VX Canada: Darryl Neate of Oxford Properties on How To Green Retrofits

It’s a pleasure to be with you this morning at VXCanada, talking about green buildings. It’s interesting to reflect on how much things have changed in Canada around sustainability and green buildings over the past five years.

• Five years ago, not many in the commercial real estate sector had heard of LEED, outside of a handful of leading edge architects and developers;

• Five years ago, real estate companies had no idea what the carbon footprint of their portfolio was;

• Five years ago, no real estate companies had set portfolio wide energy/emission reduction targets; and 

• Five years ago, there was nothing in the way of public, customer-facing sustainability reporting.

But while a lot has changed, the change has been very uneven—across asset classes, regions, and tenant types. For us, AAA commercial office buildings in Toronto with large institutional tenants have undergone the most change.  Other asset classes in other markets have not experienced as much pressure or change.

I will focus my remarks today on a five key issues and lessons Oxford has learned pertaining to green buildings. 

The first is that benchmarks and standards are important.  For us—and many other people—LEED is a benchmark that represents best practice.  That’s important for our customers. Our customers want to occupy green buildings and LEED is a proxy for a green building.  We have learned a lot about LEED over the course of the many LEED projects we’ve completed. Our challenge is to push beyond the core requirements and ensure we leverage the most we can from our LEED projects. There are a number of ways to achieve LEED certification, depending on the points you pursue and the speed at which you go through the process. We’ve learned that the choices you make in the LEED process are important and that at the end of the day, we can’t lose sight of the fact that the most important priority is to improve the performance of the building.  LEED is an effective benchmark and standard that helps us do this.

The second point I want to speak about pertains to new buildings.  We just completed a beautiful new 1.5 million square foot AAA office development called Centennial Place in Calgary, Alberta.  It’s a LEED Core and Shell Gold Certified building with a range of impressive features.  This was a really interesting building for us.  Twenty percent of new materials were comprised of recycled content (concrete, steel, ceiling tiles, aluminum curtain wall), 40 percent of new materials were manufactured/extracted within 300km of the project, and 60 percent of construction waste was diverted from landfill.  We also put in high efficiency lighting and HVAC systems, and occupancy sensors to result in an estimated 40 percent in energy savings compared to an average building.  The building also has a podium roof (above a second floor food court) that includes a 675 square meter naturally watered green roof—believed to be the largest green roof in Calgary. Rounding out the definition of sustainability, the building also has bicycle parking and showers and a progressive zero-waste recycling program. New buildings are always interesting. You start with a clean slate and can adopt leading green practices.

While new buildings are great, existing buildings is where the heart of the challenge lies. This is the third point I wanted to speak about.  We recently completed work on the Royal Bank Plaza in Toronto, the first LEED-EB Gold bank tower complex in Canada. It was a multi-year process to modernize and bring a premier asset to ‘the next level’ to compete in a changing market. Over several years, some of the initiatives implemented there included using the innovative deep lake water cooling system (instead of chillers), a major lighting retrofit, better lighting controls, an upgraded building automation system, new air control devices, modified outdoor air dampers, and more water efficient fixtures.

Our strategy at the building was to pursue cost-effective building re-commissioning and energy / water retrofits that delivered the highest return on our investment and improved occupant comfort and control.

The fourth point I want to speak to is about metering and monitoring.  There is a wide range of sophistication when it comes to metering utilities across different office buildings.  Some buildings have key base building loads metered (e.g., heating, cooling, plug load, lighting) and others don’t. A few buildings have tenants separately metered by floor, while the majority do not.  At Oxford we have a portfolio metering strategy where we are aiming to sub-meter the main base building loads of all of our buildings on a real time basis. Once you’ve got that data to mine, it tells a tremendous story.  For example, we’ve reviewed the building’s plug and lighting loads to identify opportunities for after hour savings. We dug deeper into usage over the Christmas holidays at one of our buildings.  There weren’t a lot of people in the building, using the plug load as a proxy for occupancy. We looked at the lighting load in comparison and said, “You know what, we have our building set on a weekend mode with the lights coming on for a good portion of the day. Let’s go all off. There’s actually no one in the building, its Christmas holidays.”  We achieved a 43 percent reduction in lighting and 27 percent reduction in overall electricity use compared to previous holiday periods.  That gives you a bit of a sense as to some of the savings you can have. It’s mining that data and really trying to get more efficient.

The fifth point I wanted to make is perhaps the most important.  Greening buildings ultimately comes down to people. People make decisions, and it’s these decisions that determine how green a building or portfolio is.  We are very fortunate to have commitment at the highest levels of Oxford to sustainability.  Our actions in this area were driven by our CEO.  Taking a structured and disciplined approach, we treated it like any other issue. We’re managing a core set of sustainability metrics.  We set targets and ensure clear roles, accountabilities, and rewards for achieving the targets. We’re finding that having the best building operators is also very important. Those are the guys with their hands on the switches every day, and they are vital partners.

I offer a few final observations and lessons in closing.  

• Management is management. You need to manage sustainability like you do any other important business issue – with strong leadership, a clear strategy, metrics, targets and rewards. 

• It’s hard to overstate the importance of your data. It’s hard work to manage it and ensure that it’s accurate.  It’s not glamorous, but it’s extremely important.

• Improving performance is about more than capital. It’s about good management practices. It’s about the people you have running your buildings. It’s about putting programs in place to take your efforts to the next level. It’s about leveraging the lessons you’ve learned at one building and transferring it to others in your portfolio. 

Thank you for your attention.