tiaa-cref environmental initiative update for asset managers october 2 and 7, 2008
TRANSCRIPT
TIAA-CREF Environmental Initiative
Update for Asset Managers
October 2 and 7, 2008
2
Review of the Environmental Initiative
• Benefits– Financial– Environmental– Enhance corporate image
• Goals– Reduce environmental footprint– Demonstrate market leadership– Create market differentiation– Reduce energy intensity 10% by 2010
• Opportunities– Reduce expenses through no- and low-cost solutions – Increased NOI and enhanced asset value
3
Initial Approach
• All properties– Office investments – Multi-family– TIAA-occupied – New construction
• Energy management first– Responds to growing demand for green and increased
awareness of environmental concerns– Leads to increased tenant retention and attraction– Hedges against rising costs of energy– Increases property values
• Water efficiency and waste management are underway
4
Environmental Initiative Activities
Portfolio-Wide Evaluation
Analyze Data
Make Recommendations
Implement Solutions & Track Results
Gain Recognition
Continual Reassessment
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Activities to Date
• Established a baseline from which to measure progress • Conducted training for property managers & engineers• Identified trends and opportunities• Conducting property assessments and making
recommendations for office and multifamily properties• Began implementing property improvements
• Obtaining ENERGY STAR labels for qualifying office buildings
• Earned recognition as an ENERGY STAR Partner of the Year award winner and ENERGY STAR Leader
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Ongoing/Upcoming Activities
• Quarterly reporting to asset managers• Maintain benchmarking data and track changes• “Change the World, Start with ENERGY STAR” –
CFL campaign for office tenant employees, multifamily residents, and TIAA-CREF employees
• Replace incandescent lights with CFLs in apartment homes in MFH properties
• Regular property manager, engineer, and tenant communications via WebEx and direct contact– Encouraging building staff to expand tenant communications
about sustainable practices
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Ongoing/Upcoming Activities (continued)
• Implement first set of standard operating procedures• Data collection on:
– Energy purchasing in deregulated markets– Overtime air charges to facilitate an equitable and consistent
approach• Continue pursuing ENERGY STAR labels• Evaluate feasibility of LEED-EB certification• Develop property marketing materials• Engage with industry groups• Translate savings into dollars and carbon emissions
reductions• Upgrade common areas in MFH communities, focusing on
low-cost solutions
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Your Role in the Environmental Initiative
• We need your help to reach the10% energy reduction goal• Utilize property visits and talk with property managers/chief
engineers• Observe:
– Best practices– Opportunities for improvement– Red flags and “greenwashing”
• Nick is the liaison/translator between the involved groups• Communicate with us and leverage:
– Property management roundtables– JDM accessibility
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Often Overlooked Opportunities
• Don’t condition space unnecessarily– After hours– Leasing situations– Construction situations/TI’s
• Engage gas and electric service providers for unlisted rebates/incentives
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Acquisitions
• During due diligence, request ENERGY STAR rating or energy data in order to get a rating
• Collect data for preliminary LEED assessments
• Look for energy saving opportunities
• For new acquisitions, request last 12 months of utility data to begin benchmarking
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Disposition Checklist
Up-to-date ENERGY STAR rating ENERGY STAR label, if achievable LEED assessment Environmental assessment
Environmental savings example:- The average ENERGY STAR rating for office buildings is
50, so a building rated 70 is 20 points better than average- Compared to an average building, a hypothetical 300,000
square foot building rated 70 saves:- 1,500,000 kWh of electricity per year- $165,000 in energy costs per year- 2.5 million pounds of carbon emissions
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Regional Trends
• In the Northwest – running out of capacity
• In California – skyrocketing energy rates
• In the Southwest and other areas – dwindling water supplies
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National Trend: Increasing Water Rates
National Average Rate Increases over Select Two-Year Periods
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National Trend: Demand for Green Buildings
CoStar Data on Occupancy of ENERGY STAR Buildings
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National Trend: Demand for Green Buildings
CoStar Data on Direct Rental Rates for ENERGY STAR Buildings
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National Trend: Demand for Green Buildings
RREEF Data on LEED Certified Buildings
Vacancy Rates in Office Space
Office Space Rents per SF
All LEED Buildings LEED Class A All Class A (LEED + non-LEED)
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National Trend: Increasing Waste Production
Per Capita Averages (in lbs) - U.S. Waste
While recycling rates are higher, Americans still send substantially more to landfills today than we
did 25 years ago.
Waste hauling charges are increasing due to higher fuel costs.
Waste
GeneratedRecycled
% Recycled
Sent to Landfill
1980 3.66 0.35 9.6% 3.31
2005 4.54 1.08 23.8% 3.46
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National Trend: Utilities Offering Incentives for Reducing Demand
• Rebates available for…– Lighting retrofits & controls, HVAC upgrades, other
customized energy efficiency measures, renewable energy, irrigation systems, water heaters, appliances
– Commercial buildings and multifamily communities– Retrofits and new construction
• Financial and technical assistance with recommissioning studies, energy audits, building tune-ups, demand response programs
• Incentives come from utilities, local water districts, municipalities, state and federal governments, etc.
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National Trend: The New “Green Lease”
• What is a green lease?– Communicates green operational practices, equipment
standards, and goals– Creates financial incentives for investments in environmental
upgrades or technologies– Details tenant’s responsibilities for limiting energy & water
consumption and participating in recycling program– Sets minimum green standards for tenant improvement projects– Requires that maintenance and repairs must follow the building's
green strategies• Engineers are increasingly reviewing leases to ensure energy
efficiency and other technical requirements are sound• BOMA Green Lease template available
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Additional Trends
• Expedited building permits for green buildings
• Increasing tenant demand for sustainable buildings and green leases– IBM– Toyota– Bank of America– Many more