Article from November 1, 2010 Scotsman Guide

1. •• Poor energy performance may reduce
the prospective tenant pool.
•• Energy-efficiency requirements in local
building ordinances may impact the cap-
ital cost of building renovation.
•• A lack of energy efficiency may make
buildings less competitive in the market-
place and necessitate rental discounts.
•• Green buildings can be more valuable
and can command higher rents.
•• Green buildings experience higher
occupancy.
Local initiatives
If being energy efficient can help market
a building, a lack of efficiency may hurt it.
Although there is no national standard yet
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Reprinted from Scotsman Guide Commercial Edition and scotsmanguide.com, November 2010
By Eugene A. Belli
Vice president of national
programs
AEI Consultants
Does Your Building Measure Up?
Energy efficiency can affect an asset’s marketability and value
in place, several local regulations
have been enacted that require
building-owners and property-
managers to make energy-effi-
ciency data public.
In 2007, California passed As-
sembly Bill 1103, which directed
energy-use benchmarking in ex-
isting commercial buildings. Effec-
tive Jan. 1, 2009, the law promoted
energy conservation by requiring
electric and gas utilities to main-
tain records of energy-consump-
tion data of all nonresidential
buildings in the state. The data
was to be suitable for uploading
to the U.S. Environmental Protec-
tion Agency’s Energy Star Portfo-
lio Manager, allowing commercial
building-owners to measure a
building’s energy consumption
and efficiency against similar
buildings.
Making the data widely avail-
able has been delayed, but eventu-
ally anyone looking at commercial property
in California will be legally entitled to get
the building’s energy-performance data
and compare it to peer buildings.
Similar legislation was adopted in
In recent years, there has been
a greater focus on energy ef-
ficiency in newly constructed
and existing buildings. Initiatives
aimed at measuring and curb-
ing energy use are being enacted
around the globe — from a 2003
European Union directive requiring
buildings to have energy perfor-
mance certificates to last year’s
legislation from New York City re-
quiring energy audits for buildings
every 10 years. These measures
aim to make public the energy-ef-
ficiency rating as well as the envi-
ronmental impact of buildings. In
addition, they provide potential
buyers and tenants with a stan-
dardized methodology to compare
the energy efficiency of buildings
in anticipation of purchase or rent.
As energy efficiency becomes
an increasingly valuable asset in
commercial buildings, mortgage
brokers should be aware of the lat-
est standards and regulations so they can
better advise their clients.
Energy-efficiency advantages
Energy efficiency can be a valuable com-
ponent of a real estate asset. Positive
ratings can increase a building’s market-
ability and drive competition among build-
ing-owners and managers.
With growing awareness of energy is-
sues, property due diligence by prospec-
tive purchasers likely will expand to
include energy use, particularly because
energy efficiency can impact property val-
ues and rental rates.
Energy efficiency may affect marketabil-
ity and value in the following ways:
Eugene A. Belli is a vice president of national
programs with AEI Consultants, a national
environmental and engineering due-diligence
firm. AEI services national and regional lend-
ers, equity firms, brokers, private parties and
developers. Belli has more than 26 years of
experience in the environmental-services
industry and is responsible for managing
national accounts for AEI. Contact him at (732)
414-2720 or gbelli@aeiconsultants.com.
continued >>
Illustration:DennisWunsch

2. Washington, D.C., in the form of the Clean
and Affordable Energy Act of 2008.
This past December, the Greener, Greater
Buildings Plan was passed in New York
City. The law requires most buildings to
undergo energy audits every 10 years and
update their lighting systems to more-effi-
cient technology. It also requires all build-
ings larger than 50,000 square feet to
benchmark and publicly report their energy
and water use by this coming May 1. Data
for commercial buildings will be available
to the public starting Sept. 1, 2012.
With energy-efficiency data soon to be
available immediately to prospective ten-
ants or buyers, building-owners should
know how their property compares to oth-
ers in the area. The availability of the En-
ergy Star score will make energy efficiency
a potentially valuable component of every
real estate asset.
Setting a standard
Awareness of energy efficiency and green
buildings is increasing, but a standard-
ized methodology for the collection and
reporting of energy data has not been es-
tablished. ASTM International, the leading
standards-development organization, set
out to develop a standard practice for the
collection and reporting of energy-use
data for commercial buildings.
The result was the standard practice for
Building Energy Performance Assessment
(BEPA) for a building involved in a real
estate transaction. As of press time, the
BEPA standard was still in a working group
but was expected to be passed by ASTM
in October and published in December.
With this measure, ASTM hopes to create
a standardized practice for collecting and
analyzing energy-efficiency information for
commercial buildings.
The standard includes guidelines for
what needs to be done during a BEPA
study. The study’s goal is to document his-
torical energy performance, identify the
range of building energy use and cost, and
provide a pro forma energy use and energy
cost for the building. It includes a site visit,
interviews, records collection, records re-
view and analysis, and a report on findings.
Using the new standard
A BEPA study may be used as a stand-
alone due-diligence process at the time
<< continued
All rights reserved. Third-party reproduction for redistribution is prohibited without contractual consent from Scotsman Guide Media.
Reprinted from Scotsman Guide Commercial Edition and scotsmanguide.com, November 2010
a building is listed to prove the owner’s
need to prepare energy-performance dis-
closure information for prospective pur-
chasers and lenders. It also can be used in
conjunction with a Phase I environmental
site assessment or a standard property-
condition assessment as part of property
due diligence.
Users of the BEPA process should evalu-
ate the consultants performing the assess-
ment and confirm that they have enough
knowledge of building and energy sys-
tems; training in building assessments;
and the experience necessary to conduct
the site walkthrough, interviews, data col-
lection and analysis defined in the BEPA
practice.
As energy efficiency and environmental
awareness continue to grow, commercial
mortgage brokers must be aware of the po-
tential implications of new standards and
regulations as they pertain to their clients’
properties and prospective properties.
Brokers who gain the proper knowledge
can better help clients navigate property
assessments and succeed with smart
purchases that give energy efficiency
its due. •