Energy usage is a significant operating cost for commercial buildings, and reducing energy use can lead to significant savings. It’s one of the many reasons why all commercial real estate (CRE) properties should track energy usage. But how exactly do you track energy usage? And what are the most important energy usage stats CRE teams should be measuring?
In this blog we take you through eight energy usage stats to track for your property along with how the data can be harnessed to improve rent growth.
Energy usage stats
Here are some key energy usage metrics commercial property teams should consider tracking to reduce operational expenditure (OpEx) and maximize building value:
1. Total energy consumption
This is the most basic metric, tracking the total amount of energy used by a property over a specific period (typically measured in kilowatt-hours or KWh for electricity, and therms or BTU for natural gas).
2. Energy use intensity (EUI)
EUI measures a building’s energy consumption per unit area over a given time (such as kilowatt-hours per square foot per year). This is a critical metric for comparing the energy efficiency of different buildings or the same building over time.
3. Peak demand
This measures the highest rate of energy use at any one point in time. It’s important for understanding when energy use spikes, which can have cost implications as utility companies often charge higher rates during periods of peak demand.
4. Load factor
This is the ratio of the actual kilowatt-hours consumed in a designated period to the product of the maximum demand and the number of hours in the period. A higher load factor indicates more consistent energy usage. A lower load factor indicates peaked, inconsistent usage, which can be more costly. In other words, high is good and low is bad.
5. Energy cost
This is the total amount spent on energy, which depends both on the amount of energy used and the rates charged by the utility company.
6. Carbon footprint
This measures the total greenhouse gas emissions caused by a building’s energy use, usually given in equivalent tons of carbon dioxide. This is increasingly important as more companies aim to reduce their environmental impact.
7. ENERGY STAR score
This is a measure from the U.S. Environmental Protection Agency’s ENERGY STAR program. It compares a building’s energy use to similar buildings nationwide, with adjustments for factors like climate, hours of operation, and building size. A score of 50 indicates average energy performance, while a score of 75 or higher signifies top performance (and could be eligible for ENERGY STAR certification).
8. Renewable energy percentage
This is the portion of a building’s total energy that comes from renewable sources, such as solar or wind power. More use of renewable energy can lead to cost savings and a lower carbon footprint.
How does energy usage impact rent growth?
While it’s clear that keeping track of and optimizing your energy usage can lead to lower OpEx, it can also positively affect rent growth.
For instance, JLL’s “Decarbonizing the Built Environment” report found that 63% of investors strongly agree that green strategies can drive higher occupancy, higher rents, higher tenant retention, and overall higher property value.
Tracking and optimizing energy usage can contribute to commercial rent growth in several ways:
- Increased tenant attraction: Energy-efficient buildings are increasingly attractive to tenants due to both environmental concerns and the potential for lower utility costs. As a result, these properties can command higher rents.
- Enhanced property value: Energy efficiency improvements can increase the overall value of a building, making higher rents more justifiable. For example, installing energy-efficient systems may result in a higher ENERGY STAR Score, which can increase the property’s appeal and market value.
- Corporate Social Responsibility: Many companies now have Corporate Social Responsibility (CSR) policies or Environmental, Social, and Governance (ESG) goals that include reducing their carbon footprint. Renting space in an energy-efficient building can help them meet these goals, so they may be willing to pay a premium for such spaces.
- Regulatory compliance: As energy regulations become more stringent, buildings that are already energy efficient will have fewer costs associated with upgrades or fines for non-compliance. These savings can be redirected toward building improvements that justify rent increases.
Start today: Track energy usage at your properties
When you track energy usage at your properties, you are actively working towards creating efficient and environmentally conscious buildings. It’s these types of properties – ones working towards a green future – that will find the most success with driving revenue and tenant relations.
With the guidance from this blog, you know exactly what to measure to gauge your property’s energy usage. Now, you can make insightful decisions towards the future of your building.
To learn more future-forward metrics to track at your buildings, download the free guide, “Metrics that matter for modern property management.”
