As tenants prepare to return to their buildings on a more consistent basis, office reconfiguration on and fitouts are top of mind. While updating spaces for less density and more social distancing, with more sensors and less recirculated air, owners and tenants have a prime opportunity to optimize their space for sustainability and energy performance, in addition to health and wellness, at the same time.
Historically, a new lease or a tenant improvement (TI)—either of which could trigger a fitout—is a tremendous opportunity not only to upgrade and adjust interior spaces to better address occupants’ needs and desires, but also to embed new sustainability and health-focused technology. As building occupants begin to factor in upgrades to their leased spaces now deemed essential due to COVID-19—such as better heating, ventilation, and air conditioning (HVAC) systems, more air filtration, and access to outdoor space where possible—it is crucial that overall sustainability be considered, too. ULI’s Greenprint Center for Building Performance has a number of tenant-focused resources that can help guide interested parties toward more efficient and sustainable leased space fitouts.
“While sustainability should be a continuous focus for owners and tenants, fitouts offer a unique opportunity to really focus on and optimize the energy efficiency of a space.” — Dana Schneider, senior vice president, director of energy, sustainability, and ESG for Empire State Realty
Cost-Effective Office Fitouts for Health and Sustainability
An increased focus on air filtration needs and overall health and wellness concerns has driven many building owners to upgrade base-building HVAC systems. Other improvements in buildings’ leased spaces are being implemented to enable a safer, more-distanced work environment. While addressing the overall sustainability of a leased space can be difficult, when tackled in a systematic manner it is easier to achieve and increasingly important for owners to stay ahead.
Whether a fitout is spurred by a response to COVID-19 and a pending return to the office, or through a typical TI, sustainability and health can go hand in hand. When one is broadly considering the sustainability of a space, energy efficiency is a great place to start analyzing opportunities in leased spaces during fitouts. ULI’s Tenant Energy Optimization Program (TEOP) offers tenants in leased spaces a 10-step guide to achieve higher energy efficiency—and, in turn, sizable savings—in a leased space. Spaces following TEOP’s 10 steps can achieve 30 to 50 percent energy savings and a 25 percent internal rate of return.
TEOP is broken down into three phases (pre-lease, design and construction, and post-occupancy) and uses data, financial and energy modeling, and proven best practices to guide fitout teams through steps to optimize energy efficiency. Analysis and implementation of proven technologies and building features are coupled with smart planning to ensure that the space is occupied and maintained in an efficient manner.
Dana Schneider, senior vice president, director of energy, sustainability, and ESG for Empire State Realty, explains the importance of maintaining energy and sustainability not only during the fitout but also throughout the operation of a space. Schneider said, “While sustainability should be a continuous focus for owners and tenants, fitouts offer a unique opportunity to really focus on and optimize the energy efficiency of a space. The pandemic has placed an even more critical focus on indoor environmental quality. Through the TEOP process, we have demonstrated the ability to balance health, wellness, sustainability, and efficiency in all both new and existing office spaces. This has a major impact on the health and satisfaction of occupants, and also drives measurable returns on investment.”
Even owners and occupants aiming for net-zero energy (NZE) can use the process. More information on the Rocky Mountain Institute’s leased space in Boulder Commons, one of the only multitenant aspiring NZE buildings in the United States, can be read here. Cara Carmichael, principal at the Rocky Mountain Institute (RMI), explains why recognition was so important for them: “RMI has an organizational focus on carbon emissions reductions, and we’ve always been very motivated to translate that mission to our offices, both leased and owned. Our current space in Boulder, Colorado, in a net-zero building was made possible through open and transparent communication with our landlord, Morgan Creek Ventures, a carefully crafted green lease, and a motivation to lease space in a building we see as the future of commercial offices. To also now have recognition programs like EPA’s Energy Star Tenant Space has been a great way for us to bring all of this full circle and acknowledge the importance of landlord/tenant relationships in energy efficiency and sustainability.”
Architects, engineers, and other members of the design team play an important role in any fitout, and have the opportunity to scale the TEOP best practices across a multitude of projects. As such, it becomes critical for fitout project leads to select experts who are well versed not only in design and construction, but also in energy and sustainability. A guide to help architects and engineers encourage sustainability in fitouts through the TEOP process can be read here.
Sustainability in Multifamily Residential Units
The multifamily sector must tackle its own set of challenges and opportunities. Due to the combination of potentially dozens of individual resident leases in a multifamily building, sustainability considerations are typically confined to common areas. Multifamily building owners usually only have control over the building envelope, shared buildings systems, and large appliances chosen for individual units. Even so, many opportunities for energy and financial savings emerge in the residential units themselves.
As an addendum to TEOP for office, ULI published 10 Steps for Multifamily Owners, Operators, and Investors to Achieve Energy Optimization in Residential Units. This guide walks multifamily building owners and managers through a multifamily-specific version of the process to implement during unit turnover. Aimed at the same outcome—i.e., optimizing and increasing overall energy efficiency and sustainability of a leased space—these steps can help owners and residents find more harmony in sustainability endeavors.
“RMI has an organizational focus on carbon emissions reductions, and we’ve always been very motivated to translate that mission to our offices, both leased and owned.” — Cara Carmichael, principal at the Rocky Mountain Institute
Recognition Opportunities for Leased-Space Efficiency
In addition to the financial benefits of a more sustainable fitout, there is the benefit of market recognition. Leased spaces can apply for recognition to acknowledge improvements to energy efficiency and sustainability. The U.S. Environmental Protection Agency’s Energy Star program has one of the only leased-space sustainability recognition programs on the market. Those offices achieving a high level of energy efficiency and meeting the criteria outlined by the EPA can apply for Energy Star Tenant Space recognition. An office fitout that follows TEOP is well positioned to earn that recognition—more details on how the two pieces align are available here. Even for those spaces not ready for recognition, the program’s criteria can help guide tenants toward steps that will increase the overall efficiency of their space.
As building occupants orchestrate their return-to-office fitouts, now is the time to pull together the right project team, plan out both health and sustainability improvements, and ensure that the space is recognized for its leadership. The resources listed in this article should give both building owners and tenants a good head start, no matter what is spurring the fitout.
For more resources on sustainable tenant fitouts, visit the TEOP website.