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Empty Offices Defy Energy Use Expectations

Real Estate - Building
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A tumbleweed blows through the abandoned marble lobby of an office high-rise. Like the old western tales of a mining town gone bust, our modern offices have become ghost towns both in patronage and in lore. The majority of Americans are still working from home to mitigate risk of a second outbreak of a deadly disease. The conference rooms and ergonomic chairs sit empty, almost as a remnant of a bygone era. Most mining towns eventually became unincorporated, services were turned off and governance was dissolved. But, unlike mining towns, offices still require management—and energy. 

You would think, with few people coming into the office, one of the silver linings lockdowns and stay at home orders would be a reduction in building energy use and therefore emissions. But, you would be wrong. Despite dramatic drops in occupancy, energy consumption in office buildings is only down 10 to 15 percent. Buildings weren’t designed to be powered down. Unlike your work computer, you can’t shut a building off or put it into low-power mode. Nearly 30 percent of energy in an office building is wasted, during a pandemic with no one in the office, that number is likely far higher. 

The difficulties with lowering building energy consumption during a pandemic are two fold. First, building owners must meet their legal obligations to tenants. Service level agreements (SLAs) baked into every lease stipulate how a tenant’s space is to be kept and when it is expected to be accessible. Though tenants may be in the office solely to check the mail once a week, owners are still legally required to keep their space air conditioned and available for use during the specified working hours. Secondly, by design, building infrastructure systems were not designed to be turned off or run on low power. Exercising equipment is important to health and safety. The CDC cautions against shutting down ventilation entirely, which can lead to corrosion and unhealthy air. 

“When we think about buildings, they’re not designed to be vacant. Their intent is to be occupied and useful,” Aquicore VP of Customers Anna Buglaeva said. Her company works with tenants and owners to consolidate utility accounts and budgets, giving her first hand knowledge of how buildings and tenants are dealing with the power bill during a pandemic when no one’s actually using the office.  “When COVID started, there was a rush to get building’s on a holiday schedule.” 

Holiday schedules don’t save much. Hatch Data, which monitors 400 million square feet of commercial real estate for more than 250 clients, found that energy savings peaked in May, at the height of the lockdown, at roughly 25 percent. Recently energy use has been ticking steadily back up. Buglaeva expects consumption to be down 10 to 15 percent over the course of the year. 

The easiest way to save energy is to turn off the lights. There’s no legal or technical reason lights in someone’s office space can’t be off when the space is unoccupied, as long as you keep emergency lighting on. But lighting only accounts for 15 to 20 percent of a building’s energy consumption, so savings are marginal. Heating, ventilation and air conditioning (or HVAC to the pros) accounts for over a third of a building’s energy use. It is not is not as simple as turning off and with the flip of a switch. Many buildings have boilers and chillers that use water so turning off the system for an extended time causes corrosion and other health issues. 

Service level agreements mandate that the building owners provide all types of things, such as comfortable, healthy air. Some lease obligations allow for conditions to downgrade from “Perfect” to “Acceptable,” maintaining acceptable levels still requires high levels of energy consumption. What small adjustments to HVAC usage can be made require advanced technology like building management sensors and other forms of automation that many build owners simply don’t have. 

Then there’s all other consumer electronic devices using power outlets, known as the plug load. More and more digital technology in the workplace has ballooned plug loads in every office building for decades. Plug loads now account for over 50 percent of energy consumption in some buildings, according to the General Services Administration. Because plug loads are not related to general building lighting, heating, ventilation, cooling, and water heating, owners have practically no control over its usage short of going into a tenants’ space to manually disconnect devices, which would be a lease violation. Remote access to on-site technology is what has enabled the wave of working from home. Computers, servers and other forms of technology are humming along in empty, dark offices, accounting for roughly two thirds of plug loads. Printers, fax machines and coffee makers may be off or unplugged, but make a much smaller portion of a building’s plug load. 

At the end of the month, building owners aren’t incentivized to operate much differently. If tenants want to gobble up electricity they’re not using during a pandemic, that cost will be passed on through to them. Few states have any policy or financial incentives to reduce energy consumption. To put it differently: a building saving money on its power bill is nice, but it’s not the owner’s money it’s saving. 

“The alignment of incentives is not ideal,” Buglaeva said. “It requires tenants to be more organized and landlords to communicate more aggressively with their tenants.”

If tenants aren’t concerned about their landlord cutting back energy usage during a pandemic, then landlords won’t be either. Unless tenants and landlords take explicit steps to work together to align incentives to reduce consumption, things are unlikely to change. In most cases, the opposite is happening. The pandemic has tenants less engaged with their office space, not more. Tenant interaction with property staff has been less frequent and more informal. Not being in the office in the physical presence of property management has broken a link in communication between landlords and tenants. It’s hard to blame them. Every business is struggling during a dueling pandemic and economic downturn. Keeping track of employees when they’re working from home is hard enough, being organized enough to track each employee’s office use and communicate that to your landlord is simply too much for many tenants. 

“Building’s have to be operating to be safe and efficient. How much can they reduce energy consumption? It’s not 100 percent. It’s not even 75 percent. But it could maybe be 50 percent…with the right incentives,” Buglaeva said. 

Getting landlords and owners to see a return on investment on sustainability and efficiency upgrades is the hardest part. Carbon taxes, fines and other policy initiatives slowly being implemented in some states will put pressure on landlords, making the ROI much more explicit. That will give a financial incentive for the landlord to apply pressure to a tenant. But at the same time a shrinking office market might make it hard for landlords to be more overbearing when it comes to tenant energy consumption. Ultimately it is up to the tenants themselves. Promisingly, there are many leading organizations that are committed to sustainability, including their offices. These companies will want to find ways to reduce their energy consumption, as long as they have the infrastructure to do so.

When it comes to the trope of offices as ghost towns, there is probably more than anything. While metaphoric tumbleweeds might roll down the marbled lobbies now, they will not have the same fate as mining towns. We have been scared out of the offices temporarily, but knowledge work is the future and offices will once again be the boomtowns of their former glory.

Associate Editor
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