Performance and profit gains with energy benchmarking

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Measuring the efficiency and cost of buildings’ energy use is essential in today’s real estate market. Buildings account for 40 percent of all energy used in the U.S., with an energy price tag of $450 billion annually. By measuring a building’s energy use through the EPA’s internationally recognized ENERGY STAR® program, commercial real estate professionals can save money and reduce energy consumption. Best of all, it’s free and easily accessed online.

ENERGY STAR® Portfolio Manager gives building owners and managers a baseline understanding of their buildings’ energy use and a benchmark against which to measure performance, according to Zachary Hart of the Institute for Market Transformation. Simply benchmarking energy usage led to reduced energy usage and savings: a 2012 EPA study of 35,000 benchmarked buildings found that they saved an annual average of 2.4 percent in energy costs. Buildings that benchmarked for three years straight saved an average of 7 percent.

In a competitive real estate market, this tool creates a baseline against which buildings can measure their energy usage, both for cost-saving and profit. Tenants are more likely to rent and stay in green buildings. A 2008 study by the CoStar Group found that ENERGY STAR®-labeled buildings rented at $2.40 per square foot more than non-labeled buildings, and that the labeled buildings had a 3.6 percent higher occupancy rate. Energy-efficient buildings are a safer investment for lenders and raise a building’s overall market value.

Additionally, dozens of cities and states across the country, including New York City and Cook County (Chicago) have implemented benchmarking programs and policies that encourage and sometimes mandate energy consumption tracking. In doing so, local and state governments are promoting increased energy efficiency and empowering customers to judge a building’s worth by its energy performance. A map of benchmarking programs and policies is available here.

One of the biggest challenges of measuring a building’s performance is data collection. However, JLL can guide clients to best practices in data collection and entry into the ENERGY STAR® program. Clients who have not yet entered their buildings’ energy use into the program should do so, and check to see whether local ordinances require regular measurement.

Click here to learn more about energy benchmarking and ENERGY STAR® benchmarking tools.

Chetan Gaonkar is an energy analyst within JLL’s Energy & Sustainability Services who is passionate about promoting energy awareness with clients. His responsibilities include portfolio utility data analysis and documenting energy conservation opportunities, as well as helping clients establish and maintain their ENERGY STAR® portfolios.

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