Brenna Walraven has a unique vantage point -- and enormous influence -- in promoting energy efficiency and sustainability in commercial buildings. As executive managing partner for San Antonio, TX-based USAA Real Estate, and also as chairman-elect of the Building Operators and Managers Association (BOMA) International, Walraven had a hand in winning two top Energy Star awards this year.
USAA, like the two other 2007 Energy Star Partner of the Year honorees profiled by
The Costar Green Report in recent weeks,
Jones Lang LaSalle and
Transwestern, has both the culture and property footprint to affect change. Walraven started her career on the ground floor as a property manager. She helps lead the national property management business for USAA, the real estate arm of the mutual insurance company serving primarily military personnel and retirees. USAA owns or manages more than 35 million square feet of commercial property.
An Energy Star partner since 2000, USAA is the only real estate company to win the award for the past five years. In 2006, the company’s emphasis on green operations and management practices, low-cost improvements and better communications cut energy consumption by more than 6 percent across its portfolio for a total savings of nearly 23 percent, or $10 million, over the past six years, according to Energy Star.
Walraven estimates USAA, which received Energy Star’s "leaders" recognition for the third straight year by maintaining an average rating above 75 for its portfolio, has increased its asset value by more than $30 million and prevented nearly 90 million pounds of carbon dioxide from entering the atmosphere.
Last year was the company’s highest per-year energy consumption savings since becoming an Energy Star Partner, USAA President and CEO T. Patrick Duncan said.
"We make energy efficiency a major priority and as an Energy Start partner, we see the value it brings to us and our tenants," Duncan said, adding the participation "plays a vital role in our organization and in protecting the planet. "
Such measures include turning off air conditioning and lighting to select unoccupied offices and common areas on Saturdays. USAA property managers discovered that only 20 percent of their tenants came to the office on weekends.
Another manager conducting a night audit found that several buildings had systems running around the clock because of faulty electrical relay devices. With a few hundred dollars to replace the relays, the company saved thousands. Other measures include installing more efficient light bulbs, calibrating thermostats and monitoring water flows.
"We’re constantly fine-tuning, looking at ways of optimizing our equipment."
Walraven -- who refers to BOMA as her "volunteer career" -- also founded the trade group's BOMA Energy Efficiency Program (BEEP) Task Force, which teaches best practices through workshops and educational campaigns. It’s the main way to get through to the vast majority of existing building owners and operators that aren’t big companies holding or managing huge corporate real estate portfolios, she said.
"Companies like Jones Lang LaSalle, USAA and Transwestern understand the value of green initiatives and are driving changes at the corporate level -- but they constitute only 15 percent of the total market. BOMA is how you get to the other 85 percent."
The industry has been buzzing about how CB Richard Ellis plans to deploy its recently announced "carbon-neutral" strategy
(see related story)across the hundreds of local markets comprising its 1.7 billion-square-foot worldwide portfolio within three years. CBRE has historically been primarily a brokerage operation, unlike Transwestern, USAA and to a lesser extent, JLL. Walraven said CBRE has a rare opportunity to lead the industry is a way Wal-Mart did in the retail sector last year when it pressed consumers and suppliers to adopt green practices.
"Let’s see what they do, how they execute. They have the resources and the opportunity to do it, and I certainly hope they will. If they do, it will be a huge statement from the industry."
Walraven sees BOMA at the apex of efforts to green existing buildings and portfolios, through LEED/Energy Star and upcoming initiatives such as the global Energy Efficiency Building Retrofit Program, proposed last month by former President Bill Clinton as part of his ambitious Clinton Climate Initiative. The $5 billion program brings together five of the world’s largest banks, energy and building services companies and 16 world cities to reduce energy consumption in existing buildings.
"New construction is a tiny slice of the pie, and that’s why the Clinton Climate Initiative is so important," Walraven said. BOMA hopes to participate through the U.S. Green Building Council (USGBC) in the educational prong of the program, leveraging BOMA's access and relationship with the industry.
"We know how to speak in the vernacular in a way to get the message through."
Although change is occurring, spurred by a huge surge in popular culture awareness, the challenge is still daunting. A big reason why the CRE industry has been slow to embrace change is the current emphasis on "capitalness" -- the misperception that spending money is the only way to become more efficient or sustainable, Walraven said. In the current era of short-term property holds and quick flips, owners argue they don’t have time, resources or inclination to include energy efficiency in the budget or pro forma.
Another big challenge is convincing owners and for-fee property managers to build energy saving incentives into lease structures, Walraven said. With tenants absorbing the energy costs in modified gross and even triple-net leases, landlords often lack the incentive to make buildings more efficient. Third-party property managers, who often receive fees based on a percentage of gross rent, can even see their fees drop as a result of energy savings, she noted.
But Walraven argues that in the new era of socially responsible investment, improving building comfort, indoor air quality and managing costs will ultimately drive value and tip the scale toward green practices. Buyers, investors and tenants eventually will routinely opt for buildings that manage energy costs over those that don’t, she said.
"You actually are improving your NOI by lowering those expenses, and when you cap those out, you’re getting a huge increase in your asset value. That’s the measure for owners and operators -- driving better tenant retention, better performance of the property and a competitive advantage in the market."
It may take a market trough to truly quantify the value of green, she said. In strong markets, it’s harder to pinpoint why occupancy and rent growth is healthier in a particular building or portfolio. But when the market slows, energy savings will become a differentiator for cost-conscious tenants and bottom line-conscious operators, she said.
Service providers have a major opportunity to reduce emissions through their real estate and through educating their stakeholders, Walraven noted.
"Where organizations like CoStar and BOMA are really important is helping to provide information about the benchmarks in the market, and in the case of BOMA, how we help you get there."
As a way to promote awareness of the need to reduce the 18 percent of all greenhouse gases related to commercial buildings, CoStar Group Inc. earlier this year began adding the Energy Star rating to properties to its massive online database of more than 2 million listings.
"All those things are very important so consumers can make decisions on information that isn’t just about rent or location but includes some qualitative measures," Walraven said.
Do you have a comment on this article or the CoStar Advisor newsletter? Reach Randyl Drummer, Senior News Editor, at rdrummer@CoStar.com