Economy Can’t Stop Retrofit Trend

Despite the widespread financial challenges presented by the debilitated economy, commercial property owners continue to invest in retrofitting their buildings today in order to achieve great savings tomorrow, and it seems the trend is only going to grow. According to a new report by Pike Research, comprehensive efficiency retrofits will increase in annual revenue three-fold to $6.6 billion by 2013.As noted in the report, entitled Energy Efficiency Retrofits for Commercial and Public Buildings,approximately 20 billion square feet of the country’s existing 70 billion square feet of public and private commercial building space is in need of major renovations, presenting a $400 billion opportunity for significant green upgrades over the next few years. Even with the economy in its currently shattered state, many commercial building owners are finding the funds to invest in upgrades that will reduce energy use. “There certainly is a shortage of capital for energy efficiency retrofit, but as vacancy rates increase, property owners see there are both short-term and long-term benefits so despite limited capital, they’re trying to find ways to make the improvements.” Clint Wheelock (pictured), Pike Research managing director, told CPN. “The savings from energy efficiency can be seen in both the short-term and the long-term. The increase in value of the property can be seen in the long-term, as well as in the short-term with renters–green buildings are much more attractive to renters.” Recent news in the real estate industry serves as validation of the report’s conclusions about current investment in retrofits. Last month, real estate developer Kitson & Partners revealed that it had entered into an agreement with Florida Power & Light to erect a solar voltaic power plant at its 17,000-acre mixed-use Babcock Ranch project in Babcock, Fla., which would make the development the world’s first completely solar-powered city. In early April, news emerged that New York City’s Empire State Building would go green as part of its new Leadership in American Progress in Stability initiative, a collaborative program designed to create a new methodology for incorporating large-scale efficiency retrofits into existing structures. And an announcement was made that Chicago’s Sears Tower, recently renamed Willis Tower, would also undergo a greening. Property owners are especially eager to save money in today’s economic climate, but looking ahead, what will be predominantly responsible for spurring the energy retrofit market won’t be cost savings, but such issues as the growing realization for the need to decrease carbon footprints, the desire to promote greater employee productivity and the ever-present goal of increasing property. While some states, like California, are extremely active in pursuing energy retrofits, others are lagging, which means bringing the 20 billion square feet of commercial space in need of retrofits up to snuff will take some time. “From what we see in our research, it will be a 20-year cycle,” Wheelock said. The Pike Research report also predicts that the trend will cause somewhat of a shift for those in the construction business. “We anticipate a much higher percentage of the construction industry will be focused on renovation, rather than building.”