Is implementing energy-efficiency practices worth the effort when the portfolio is spread out across the country?

Shorenstein Properties thinks so. A privately owned company headquartered in San Francisco, Shorenstein is one of the oldest real estate companies in the U.S., with a national portfolio of 18.5 million sq. ft., valued at $6.2 billion, and a reputation for innovation. A portfolio-wide campaign to reduce energy consumption saved the company $1.7 million in energy costs in 2010.

In addition, Shorenstein Realty Services, the property management arm of Shorenstein Properties, recently launched the first phase of a targeted energy conservation education program, aimed at its thousands of tenants across the country, by conducting an energy awareness road show at several of its buildings.

Titled “Flip the Switch,” the road show event, which is completing its nationwide tour by the end of 2011, focuses on energy conservation but also introduces tenants to the importance and long-term financial benefits of sustainability.

To ensure the sustainability of the concepts and strategies discussed in the tour, each roadshow event includes tenant follow-up by Shorenstein Realty Services. Flip the Switch is being followed by the launch of a green Web site highlighting tour details as well as resources and materials for tenants to use to implement reduction strategies. The website will house information on the spectrum of sustainability from recycling to water conservation and sustainable purchasing.

NREI spoke with Stan Roualdes, executive vice president of property management and construction services, on Shorenstein’s green initiatives.

An edited transcript follows.

NREI: Last year Shorenstein Realty Services saved $1.7 million, or 5 percent, in energy costs across its portfolio. Tell us about that.

Roualdes: Currently the Shorenstein portfolio consists of approximately 18.5 million sq. ft. of class-A office space in major markets around the country. When we launched our corporate energy-efficiency program I set our engineering managers a goal of reducing our annual consumption of kilowatt hours by 3.5 percent.

Bill Young and Mike Kovalsky, our managers of engineering services, and their teams did a superb job and exceeded the target by achieving a reduction of 5.1 percent. And I should point out that these reductions are not one-time reductions—the operational modifications remain in place such that we will continue to see the reduced consumption going forward.

NREI: What measures were taken and technologies used to cut consumption and costs? How easy or difficult was it to do?

Roualdes: Even though we invest in a single property type—class-A office—we still have what amounts to a quite diverse portfolio of assets within that portfolio. For example, we have a variety of different operating systems and mechanical plants as well as a variety of types of tenants, each with its own unique consumption profiles, hours of operation, etc. Clearly, there was no one-size-fits-all strategy. That being the case, we knew that the critical first step needed to be an in-person, extensive audit of the mechanical and operating systems at each property.

Given the level of technical capability that we knew was required for this audit to be effective, we sent Mike and Bill as a team to visit each of our properties to complete that inspection and audit. We wanted them to visit each property together on this "energy savings tour" because they bring different backgrounds, experience and perspective to the process, and we thought we would reap as much benefit from their collective expertise as possible.

The audit took four months to complete, after which we had a solid strategy for how, where and when we could pursue energy efficiency savings. The team identified more than 300 energy-saving strategies—some big, some small—in almost every building-system category.

Each strategy was grouped according to dollar investment and payback period. All strategies which were free, or which paid us back in less than 12 months, were automatically implemented. For those strategies with longer paybacks and more costly implementation, we looked more closely at the asset and its financial performance to determine which of those strategies, if any, it made sense to implement.

Some examples of strategies we've already implemented: extensive lighting retrofits in buildings with older, less efficient fixtures; installation of occupancy sensors; modifications to building controls automation systems; installation of variable frequency drives (VFDs) in the mechanical systems of our buildings; elimination of simultaneous heating and cooling; reduction of unnecessary hours of HVAC operation based on actual building occupancy in lieu of operation hours stipulated in the leases; and the implementation of demand-only Saturdays, where we operate the building during normal Saturday lease hours only if a tenant requests it.

NREI: What is the energy savings equivalent to, environmentally speaking?

Roualdes: It's estimated that our energy savings is equivalent to taking 1,130 homes off the grid or 940 cars off the road.

NREI: Shorenstein has participated in the Environmental Defense Fund’s Climate Corps Summer Fellowship program for three years now. What does that entail, and how has it benefitted Shorenstein?

Roualdes: We've been a Climate Corps corporate partner since 2009, with impressive results for us and our tenants. It's really more than just a summer internship, from our perspective.

First, the intern selection process really begins at the start of the year when we develop a work plan for the incoming intern, and then EDF uses what they know about us and our work plan to match us to the right intern. By the time the 10-to-12-week internship begins, we've already spoken to the intern several times, so he or she really hits the ground running once summer begins.

EDF Climate Corps does an excellent job of training the interns before they come to us so much so that when they arrive they immediately become an integral part of our sustainability platform and fully augment our own efforts.

You've got to remember that our in-house sustainability program is operated by people who have "day jobs" in engineering, property management, construction, etc. Sustainability is really a second job and most people in our organization participate in the program because they believe in sustainability.

So having someone come in who is dedicated solely to sustainability really helps to focus our team and allows them to prioritize and—most importantly—execute. It actually increases our productivity. Last year, for example, our intern prepared a wonderful report that identified a lot of little ways our tenants can save energy.

Our G.R.E.E.N. Committee took that report and used it as the backbone of a tenant education program we've been promoting this year—we call it our “flip the switch tour”—and also developed a web site where tenants can go to get ideas about how to save energy in their offices and at home, based largely on the content of that report. The tour has been very successful and we believe the website, which has just been launched, will be too.

NREI: Through EDF, Shorenstein was able to have energy-efficiency data from several buildings monitored and to assess 305 separate energy efficiency projects. Can you tell us about this?

Roualdes: Shorenstein engaged Jaxon Love, the company’s 2011 Climate Corps Fellow, to independently evaluate the Energy Savings Tour results collected by Bill and Mike. They handed over all the data they had collected on their property tours as well as 2009, 2010 and 2011 year-to-date occupancy data and all 2009, 2010 and 2011 year-to-date utility bills.

Then we gave Jaxon access to the chief engineer at each of the buildings so he could validate that data and update completed projects as well as log accurate implementation dates for projects. Jaxon adapted methodology used for verification of utility-scale energy efficiency programs and worked with experts at EDF to confirm evaluation techniques using analytical tools so the savings wouldn't be overstated.

NREI: What emerging technologies is Shorenstein planning to embrace, and what new energy-saving strategies are being considered?

Roualdes: Part of the beauty of the corporate energy- efficiency program is that we are constantly looking for emerging technologies which can help us continue to push the bar higher. Of course, you always have to weigh the cost against the return, and some technologies just don't “pencil” until they are in a later, more economical version.

One of the key components of our energy-reduction platform is what we call “technology papers.” A technology paper is done for each of the technologies that Bill and Mike evaluate.

These technology papers are reviewed periodically to determine whether building conditions, the cost of the technology or market conditions have changed so that it may make sense to deploy one of these new technologies. We also layer into our review the availability of financial incentives or rebates, as these can often tip the scale from the financial feasibility perspective.

So, in addition to continuously evaluating previously-assessed technologies, we are currently investigating new wireless lighting distributed controls. We are also continuing to implement improvements in automation controls and the sequence of operations as new technologies emerge.