 Researched and Written by Rob Watson For GreenBiz Group: Joel Makower, Chairman and Executive Editor Derek Top, Senior Editor and Program Director, VERGE Eric Faurot, Chief Executive Officer Pete May, Co-founder and President Samuel Smith, Executive Producer Alan Robinson, VP Sales Thanks to Our Sponsors:AND THE BUILT ENVIRONMENT2 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, credit is given to GreenBiz GreenBiz Group Inc. andthis copyright copyright notice. only, provided provided credit is given to Group Inc. and includes includes this notice.
  3. 3. In 2011, GreenBiz Group asked: What happens when four massive technologies (energy, information, buildings, and transportation) collide? The answer is “an unprecedented opportunity for business and sustainability” called VERGE. VERGE refers to a vast array of products, services, and business models, and includes within its sphere a number of other trends: next-gen cities, intelligent buildings, connected mobility systems, big data, smart grids, the “share economy,” and more. Each of these things is a product of this technological/ Executive Summary industrial convergence, and each stands to have its own profound impact on business, consumers, government, and sustainability. Of course, VERGE is place-based — that is, it happens somewhere: a building, campus, neighborhood, city, or region. That is the focus of this report: the key trends that undergird how this technology convergence will unfold in the context of the built environment over the next few years. The 20th century emphasized linear thinking and the efficiencies of assembly- line production. We got very good at understanding the parts and optimizing the components. Unfortunately, this came at the expense of sub-optimization of the larger system. By contrast, we believe the 21st century will be one of integration and non-linear systems thinking — a convergence of increasingly complementary parts in support of an optimized whole. The overall catalyst for this systems view is information and communications technologies, or ICT — the explosion of information-enabled products and services. That is certainly true when it comes to the built environment. Truly competitive buildings, developments and cities are rife with connectivity that extends from the micro to the macro. Sensors and other metering technologies increasingly are becoming embedded in building equipment that can now be connected, monitored, controlled, and optimized through cross-platform management systems that allow interoperability. ICT is now facilitating and enabling the beginning of two-way flow of information and energy — a “conversation” between the electric power grid and intelligent buildings, vehicles, and devices of all kinds. And, as mobile broadband expands, all these components can be controlled at a device, building or portfolio level by a conventional smart phone, or even machine-to-machine, without human intervention. Although the convergence of buildings with energy, ICT and transportation is just emerging, the following indicators show that it is already having a positive impact on helping companies and cities achieve their sustainability goals: • P rojected 2012 CO2 emissions in the United States are on track to be about 14 percent lower than the 2007 peak. In terms of emissions per real dollar1 of GDP, the rate has decreased steadily since the 1973-74AND THE BUILT ENVIRONMENT oil embargo — from 1.93 pounds per dollar of GDP to a forecast 0.76 pounds in 20122 — except for odd year or two when the recession sapped economic growth more than the regular improvement of energy efficiency. Energy consumption per dollar of GDP shows a very similar trend from 15.41 kBtu down to 7.48 kBtu per real dollar of GDP. 1 “Real” dollars are adjusted for inflation. We used the figures in the Monthly Energy Review (MER) September 2012 based on chained 2005 dollars. Table 1.7. 2 2012 GDP figures assume a 1.9% growth rate (Bloomberg, October 15th); CO2 figures are based on YTD fig- ures for Buildings (Residential & Commercial), Transportation and Industry derived from the MER report.3 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  4. 4. POUNDS OF CO2 / DOLLAR OF GDP (2005) 2.0 1.5 1.0 0.52012 est. 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2012 est. Pounds of Carbon Emissions per Real Dollar of GDP Energy Information Administration, Department of Energy, Monthly Energy Review, September 2012, Table 1.7 & Table 12.1. • Vehicle Miles Traveled (VMT) per capita peaked in 2004 and have Building energy use declined 6 percent since; total VMT is down about 3 percent from its in 2012 is expected 2007 peak. Oil imports peaked in 2006 and oil consumption peaked the to be almost 8 year before. percent below • Fixed broadband penetration (defined as download speeds of at least 2 the 2008 peak, Mbps and upload speeds of at least 756 kbps) exceeds 40 percent of the population, according to the U.S. Federal Communications Commission, the lowest annual but ranks 15th of 28 OECD countries on a per capita basis. consumption this • B uilding energy use in 2012 is expected to be almost 8 percent below century. the 2008 peak, the lowest annual consumption this century. Commercial building energy use is almost 6 percent lower than the 2008 apex. Launched in 2000, the LEED Green Building Rating System now represents over 20 percent of new construction in the U.S. • Residential sector energy use is forecast to be nearly 11 percent lower. The average size of a dwelling unit (weighted average including both single & multifamily) is 7 percent below its 2006 peak. AND THE BUILT ENVIRONMENT It may be tempting to dismiss many of these indicators as being driven purely by challenging economic and employment conditions, but our research indicates that, as important as the recent recession is in driving change and transforming markets, as our report indicates, there is more to these trends than that. 4 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  5. 5. The Big Picture Enabled by technology, changing demographics and individual preferences, companies are trying to squeeze more out of the space they have, rather than squeezing out more space. This trend toward greater asset utilization is most evident in the office sector, through we see signs of this in retail buildings, schools, and homes, which are increasingly becoming part- time workspaces. Most corporate real estate professionals see their portfolio contracting, not expanding, in the near term. Buildings: Doing More with Less Average office space per person is steadily declining and forecast to drop more than 30 percent in the next five years. Big-box retailers are downsizing their stores, in some cases as much as 40 percent, and adopting urban location strategies rather than a strictly suburban/rural approach. (If this trend fully evolves, we may need to rethink the “big box” moniker.) In U.S. homes, the size of an average new residential unit is down more than 7 percent since 2006.3 The Drivers In the 2008-2011 Green Building Market and Impact Report, we wrote extensively about drivers of building energy efficiency, including the LEED Green Building Rating System and its interplay with the ASHRAE national energy standard. We believe that these standards will continue to be quite influential in the building sector and continue contributing to its lower energy intensity. According to Richard Kadzis, CoreNet Global’s Vice President of Strategic Communications, the backdrop of continuing economic uncertainty and cost containment are two principal drivers of greater asset utilization. However, demographic trends are also playing a bigger role, with strong growth in close — in urban centers compared with suburban or far suburban areas. For starters, commercial building vacancy rates remain stubbornly high after the official end to the recession in 2009. While there is some prospect of accelerating construction activity over the next few years, the amount of new floor space is expected to remain weak. With real estate budgets stretched, companies are cutting back on their square footage. Technology also is enabling companies to reduce or eliminate permanent space per employee. Instead, they have unassigned space that can change daily, assigned on a first-come, first-serve basis, or depending upon the need for collaborative and team activities. ICT has facilitated both the more-efficient use of space through online reservations and also the ability to work remotely. But ICT doesn’t do it all: There is a new job position called a “hoteling coordinator,” which has been advertised on behalf of Deloitte, Booz Allen Hamilton and Ernst & Young, among other firms with large numbers of mobile employees. And retailers are beginning to adapt a dual strategy where shoppers can come to a physical location to preview and test actual merchandise, whichAND THE BUILT ENVIRONMENT can be ordered online and delivered to their home with the physical stock being located in cheaper warehouse space, perhaps miles away. Telework is growing in both government and the private sector, although there is not one fixed definition of “telework.” At one end of the spectrum is the definition where people work at home at least one day a week, a cohort that the Telework Research Network says is growing almost 60 percent per year and now encompasses 20-30 million people. More conservative estimates from IDC Research — where telecommuters work from home at least 3 days a week — as 3 Calculations based on US Census Data, Table Q1, Characteristics of New Housing5 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  6. 6. reported in the 2012 State of Green Business report found that telecommuting grew slightly in 2011, from 8.5 million to 8.6 million households. Not surprisingly, telework is quite common in the tech industry, but it also has found adherents in other sectors. In addition to the reduced need for floor space, telework has been credited with reducing absenteeism, improving recruitment, particularly among younger workers who prize flexibility, and There is a new reducing turnover. Many corporate managers continue to be suspicious of job position telework, however. For example, per-employee savings notwithstanding, according to a study by the MIT Sloan School of Management, telecommuters called a “hoteling — rightly or wrongly — are slightly less likely to get promoted. As the 2012 coordinator,” which State of Green Business report noted, “Distrust among middle managers is the has been advertised biggest hurdle to growing the ranks of telecommuters.” on behalf of The Impact Overall energy use for buildings should continue to decline, but Deloitte, Booz Allen energy intensity of buildings could rise as space is more intensively utilized. On a macro level, we expect that less floor area will be built for both living and Hamilton and Ernst commerce, which could result in lower overall real estate costs for companies. & Young, among This will allow them to locate in denser, and more expensive, urban cores. other firms with Retailers — including giants such as Walmart, Target, and Best Buy — have been large numbers of shrinking their footprints for a while, gaining more revenue per square foot while mobile employees. reducing overhead. Indeed, some are pursuing a much more urban strategy. Downsizing and urban relocation have affected regional malls, some of which are starting to diversify to include health care and government services, even residential. This trend could have interesting implications for suburban office parks and malls, allowing them to evolve into mixed-use “town centers.” This would not be inconsistent with residential building trends. Living units on average already are 7 percent smaller today and much more likely to be multifamily than five years ago. The amount of occupied commercial floor space per dollar of GDP is at historic lows. Where It’s Headed According to the 2012 Human Capital and Work-Related Quality of Life survey by CoreNet, the average space allocated office workers across all companies in 2017 is forecast to be 151 square feet, compared to 176 square feet today and 225 square feet in 2010. Indeed, 40 percent of the companies surveyed by CoreNet anticipated having average office area of 100 square feet or less within five years. For companies that have adopted a comprehensive mobile technology strategy, this figure could be as low as 50 square feet per employee, according to Jones Lang LaSalle. An office space benchmarking survey conducted by the General Services Administration showed a 2010 average of 200 square feet of usable space perAND THE BUILT ENVIRONMENT person in the private sector, compared with a 190-square-feet benchmark in government.4 But the GSA office consolidation and upgrade project (currently on hold) was benchmarked at approximately 80 square feet per employee. Key Players A growing number of companies and government departments are stressing “smaller but smarter” workplaces that rely not only on open, flexible space but also heavy reliance on telework strategies. Leaders include: • The federal government is a major adopter of space consolidation and promoting telework. For example, the U.S. Patent & Trademark Office expects to save $1.5 million a year thorough offering flexible workspace.6 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  7. 7. Floor Space per Employee 2010 675= 225 With 25 percent of 2012 528= 176 its global workforce 2017 453= 151 as road workers or telecommuters, IBM saves $700 million Estimates of Floor Space Trends from CoreNet Survey in real estate costs each year. • IBM With 25 percent of its global workforce as road workers or telecommuters, IBM saves $700 million in real estate costs each year. • Sabre Holdings—The travel firm reduced its real estate costs by 25 percent—roughly $10 million a year—through its Flexspace program. • AT&T—Ma Bell saved $550 million per year through space consolidation. • Nortel Network—Its telecommuting program reduced the need for 1.6 million square feet and $20 million annually in real estate costs. Yeah, but… A study published in 2001 by Cornell University, Offices that Work, found that having open-plan offices fostered joint innovation and quick problem- solving sessions. Originally thought to lead to greater chance encounters and stimulate discussion and new ideas, the open plan office is nearly ubiquitous in today’s corporate world: Teknion corporation’s 2011 Workplace of the Future survey predicted that by 2015, more than three quarters of U.S. companies expect to use open workspaces with fewer offices. However, the vast majority of studies show that the noise level and constant interruptions result in increased stress and lower productivity. European research shows that while employees who ask for help do better in an open space, those who supply the help can often find their productivity decline. Ironically, in order to get away from prying ears, many workers choose to discuss ideas regarding innovations and new products outside of the office. Dr. Vinesh Oommen of Queensland University in Australia, in a literature review on the impact of open plan offices on productivity, concluded, “In 90 percentAND THE of the research, the outcome of working in an open-plan office was seen as BUILT ENVIRONMENT negative, with open-plan offices causing high levels of stress, conflict, high blood pressure, and a high staff turnover.” Some suggest that the preference and productivity of open plan offices may be a more generational and even personality issue. Gen X’ers and Gen Y’ers have grown up in a more open and collaborative setting and extroverts thrive in this type of environment, regardless of age. Older, more experienced workers, however, have lower tolerance for the hubbub of open-plan offices, and 4 General Services Administration, Office of Real Property Management, Performance Measurement Division, Workspace Utilization And Allocation Benchmark, July 2012 update.7 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  8. 8. introverts need some sort of privacy and seclusion to be productive. Unfortunately, green office space is not likely to solve many of the issues surrounding open-plan offices. For a variety of resource conservation reasons, the majority of green office space is open plan. A 2007 study of LEED certified office space by the Center for the Built Environment at the University of California shows that, although they perform better on most indoor environmental quality metrics, they are acoustically inferior. Get Your Inner Geek On... According to ING Clarion Partners’ David J. Lynn, writing in the National Real Estate Investor, renewed trends in urbanization is driving change in retail strategies. Lynn uses rent growth as a proxy for both demand and overall trends in location. According to Lynn’s research, over the last five years, rent growth for central business district (CBD) retail assets has MSA Historical CBD Historical MSA Forecast CBD Forecast  Market (%) (%) (%) (%) Atlanta -0.34 -0.88 -1.32 -0.77 Boston 2.2 3.5 0.2 1 Chicago -5.48 -5.8 -2.02 1.4 Denver -2.14 -3.3 2.3 1.2 Houston 1.6 5.3 2.89 3 Miami 2.08 7.5 2.58 2.5 San Francisco 2 10.6 0.1 0 Washington DC 1.32 9.6 1.63 1.6 Average of top 15 0.55 1.42 1.49 2.11 retail growth markets Comparison of Growth Rates in Retail Rents outpaced that of the overall Metropolitan Statistical Area (MSA) more than half the time, as shown in the table below. In addition, the five-year forecast is for CBD rent growth to outpace that of the MSA more than two thirds of the time. Not only is the rent growth higher, but it is one a half times higher.AND THE BUILT ENVIRONMENT Past 5 Years Forecast 5 years Rent Growth CBD vs. MSA 255% 142% Fraction of markets where CBD 53% 67% growth exceeds MSA growth Comparison of rent growth between CBD and MSA8 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  9. 9. ESREVER MIGRATION As urban environments become more livable, many corporations are reversing the suburban flight of 30 years ago. Some examples: United Airlines The airline has signed one of the largest leases in Chicago history in the Willis Tower, leasing 830,000 square feet through 2028. Sara Lee In 2005, the company moved out of its 60-year home in Chicago for Downer’s Grove, a suburb. However, the company has announced that in 2013 it plans to relocate 500–650 employees back to downtown Chicago. Amazon.com The online retailer’s new headquarters, totaling 1.7 million square feet in 11 buildings, is located on a Seattle streetcar line, providing direct access to the city’s airport. Salesforce.com announced in 2010 that the company spent more than $270 million to buy 14 acres in San Francisco’s Mission Bay to build a two million-square-foot headquarters. However, in early 2012 the company abandoned its plans for building the project, opting to remain in and expand its downtown San Francisco presence in 3 newly available buildings that would give them nearly the space of Mission Bay several years before that project would be ready. According to an article in Forbes, Salesforce CEO Marc Benioff noted “We can attract extraordinary talent [to San Francisco]. It’s not Silicon Valley, the flatlands.” Zappos is scheduled to move 1,200 employees to downtown Las Vegas in 2013 from suburban Henderson. Motorola is moving all of its 3,000 Mobility division employees outside Chicago to downtown, taking over several top floors of the LEED-certifiedAND THE Merchandize Mart. BUILT ENVIRONMENT Many fast-growing startups are opting for downtowns, sometimes settling in sub-prime parts of town. Downtown Internet firms include: Zynga (San Francisco) • Square (San Francisco) • Tumblr (New York) Pinterest (Palo Alto) • Twitter (San Francisco)9 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  10. 10. The Big Picture With the advent of always-on, high-speed and mobile communication, it is possible to have nearly continuous access to people, work, goods and services from anywhere. Two very large demographic cohorts — retiring Baby Boomers (those between 47 to 67 years old) and coming-of- age “echo boomers” (a.k.a. Generation Y, ages 18 to 34) — are expressing preferences for the compact, diverse opportunities available in denser urban environments, mean that they are choosing access over mobility. Transportation: Access Trumps Mobility For the younger generation, this choice appears to be reinforced by the fact that in 2011 Gen Y’ers bought 30 percent fewer cars than were sold to this cohort 4 years ago, and adults in the 35-44 age range curbed their car-buying by 25 percent, while losing a large number of licensed drivers. This indicates that many younger people are eschewing the physical access from remote locations that cars gave earlier generations in favor of the access provided by virtual mobility. Public transit, car-sharing, bicycling, and walking are just a few of the preferred options for sustainable mobility among younger people. Ania Wieskowski outlined in the Harvard Business Review the many physical, mental and cultural problems with suburban living, and notes that almost two- thirds of college-educated job-seekers locate first to where they want to be: the cities, which have quick physical access to a variety of goods and services without having to rely on a car, then they find a good job. The Drivers Before automobiles became a dominant element of American society, if people wanted to see someone or get something, they simply walked to their neighbor’s house, or to the relatively convenient town/city center. With the advent of sprawling suburbs and automobile transportation, access, in terms of time, grew significantly in spatial terms. Earlier this year, Time.com reporter Brad Tuttle wrote about eight key influences on America’s driving habits, which we group here by VERGE category with commentary based on our research: ICT • Telecommuting: As noted above, for reasons of greater access and cost savings, more and more companies are embracing at least part-time telecommuting. • Online shopping: Online shopping continues to grow by double digits annually, but retailers are finding ways to consolidate their real estate footprint and take advantage of an online component in conjunction with their physical properties. A 2008 Carnegie Mellon study updated last year found that online shopping had a lower environmental footprint than in-storeAND THE shopping principally because of the reduced transportation footprint. BUILT ENVIRONMENT • Information technology: Another side of the online shopping coin, what we call “informational access,” allows people to interact socially without being physically together. • Home entertainment: Numbers vary, but the electronic gaming industry in the United States is 60 percent to 70 percent larger than the film industry in terms of revenue. Add to this a wide array of cable and online entertainment options and it is no longer necessary to leave the home for this type of entertainment.10 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  11. 11. Transportation • Gas prices: There is no doubt that gas prices influence behavior in the short run, but as noted below, the overall cost of driving is still considerably below that of a decade ago, in inflation-adjusted terms. Perhaps the confluence of rising ownership costs and the other trends mentioned will combine to moderate, if not reverse, America’s half-century-long increase in annual The trends of urban vehicle miles traveled. densification and • Traffic: Although traffic is worse than the 1982 baseline — “wasted time” is growing access about 15 percent greater across the 400+ urban areas studied — congestion conditions have actually improved slightly since the year 2000, according to to broadband research by Texas A&M University. Of course, your congestion may vary. information are Buildings affecting two of thelargest demographic • Shift to urban living: As noted above, the trends of urban densification and growing access to broadband information networks are affecting two of the cohorts in the U.S: largest demographic cohorts in the United States: retiring “empty nest” Baby Boomers and Baby Boomers and the 18-to-34-year-old Gen Y “Echo Boomers.” As part of the 18-to-34-year- wide-ranging livability programs, many urban areas are significantly increasing the physical and informational infrastructure to support non-motorized old Gen Y “Echo transportation and trips. Research by William Frey of the Brookings Institution Boomers.” indicates that the annual population growth rate in exurban and suburban areas has declined precipitously from over 2 percent to below 1 percent since the late 2000s. At the same time, city and high-density suburban populations have climbed significantly, from negative growth in 2006 to growth rates of nearly 1 percent today, equaling or surpassing their less-dense counterparts. • Employment trends: Of course, employment — or lack thereof — impacts transportation trends. And although unemployment remains high, the improving job growth since 2009 has not resulted in a resumption of car travel. Interestingly, the decrease in energy and carbon emissions from transportation accelerated in 2012, which could mean that a virtuous cycle — urban job growth, substituting virtual or non-motorized access for mobility and continued improvement in auto fuel economy — will keep transportation- related energy and carbon emissions low amid economic recovery. The Impact There are contradictory trends regarding peoples’ use of transportation services. So, while it is premature to say that America’s love affair with the automobile has ended, certainly the honeymoon is over. On the one hand, vehicle miles traveled — both for personal vehicles as well as heavy trucks, including long–haul transport and local delivery — have declinedAND THE over the last few years. Clearly, the trucking industry has been hit by higher fuel BUILT ENVIRONMENT prices and the recession since 2007 but large fleets such as UPS and FedEx also have improved the energy efficiency of their fleets. On the other hand, although fuel prices have risen sharply since 2009, the cost in inflation-adjusted dollars for driving 15,000 miles, including both fixed and variable costs, is about the same as it was in 1996 and considerably lower than it was a decade ago. Fuel economy for the personal vehicle fleet (including light trucks) is the highest on record. If FedEx and UPS and the major airlines are any indication, there are11 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  12. 12. aggressive efforts underway to upgrade truck and air fleets, which also includes fuel-switching in ground vehicles. Where It’s Headed We believe that workplace policy, demographic, urbanization and pricing trends will continue to put downward pressure on the use of private transportation. Non-motorized transportation, such as walking and bicycling, will continue to grow as cities become more walking and bike friendly. We expect to Although still a relatively small portion of commuting trips, the use of mass see greater transit for non-work-related trips has grown significantly. In addition, walking and development bicycling trips are significantly above the levels of the decade ago, in part due to greater urbanization. concentration in the more vibrant areas We believe that urbanization trends of the U.S. population will continue, though not necessarily in the denser central business districts (CBDs) that are of larger cities that considerably more expensive to develop. Significant opportunity remains in will cluster around the CBDs of many of the northeastern U.S. cities that suffered population loss the fringes of the over the last three decades. But in the near future we expect to see greater existing fixed-rail development concentration in the more vibrant areas of larger cities that will cluster around the fringes of the existing fixed-rail transportation networks, such transportation as commuter rail, streetcars and subways. networks. We also see huge potential for new transit patterns being developed around and between office parks and shopping malls where sufficient density exists. On the vehicle front, one of the key takeaways from a 2012 KPMG survey of global automotive executives is that we are beginning to move into an era of car usership and out of the era of car ownership. This trend is consistent with the overall global movement of the share economy, or what the VERGE speaker, Lisa Gansky, calls “The Mesh,” the title of her 2010 book. Key Players The ascendancy of car usership versus ownership is represented by the strong growth in car-sharing fleets and programs as well as ride-sharing options for both businesses and consumers. The website carsharing.net lists more than 150 car-sharing organizations, from national networks like Zipcar to a small local co-op in Traverse City, MI. Region Car Sharing Program Types of Operations Wide range from small co-ops to U.S. Over 100 cities large for-profits Mostly smaller, local programs & Canada Over 2 dozen cities coops Wide range from small co-ops to Europe Over 50 citiesAND THE large for-profits BUILT ENVIRONMENT Middle East Israel Mostly for-profit companies Asia Singapore Mostly for-profit companies Australia & Several cities Mostly for-profit companies New Zealand Several of these services have investments by the big car companies. For example, carpooling.com, a website that facilitates carpooling for over a million riders in Europe, and Car2Go both boast investments by Daimler. In Germany, BMW has launched DriveNow a carsharing service featuring electric vehicles12 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  13. 13. and recently debuted the service in San Francisco. Ford and Zipcar have jointly launched a program targeted at universities, and GM has investments with the peer-to-peer company RelayRides. The large rental companies are also getting into the act, with Hertz-on-Demand launching into a dozen cities. City-Go-Round, which is funded by the Rockefeller Foundation, has an excellent website (www.citygorround.org) principally dedicated to urban and suburban It seems almost transit mobility that has almost 180 apps for transit (143) walking and biking (21) an article of faith and driving (13). that fuel prices and Yeah, But… It seems almost an article of faith that fuel prices and economics dictate how much people drive. However, at the macro level, the data tells a economics dictate slightly different story. In the graph below, it appears that rising cost of driving how much people is correlated with more driving. Ironically, cost and VMT curves track almost drive. However, the identically, opposite of what is expected given the inverse type of relationship. data tells a slightly These kinds of situations are what economists call “inelastic,” where demand is different story. not heavily dependent on price. But it now appears that some sort threshold has been reached. Perhaps there is some combination of driving costs, congestion and the availability of alternatives that is damping down total mileage. 3,500,000 $10,000 $ 9,000 3,000,000 $ 8,000 2,500,000 $ 7,000 2,000,000 $ 6,000 $ 5,000 1,500,000 $ 4,000 1,000,000 $ 3,000 Annual VMT Sources: Cost of travel: American Automobile Association, Your Driving Costs (Heathrow, FL: Annual Issues); VMT: $ 2,000 500,000 Cost of Travel (adjusted for inflation) Monthly Traffic Volume Trends, August 2012 $ 1,000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2205 2006 2007 2008 2009 2010 2011 Annual VMT and Cost of Travel (15,000 miles) Trends29 Feet on the Street The Urban Land Institute and the LOCUS network of Smart Growth America sponsored a study of the Washington DC area with George Washington University (GWU) School of Business. It looks at the DC area as a microcosm of urbanization trends over the last decade or so. The basic thesis of the study is that regionally significant walkable areas will be the principal location of economic growth in the metropolitan Washington, D.C. area and, by extension, the rest of the country. Indeed, the U.S. Conference of Mayors anticipates that over 90 percent of the growth in U.S. employment and population will occur in cities. Based on a 2007 Brookings Institution assessment of the Washington, DC area, the GWU evaluation looks at two principal development types within the Washington Metro region: drivable suburban and walkable urban areas. On average, the walkable urban places (a.k.a. WalkUPs) are 15 times denser than the drivable suburban areas with comparable real estate premiums for the returns on equivalent amounts of land.13 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  14. 14. The study lists six distinct types of WalkUPs: 1. Downtown; 2. Downtown Adjacent; 3. Urban Commercial; 4. Suburban Town Center; 5. Strip Commercial Development; and 6. Greenfield. These six WalkUPs comprise less than 10 percent of the metropolitan area in Washington DC. Yet, since 2009, they account for 48 percent of all of income-generating property (office, retail, apartment, hotel) in the region, up from 34 percent in the period 2000-2008. There is a 75 The GWU research found that WalkUPs are significantly more desirable and significantly more valuable economically than drivable areas. percent rental premium for office • There is a 75 percent rental premium for office space in DC WalkUPs, compared to the region’s average rents. space in DC in walkable urban • H ousing for sale in DC WalkUPs is 71 percent more expensive per square foot than the average of prices in the DC metro area. areas, compared to the region’s • O ffice, retail, apartment and hotel space in DC metro area WalkUPs has risen, from for 24 percent of new development during the 1990s, to 48 average rents. percent of all development in the cycle starting in 2009. • W alkUPs are host to a growing share of new rental apartment development. In the 1990s, 12 percent of new rental apartment space was built in WalkUPs, but in 2012 that figure reached 42 percent. The 43 regionally significant WalkUPs identified in the report account for about 34 percent of metro area jobs in DC. Three-quarters of the WalkUPs are connected with rail transit to the broader region. The Big Picture Information and communication technology (ICT) is enabling change in the nature of consumption and ownership, which, in turn, is having dramatic impacts on building and transportation asset utilization. REGIONALLY SIGNIFICANT LOCAL SERVING U.S. Metropolitan Land Use Options Walkable Urban WALKUP NEIGHBORHOOD (Walkable Urban Place) 1-2% of Metro Area Acreage 3-7% of Metro Area Acreage Drivable Sub-urban BEDROOM EDGE CITY COMMUNITYAND THE 5-7% of Metro Area Acreage 80-85% of BUILT ENVIRONMENT Metro Area Acreage Division of Metropolitan Land Areas Between Walkable and Drivable DC: The WalkUP Wake-up Call, by Christopher Leinberger, George Washington University School of Business, 2012.14 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  15. 15. After some initial (and ongoing) false-starts, ICT is beginning to catalyze the remaking of the entire facility management industry. On the energy front, the smart grid could have a potentially similar impact depending on whether the intelligence is directed toward the building side (huge) or toward the utility side (less significant) of the meter. Although buildings hold particular promise for the efficiencies that can be realized from an ICT overlay, there is a mistaken belief that ICT alone can solve the problem. It can’t. Information and Communications: Catalyst & Enabler In sum, ICT tools are necessary, and hold considerable promise for the built environment, but insufficient without cultural or structural changes. The Drivers One of the cornerstones in the theory of economic efficiency is that perfect information is uniformly available and that rational decisions are made solely based on that information and not subject to the context.5 One of the key explanations of economic inefficiency is the lack of information or information asymmetry. The spread of fixed and mobile broadband is putting near real-time information into the hands of more and more people. ICT is helping reduce the risk to individuals or companies that just because you don’t “own” resources such as office space or a car, it doesn’t mean you won’t have them when you need or want them. This means it is not necessary need to over-consume or “over-own” resources just to guarantee access. The Impact: Buildings and Urban Development Although dashboards don’t save energy by themselves, they give insights to building operators that can lead to eliminating waste. When combined with experienced and skilled building operators, these insights can lead to more efficient and effective building operations, though we would argue extent of these energy “savings” remains somewhat unclear. Most faults detected through dashboards and analytics should be caught in the course of routine building management. At the end of the day, it’s the human action that saves the energy, not the information that revealed the need to act. Clearly, good management makes a difference and improved tools simply improve management. We have argued elsewhere that the main goal of building analytics is to prevent ROI, not to create ROI. The impact of increasing building instrumentation and control, however, is a different matter. Putting intelligence and control on the building side of the meter — at the individual building or building cluster level — in our opinion, is what the “smart grid” is all about. It’s up to buildings themselves, not the grid, to tune the size of their energy demand to their own needs. This can be helped, of course, by pricing information from the grid. The ability to continuously and automatically commission and tune building services to their exact needs not only reduces maintenance costs significantly,AND THE BUILT ENVIRONMENT but also should lead to significant improvements in energy efficiency, with the same caveats about “savings” noted above. In addition, soon we will see building energy systems integrated and controllable down to the individual device. Some highly tuned control systems are beginning to emerge, particularly in lighting and crude space-by-space HVAC control. Transportation The Telework Research Network estimates that economic 5 If you ever want to drive a conventional economist crazy, simply refer to the willingness to pay experiments that show people are willing to pay vastly different sums of money for the identical product, simply because of where they are purchasing the product.15 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  16. 16. savings of up to $10,000 per employee can be realized through a comprehensive approach to telework. These savings range from increased productivity to lower real estate costs and, on the employee front — you guessed it — lower gasoline bills and car operating expenses. According to a survey of global automobile executives done by KPMG, 63 percent think that convergence of TIME (Telecom, IT, Media, Entertainment) and the auto industry is “inevitable.” According to a Energy In an extensive study of the energy efficiency impacts of the smart grid, survey of global Pacific National Northwest Laboratories estimated that reductions in electricity sector energy and CO2 emissions could be reduced directly by approximately 12 automobile percent, while the indirect impacts would be approximately 6 percent. executives done Where It’s Headed by KPMG, 63 • Transparency: ICT enables more freely available data and greater access percent think that to that information. Understanding operational data and how a building convergence of is managed can help maximize resource efficiency. Information about key Telecom, IT, Media, features, such as neighborhood walkability and amenities, is readily available Entertainment and on the Internet, which helps focus and drive both residential and non- residential investment. Eventually, people both inside and out will know much the auto industry is more about the building in real time or in terms of reviews. The growing trend “inevitable.” of benchmarking energy consumption and public access to this information will play an increasing role in real estate markets. It is very easy to see how savvy owners could promote their buildings based on publicly benchmarked performance and “crowdsourced” opinions on conditions in certain buildings, not unlike what happens now with restaurant reviews. • Six cities: New York, Philadelphia, Washington DC, San Francisco, Austin, and Seattle, have requirements for commercial buildings greater than 50,000 square feet to benchmark their energy use and to post it publicly. Some cities, such as New York, further require that energy audits and retro-commissioning efforts be undertaken. There are also some requirements for multifamily and, in the case of Austin, single-family residential buildings at the time of sale, to be benchmarked to help improve energy efficiency. • Real-Time/Just-In-Time Management: Real-time data for building analytics as a first step in moving buildings toward “autopilot” is a scenario in which the traditional building operator could end up going the way of the telephone operator. But simply because there are no longer any phone operators does not mean that the telecom system runs itself. In the near future, different skill sets will be needed in building management that combine the ICT with hands-on field experience. This is not unlike the automotive industry, where diagnostics is now done principally or increasingly by plugging in to theAND THE dataport, rather than listening to the engine. However, the best mechanics BUILT ENVIRONMENT also know what to listen for, as well as how to read and understand the computer diagnostic report. Also in the near future, people involved with facility management would need to have a significant combination of both ICT experience and mechanical knowledge. One of our worries is that the rush toward building automation and integration through ICT is getting ahead of the ability of the operations and maintenance field to successfully provide enough people with the proper skill sets to meet upcoming needs. This is part of the potential green job deficit noted by McGraw-Hill in its green employment study. Management will16 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  17. 17. also need to rethink its approach to facility management, recognizing that people will end up costing more on an individual basis though each individual will be able handle more floor area eventually. Automatic continuous commissioning will be able to monitor building behavior and conditions that can be accessed by the building operations team from anywhere in the world. Self-calibrating controls, or controls that can be manipulated remotely, will increasingly replace manual and mechanical controls, but some things will still need intervention and replacement. • Demand Response: Demand response or peak load reduction is not really “new,” with variants of this demand-side management strategy dating to the 1980s. The demand charge portion of commercial energy bills is growing rapidly, so reducing power consumption is one of the most cost-effective Year No. of City Timing Activities Started Buildings Residential Buildings: Disclose Reporting: audit results to potential buyer Commercial Buildings >75,000 ft2 Commercial Buildings: Portfolio June 2012 Austin 2009 Manager Benchmark 30,000-75,000 ft2 2013 10,000-30,000 ft2 2014 Multifamily Buildings: Reduce Multifamily > 150% of average energy by 20% & disclose performance 2011: City Buildings >10,000 ft2 Benchmarking 2012: Commercial Buildings Tenant Submetering New York 2009 >50,000 ft2 ~24,000 Reporting 2013: Residential multifamily >50,000 ft2 Retrocommissioning Commercial building benchmarking: >50,000 ft2, October 1, 2011 San Francisco 2010 ~8,000 25,000-50,000 ft2 April 2012 10,000-25,000 ft2 April 2013 Audits begin 2013 Phase 1: Commercial buildings Benchmarking > 50,000 ft2 (April 2012 data submission deadline) Tenant Submetering Seattle 2010 ~24,000 Phase 2: Commercial buildings Reporting >10,000 ft2 & Multifamily buildings Retrocommissioning >5 units. 2012: City Buildings >10,000 ft2 Washington still 2012: All Buildings >150,000 ft2 DC finalizing 2013: City Buildings >100,000 ft2 2014: All Buildings >50,000 ft217 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  18. 18. actions any company can take to trim its energy costs. Typical demand management measures include, among many others, letting building temperatures float during peak hours, slight dimming of lighting systems, reducing voltage at the building transformer level, and slightly slowing the speed of elevators and escalators slightly. However, it has only been within the last few years that the process of It has only been demand response has been automated with both standalone and whole within the last building software, such as building management systems. The modern demand management industry has evolved from a customized, expert-driven few years that the offering to one that is governed by automatic decision rules. process of demand One of the few bright spots in the automated software front, this activity response has been quickly became commoditized. It has made strong inroads into building automated with automation systems and has allowed more effective management of energy both standalone costs and building peak loads, which are the principal driver of capacity additions to the electric grid. and whole building software, such as • Collaborative Consumption: ICT also is the principal enabler of the rapidly growing share economy (or “collaborative consumption” and “peer-to-peer”) building automation movements that are beginning to have a noticeable impact on the more systems. efficient and effective use of transportation and building assets. • Gamification: Still in its infancy, but Gainesville Green is an interesting website site (in beta, as of this publication) that shows what might be possible in the future for tracking energy consumption. As a study by the American Council for an Energy Efficient Economy noted, combining smart metering and user feedback with the ability to compare consumption with peers is the most powerful combination in reducing energy use. Key Players • Buildings and Energy: Groom Energy has by far and away the best representation of the key software products that form the intersection between buildings and the energy system under the rubric of their enterprise smart grid evaluation services, so we will let the picture speak the thousand words. (See graphic on next page) Yeah, But…The Dilemma of Big Data Analytics experts at IBM’s Smarter Buildings initiative have noted that a single decent-sized building can have almost 10,000 data points producing meaningful information at 15-minute, or less, intervals, producing nearly a million data points every day. EnerNOC, the demand management and energy efficiency company, manages over 23 GB of data per day across its 13,000 building network. This quantity of informationAND THE brings up several challenges: BUILT ENVIRONMENT • Verifying: Data is produced by sensors, which have been often sold on lowest price, that are not terribly accurate or reliable. You know the drill: garbage in, garbage out, and in a building with thousands of sensors, that can be a lot of garbage. • Storing: Much less of an issue now, except for that pesky cost thing. • Managing: The next big challenge with this amount of data is that it needs to be managed and analyzed in a way that can produce useful18 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.
  19. 19. Groom Energy’s Brilliant Graphic of the Building-Related IT Space information. This is where building analytics and network operation centers (NOC) have the greatest benefits, so long as the analytics and NOCs are developed by or staffed with competent people, which continue to be in insufficient supply. • Interpreting: Alluding to the current and looming shortage of qualified green professionals in the building sector noted by the McGraw-Hill study mentioned below, the ability to analyze and interpret the data that’s being provided is another challenge. • Action: Often the Achilles heel of the Big Data dilemma, as many of the dashboard companies have discovered to their chagrin. Just because information is provided, does not mean that building operators have the time or the training to respond to it.AND THE BUILT ENVIRONMENT19 © 2012 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced for noncommercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.

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