Landlord Challenge:
Kilroy Realty Corporation wanted to engage with a tenant to encourage energy efficiency, even though the tenant pays the energy bill directly.
Tenant Challenge:
Bridgepoint Education sought Kilroy Realty Corporation's help to increase the efficiency of their leased space.
Building:
13480/13500 Evening Creek Drive, San Diego, CA
Lease Type:
Triple Net (Tenant pays energy bills directly to the utility)
Recognizing the vital role that tenants play in energy consumption, Kilroy Realty Corporation’s (KRC) interest in high-performing, energy-efficient space extends beyond its new construction projects and common area spaces. The company has continually looked for opportunities to influence the energy consumption of tenant spaces as a way to further improve the performance of its buildings. In Bridgepoint Education, KRC found the perfect partner.
The engagement between KRC and Bridgepoint around sustainability blossomed after the KRC asset management team requested utility consumption data from Bridgepoint’s corporate campus on Evening Creek Drive in San Diego. Bridgepoint leases two full buildings and part of a third on the property owned and operated by KRC. The asset management team and Sara Neff, KRC’s Vice President of Sustainability, needed the data – pulled from 21 meters in one of the buildings – in order to apply for ENERGY STAR certification. Bridgepoint willingly shared the data, allowing Neff to complete the application, earn ENERGY STAR certification, and demonstrate both organizations’ commitment to energy efficiency. This collaboration set the stage for future energy-efficiency upgrades.
With a foundation of energy data and an established relationship, Bridgepoint sought KRC’s help in piloting a cutting-edge, efficient lighting technology. Neff and her team worked with the tenant to green-light the project, but the high upfront cost was a barrier. Neff and the thirdparty vendor proposed that Bridgepoint consider On-Bill Financing (OBF). Through her relationship with San Diego Gas and Electric and other California utilities, Neff had learned about the utility’s OBF, which provides up to $100,000 in 0% financing for efficiency upgrades tied to a single meter, with repayment through the energy bills. With OBF a possibility, Bridgepoint took a step back and worked with the vendor to identify a more comprehensive package of energy-efficiency improvements, including hot water and discharge air temperature reset, cooling tower filtration pump runtime optimization, and installation of variable-frequency drives on chilled water pumps. The estimated energy savings from these improvements, supported by the energy benchmarking data, is close to $40,000, with a simple payback of less than 2 years.
“We love it when we have an open dialogue with tenants about energy efficiency, and this dialogue inspires each of us to pursue more and more projects to reduce energy consumption in our buildings.”
– Sara Neff, Vice President, Sustainability, KRC
In addition, Bridgepoint installed test window film in two offices. KRC was impressed with the results, and the two companies are now planning to work together to install window film on the entire campus, both the buildings that Bridgepoint occupies and the third multi-tenant building. Although the original lighting project is not part of the OBF package (as it would have exceeded the utility’s payback limit), both Bridgepoint and KRC are inspiring each other to explore energy-efficiency opportunities and look forward to continuing this relationship in the future.
Lessons Learned
- Start with the data. Sharing utility data creates an opportunity for conversations around sustainability, and an accurate energy baseline allows analysis of project savings.
- Be patient. It can take time for landlords and tenants to find the right upgrade package and the proper financing to allow projects to move forward.
- Collaborate. No matter who pays the energy bills, landlord-tenant collaboration on efficiency pays off for both.
- Explore programs offered by your local utility to provide financing and other support for your efficiency initiatives.
- Landlords: Consider the opportunities for tenants with an interest in sustainability to be incubators for new technologies and practices. Both landlords and tenants can gain from experience and duplicate successes in other buildings.