Westchester building owners, managers, and tenants are finding that investments in everything from energy-saving fixtures to recycling programs are not only good for the earth, but good for the bottom line, too. How good? According to several we polled, an annual return on investment of 30 percent or even more is entirely achievable.
“It’s a win-win,” says Jim Diamond, CEO of property management firm Diamond Properties, LLC. “We can do things that are good for the environment while improving our operating efficiency.”
Diamond is in the midst of a $10 million solar energy project that promises big returns at properties throughout the county. “We’re installing more than five megawatts of solar power on our buildings. That’s enough to power several thousand homes,” Diamond explains. “The main installation is at 333 North Bedford Road in Mount Kisco, where we are covering the entire 14-acre roof with solar panels.” When the installation is finished (it’s about 50 percent complete now), Diamond says, that building alone will generate enough power to supply several of its other buildings. “We’re installing solar power on five other buildings as well,” he adds.
“The payout will come over 10 years, but the panels have a lifetime of 25 to 30 years, so it is a long-term commitment,” he says. In rough terms at today’s electric rates, the $10 million investment will return $1 million dollars annually once it has paid for itself.
Diamond Properties is installing more than 5 megawatts of solar panels on its locations, including the 14-acre roof of this building in Mount Kisco.
Diamond Properties has been focused on energy efficiency for a long time, notes the CEO. “In a world of limited resources, it makes sense to be as efficient as you can,” he says. In fact, Diamond is such a strong believer in the economics of sustainability he started another company, Xeleum, to design and manufacture LED lighting fixtures. “LED can reduce power consumption of a typical fluorescent fixture by 60 to 80 percent,” he says. “We’re putting it into all our properties.”
Another Westchester property owner making major investments in energy savings is Reckson, a division of SL Green Realty Corp. “Improving the carbon footprint of a building is important, but it also has to have economic benefit,” says Jay Black, director of sustainability for SL Green. “We do an analysis to make sure the payback is within an acceptable range and we’re rigorous about how we track our results.”
Reckson owns and manages numerous buildings in Westchester and has earned EPA Energy Star certification (awarded based on a given building’s energy usage) at nine county properties. In 2011, SL Green also achieved LEED Gold Certification for 360 Hamilton Avenue in White Plains. At the time the designation was received, it was one of only 10 buildings in New York State to receive gold certification or higher.
In the last four years, Black says, “We have spent more than $8.7 million on energy-efficiency projects, receiving $3 million in state/utility incentives toward these costs, to save $2.5 million annually in energy costs, achieving an average project payback of only 2.25 years.” At that savings rate, the company earns more than 40 percent annually on its investment.
In addition to various heating and air conditioning upgrades completed throughout the portfolio, Reckson replaced antiquated fluorescent, halogen, and incandescent fixtures with LED lighting throughout 22 of its suburban properties. This project cost $800,000 to complete after $100,000 in project incentives and saves the company $233,000 annually.
“To have Energy Star or LEED certification is also a great way to convey the caliber and quality of your building,” Black says.He points out that the government generally requires leased space for federal agencies be in an Energy Star building. What’s more, SL Green, Reckson’s parent company, is publicly traded, a factor Black says adds another layer of environmental sensitivity. “The investor community is interested in working with companies that have a strong sense of social responsibility, and the environment is a prominent component of that.”
Both Diamond and Reckson are participants in the Westchester Green Business Challenge, a public/private partnership between Westchester County and the Business Council of Westchester that is managed by Green Team Spirit, a company that facilitates environmental programs for businesses in the county. Green Team Spirit CEO Dani Glaser explains that her company helps participants start and measure their progress in several key areas to become Westchester Green Business-Certified. “The materials we provide include a checklist with 90 required actions and 120 voluntary actions broken down into energy, waste, and recycling management; purchasing; transportation; land use; and water.” About 275 Westchester companies are part of the program, which is designed to help them develop a formal approach to environmentally friendly practices.