The history of New York City’s skyline is one of fortitude, finance and family. Building and managing buildings in what has been the world’s most competitive property market for over a century takes hard work, ingenuity, and a longterm mentality. Because of this we there are a number of family businesses that have been able to create fortunes by building, buying and renovating buildings in ways that would not pencil out for investors looking for easy money or quick gains.
One of the reasons for the success of these families is that they are able to make large investments in infrastructure that help their portfolios stay on the cutting edge of the industry. These investments require an upfront cost that would overrun many company’s capital expenditure budgets. These companies know that, just as these buildings will be an important part of New York City’s infrastructure for the foreseeable future, these assets will remain a valuable part of a portfolio for a long time and thus deserve the kind of future-proofing that will keep their top tier status in the market for generations to come.
One of these families is the Resnick’s. In the pantheon of New York City’s elite real estate dynasties like the Speyer’s, the Durst’s, and the Rudin’s, the Resnick’s are a third-generation real estate organization and their firm, Jack Resnick and Sons, has amassed a portfolio of six million square feet of Manhattan office space and over 900 apartments. Their commitment to their buildings has led them to be one of the most forward-thinking real estate companies when it comes to sustainability. The current President, Jonathan Resnick, explains, “As a company with deep roots in the City of New York and a steadfast commitment to its future, sustainability is one of our core organizational values. We are always looking at better ways to operate our properties, either through upgraded building management systems or more modern, efficient equipment.” The investments include switching from burning fuel oil to natural gas at all of their properties with boiler plants and extensive LED-lighting retrofits. They have also installed variable frequency drives in their cooling systems. They have even installed green roofs on a number of their properties. “In addition to benefiting the tenant experience, these improvements help reduce stormwater discharge and reduce the city’s heat island effect,” Resnick said.
A big part of Jack Resnick and Son’s commitment to sustainability includes having a better understanding of how their buildings consume energy. By participating in The New York Energy Research and Development Authority’s (NYSERDA) incentive program and partnering with R3 energy consultants and energy management software David Energy, Jack Resnick and Sons has been able to create an advanced real time energy management (RTEM) system at their property 110 East 59th St.
Teaching an old building new tricks
110 East 59th St. was originally developed by the firm in 1969 and is now the home to the firm’s corporate headquarters. While advanced for its time the building needed smart monitoring and advanced analytics to help it better manage its energy use. After the network of sensors and electrical monitoring hardware was installed, David Energy was tasked with connecting the data flows and optimizing the operations. “We installed a controller and programmed it to figure out what baseline demand for the building is. Then we determined how much is under the building’s control,” said Srikant Subramaniam, Director of Analytics at David Energy. They were able to understand where the most impactful changes can be made thanks to the more holistic understanding of the building’s energy use and the increased frequency of reporting. “Before it would only tell us how much we used every month, now with the smarter meters it can update us every 15 minutes,” Subramaniam said.
After examining possible energy savings and weighing it against tenant comfort the team was able to identify a way to utilize off-peak hours, when energy is cheapest. “We realized that instead of trying to reduce chiller demand at peak hours it was easier to pre-cool the building. The building might have been a little cooler than people expect at 7 or 8 am but by the middle of the day, it was much easier to keep the building cool,” Subramaniam said. 110 East 59th St., like most buildings, had up until then relied on the on-site building manager to determine the start times. Now advanced modeling techniques are able to predict the outcomes of different inputs.
Savings were compounded by the fact that the local energy utility, Con Edison, calculates a building’s entire year’s energy rate by their peak daily load. By using preventative measures on the hottest days, the ones that usually draw the most peak power, the building was able to reduce the building’s rate case. “Rule of thumb is for every 100 kW the demand goes up it is about ten to twenty thousand dollars extra in energy cost for the year,” Subramaniam said.
Working smarter not harder
The energy savings were the first improvement that the team noticed from the newly installed RTEM technology but it wasn’t the only identifiable benefit. Fault detection is a large component of the software’s analysis. Being able to see changes in energy consumption in conjunction with a piece of equipment’s actual output can help identify signs of possible maintenance needs. “As a former consultant, I have seen many projects where you make suggestions that are just estimates. Now with these types of tools, we can develop the KPIs and find the best ways to inform replacement and repair decisions,” said Subramaniam.
Jonathan Resnick also explained that understanding a building’s energy use can also help manage the building staff. “Having real-time data at our fingertips has been a huge benefit. Being able to see our energy consumption on a day-to-day or even hourly basis allows us to determine where to deploy staff and services to adjust operations to improve operating efficiencies and costs,” he said. Maintaining a level of excellence and a high-touch experience in their properties has always been a hallmark of Jack Resnick and Sons properties. This level of service requires a lot of labor so any way to help their team work efficiently has major impacts on the building’s ability to deliver the best service while increasing profitability.
Unlike almost any other asset, buildings have a lifespan that can be measured in centuries. They have amazing intrinsic value that grows with the population and the economy. But they also require maintenance, repair, and investment. Some of the most successful families learned long ago that this effort is worth the cost and passed these ideas down from generation to generation. Investments like the RTEM project at 110 East 59th St. make buildings more valuable to the owner, the occupant and the community, all while benefiting the environment.
By having the RTEM system set up before the shutdown the management at 110 East 59th St. was able to understand much more about the building. “We’ve seen occupancy drop to between two to five percent of the average daily occupancy across our client portfolios, due to commercial tenants enforcing work-from-home policies for their employees. Only essential employees and building staff are occupying buildings during working hours. Electricity demand has been reduced by between 30-50 percent as a consequence of equipment setbacks being implemented to meet reduced operational loads,” David Energy’s Subramaniam said.
The team was able to learn that the reason that energy didn’t drop at the same rate as occupancy has to do with the base load demand needed to keep common spaces habitable. Also, the small amount of demand was actually spread out throughout the whole building as each office had a skeleton crew that would come in to do only the most critical tasks. The already complicated task of efficiently cooling a building has become even more difficult now that more outside air is thought to help stop the spread of the COVID virus in buildings. Subramaniam explained, “Given that conventional air-conditioning equipment relies on outside air temperature sensors to dictate the supply air temperature to tenants, the presence of a real-time energy management system at the property will be beneficial to modulate both indoor comfort levels and energy efficiency, considering the lopsided interplay of high outdoor summer temperatures but significantly reduced occupancy (should the health crisis continue).”
In line with the long term thinking that has helped families like the Resnicks outperform many other corporate property owners and developers, Jonathan Resnick sees the shutdown as a time to invest in his asset. “We try to improve our buildings during downtimes, so they are well positioned when the market improves, and attractive to future office users,” he said.