Energy Matters

Energy has become a paramount priority for commercial real estate owners and operators.

Energy has become a paramount priority for commercial real estate owners Sue_New_Headshotand operators. Its cost has moderated, but it remains the single largest operating expense for commercial buildings, according to the U.S. Environmental Protection Agency, accounting for about 30 percent of operating costs. That has encouraged experimentation with a growing variety of alternative sources, technologies and strategies that are helping to lighten the load on the electric grid, the environment and the bottom line.

So perhaps it is not surprising that this year the Counselors of Real Estate ranked energy No. 1 on a list of the top 10 issues affecting real estate. In unveiling the list during the National Association of Real Estate Editors’ 48th annual Real Estate Journalism Conference in Houston in mid-June, CRE chair Hugh Kelly termed energy “the game-changer for the U.S. economy.” The thought-leadership organization further pointed out in a statement that “the U.S. is becoming increasingly energy independent. Changes in U.S. energy production are impacting jobs, income growth and the quality of life—key determinants of real estate value and successful investment.”

Thus, you don’t have to support fracking to welcome the growth of the U.S. energy sector. New jobs—and new industrial facilities—are springing up around a variety of energy sources: yes, fracking in North Dakota, Montana and Pennsylvania, but also renewable energy in Massachusetts and even in Texas, that historic stronghold of the oil and gas industries. Yet the U.S. economy needs even more energy to keep growing, Kelly cautioned, raising the question: “Can we generate enough energy to make changes that matter?”
Meanwhile, public utilities commissions continue to advance incentives to reduce demand on the grid and encourage energy efficiency, as Enerliance president Ray Pustinger relates in this month’s New Visions Q&A. In New York City, Con Ed is launching a program aimed at retiring the Indian Point nuclear power plant, with a lofty goal of reducing demand by 125 megawatts. “The overall trend is for more incentives and more investment in energy efficiency and solving environmental and grid problems, reliability problems through energy efficiency and demand response,” Pustinger noted.

Read the full note by Editorial Director Suzann D. Silverman in the July 2014 issue of CPE. Access is free!