APRIL 2008 PUBLICATION 1853
What’s in YOUR Building?
By Mark G. Dotzour and Beth Thomas
Is your commercial building Leadership in
Energy and Environmental Design (LEED)
certified? If so, has it earned the basic
certification or silver, gold or platinum? What
is your building’s Energy Star design rating? A
growing number of local government officials
and prospective tenants want to know.
Cities across the nation are looking for ways to encourage
or mandate the private sector to build and renovate to LEED
specifications, also known as “green building” or “sustainable
Commercial Goes Green
Since 1999 the number of commercial buildings being
built according to the LEED Green Building Rating
System has grown at an average annual rate of 40 percent.
The LEED system has become the nationally accepted
benchmark for design, construction, and operation of highperformance
The City of Austin passed a resolution in June 2000 requiring
LEED certification of all public projects over 5,000 square
feet. Dallas officials have issued a resolution requiring all city
buildings larger than 10,000 square feet to have at least LEED
silver certifications. Houston adopted a similar resolution in
Plano’s city council recently adopted a building sustainability
policy. From now on, that city will use the LEED rating system,
requiring the highest level of LEED certification possible
for all city facilities.
The City of Hutto recently
became the 20th city
in Texas to sign the U.S.
Mayors Climate Protection
Agreement (CPA), which
calls for cities to meet the
goals set by the international
Kyoto Protocol to address
climate change. Although
the U.S. government did
not sign the Kyoto Protocol,
mayors of 755 U.S. cities
have signed the CPA, which urges state governments and the
federal government to enact policies and programs to meet or
beat the 7 percent greenhouse gas emission reduction target
suggested for the United States.
According to Energy Star, a joint program of the U.S. Environmental
Protection Agency and the U.S. Department of
Energy, 30 percent of the typical office building’s costs go to
energy use. In fact, energy is a property’s single largest operating
expense. That cost gets passed to tenants, who want as
much as possible of that operating cost off their bottom line.
As a result, the market is rapidly approaching the point at
which developments that are not LEED certified will be unable
to attract the anchor tenants needed to guarantee success.
In many large cities, if a new building is not LEED certified,
it has almost no chance of being classified Class-A or -AAA.
Consequently, that building might not rent at top market rates
nor will its value appreciate at a rate equal to energy-efficient
buildings of similar design. Relatively new Class-A buildings
not LEED certified could become Class-B simply because the
market does not consider them energy efficient.
These factors bring to light a huge problem in the U.S. commercial
building stock. The Commercial Buildings Energy
Consumption Survey estimates there were nearly 4.9 million
existing commercial buildings and more than 71.6 billion
square feet of commercial floorspace in the United States in
2003. In 2007, only 1,129 buildings were LEED rated; 8,566
under-construction buildings had applied for LEED certification.
Clearly, the nation’s commercial building stock will face
stiff competition as certified energy-efficient buildings come
Building owners and developers are being pressured from all
sides to go green. But while owners and developers understand
that green building has become a necessary marketing tool,
the perception remains among them that the added costs of
green building outweigh the benefits. Another misconception
is widespread — that energy savings cannot be measurably
proven or satisfactorily maintained.
Major problems occur when building owners implement
technological changes without knowing what energy technology
to install or how to operate and maintain it. In short, technology
alone does not equate to high performance. One size
does not fit all buildings.
As a result of these
challenges, a new breed
of real estate professionals
is emerging. Calling
experts perform quality
assurance, known as
which can detect and
remedy most deficiencies
found in either new
or existing building design. Like engineers who design new
automobile engines and bodies for fuel efficiency, building
commissioners look for ways to streamline buildings for
Commissioning and Retrocommissioning
Building commissioning confirms a building’s energy
systems function according to criteria described in the
project’s construction documents and meet the owner’s
Retrocommissioning, also called recommissioning, is the
process of investigating, analyzing and optimizing system performance
in existing buildings. In this scenario, the building
commissioner functions like an auto mechanic who fine tunes
a car for maximum efficiency. After analyzing the current
systems, building commissioners make recommendations that
will improve operation and maintenance to ensure continued
high performance. Retrocommissioning helps make the building
systems perform interactively to meet the owner’s — and
the owner’s tenants’ — current facility requirements.
The market is rapidly approaching
the point at which developments
that are not LEED certified will be
unable to attract the anchor tenants
needed to guarantee success.
Cities are encouraging builders to develop commercial
buildings to meet energy-efficient LEED standards. Retrocommissioning,
the process of analyzing system performance
in existing buildings for the purpose of improving
operations and maintenance, is becoming more common as
owners struggle to maintain Class-A and -AAA ratings.
Building commissioners’ contributions include acting as
consultants, project managers/value engineers and facilities
managers. Their incomes are based on flat consulting fees, a
percentage of the annual cost savings realized, maintenance
programs involving key performance indicators, or a combination
Traditional consulting firms, which include Arthur
Little, Deloitte, and Bearing Point, perform “business
sustainability value analysis,” but may or may not
perform or oversee the suggested cost savings initiatives, depending
on their client. Some consulting services may include
tracking the success of the client’s implemented changes. Most
service only high-income clients who own high-square-footage
buildings (upward of 500,000 square feet), representing a small
percentage of the U.S. commercial building stock.
Real estate firms such as Cushman & Wakefield, CB Richard
Ellis and the Staubach Company are expanding into facilities
management through “value engineering,” which describes the
process of commissioning new or recommissioning existing
facilities to operate at maximum efficiency.
Cushman and Wakefield’s George Denise, project manager
for the Adobe Systems Inc. headquarters located in downtown
ALL OUTDOOR LIGHTINGat Adobe
Towers in San Jose, California, was
retrofitted with energy-efficient luminaires
and advanced lighting controls.
government agencies and reduced operating costs by some $1.2
million annually. The project had an average payback of 9.5
months with return on investment netting a whopping 121
percent. Notably, even though these buildings were relatively
new at the time of recommissioning, the payback still proved
worth the expense.
Commissioning and recommissioning buildings is proving
extremely valuable to the client. According to Energy Star,
along with realized cost savings, recommissioned buildings
typically sell for about 5 percent more than similar nonrecommissioned
In a study entitled “The Cost-Effectiveness of Commercial-
Buildings Commissioning,” analysis of 224 buildings totaling
30.4 million square feet across 21 states found that commissioning
has far broader relevance than simply optimizing
energy-efficient systems. Knowledge of day-to-day systems
operations is essential. Cost savings are directly impacted by
the extent to which energy efficiency research, development
and deployment programs are combined with quality assurance
in design, delivery and operations maintenance.
For example, a fan study conducted by the Environmental
Protection Agency found that 60 percent of building fan systems
are oversized by an average 60 percent. The 224-building
study found chillers were oversized by 50 to 200 percent.
Across the nation, improper installation, inaccurate
sizing and poor maintenance are negatively affecting
building efficiency.Building commissioners apply an emerging form
of cost-effective quality assurance procedures
that provide a way to define measurable performance
targets and evaluate as-built and as-operated
As part of an integrated strategy for improving building
energy performance, commissioning is an effective
and far-reaching means of improving energy efficiency
across the U.S. building stock.
Commissioning professionals are risk managers
helping to ensure funds are spent wisely and
that intended energy savings targets are actualized.
Commissioning provides a way to define measurable
performance targets and evaluate existing operating
With more than 99 percent of the nation’s existing
building stock facing market demand and local
governmental pressure for recommissioning, expect
to see demand for building commissioning professionals
Dr. Dotzour (email@example.com) is chief economist and Thomas (bthomas@
mays.tamu.edu) is a research assistant with the Real Estate Center at Texas
San Jose, Calif., has documented phenomenal success with
value engineering. Adobe’s headquarters are in three buildings
known as Almaden Tower, East Tower, and West Tower,
which are 17, 16 and 18 stories, respectively, and at the time
of recommissioning were three, nine, and 11 years old. Combined,
the buildings total 989,358 square feet of office space,
situated above an additional 938,473-square-foot enclosed parking
After analyzing the three towers, Cushman & Wakefield
implemented energy saving techniques that reduced peroccupant
electricity use by 35 percent, natural gas use by 41
percent, domestic water use by 22 percent, CO2 emissions by
23 percent, and landscape irrigation by 76 percent. In addition,
they are diverting solid waste by up to 87 percent. Adobe spent
just over $1 million, received about $389,000 in rebates from
MAYS BUSINESS SCHOOL
Texas A&M University
College Station, TX 77843-2115
Director,Gary W. Maler; Chief Economist, Dr. Mark G. Dotzour; Communications Director, David S. Jones; Associate Editor, Nancy McQuistion; Associate Editor,
Bryan Pope;Assistant Editor, Kammy Baumann; Art Director, Robert P. Beals II; Graphic Designer, JP Beato III; Circulation Manager, Mark Baumann; Typography,
Real Estate Center.
D. Marc McDougal, Lubbock, chairman; Ronald C. Wakefield, San Antonio, vice chairman; James Michael Boyd, Houston; Catarina Gonzales Cron, Houston;
David E. Dalzell, Abilene; Tom H. Gann, Lufkin; Jacquelyn K. Hawkins, Austin; Barbara A. Russell, Denton; Douglas A. Schwartz, El Paso;
and John D. Eckstrum, Conroe, ex-officio representing the Texas Real Estate Commission.
Tierra Grande(ISSN 1070-0234) is published quarterly by the Real Estate Center at Texas A&M University, College Station, Texas 77843-2115. Subscriptions
are free to Texas real estate licensees. Other subscribers, $20 per year. Views expressed are those of the authors and do not imply endorsement by the
Real Estate Center, Mays Business School or Texas A&M University. The Texas A&M University System serves people of all ages, regardless of
socioeconomic level, race, color, sex, religion, disability or national origin. Photography/Illustrations: Real Estate Center files, p. 1;
Courtesy of Cushman & Wakefield, p. 3.