Landlord/Tenant LED Purchasing Program

Tuesday, September 1, 2015

Purpose of the project

The asset management team that runs our 420,000 sf Fremont portfolio, which spans 701, 801 and 837 North 34th Street in Seattle, was frustrated that while they were able to do LED lighting retrofits in common areas, they could not extend these retrofits into tenant spaces. Tenants seemed unwilling to conduct the retrofits on their own. When asked, tenants responded that they did not have the upfront capital needed to purchase the new lamps. The solution was a new approach to tenant lighting retrofits that did not require tenants to purchase the lamps upfront.

 Approach

When the asset management team conducts a common area building upgrade, that cost is billed back to the tenant through their Common Area Maintenance (CAM) charges. However, as a result of that portfolio’s lease structure, the asset management team’s ability to conduct and bill back for an upgrade did not extend to tenant spaces. The asset management team had the innovative idea of working with the tenants to purchase the needed LEDs on their behalf and then billing them back for the lamps in the CAM charges. The CAM had never previously been used as a vehicle to purchase efficiency equipment specifically for tenant spaces. However, the tenants thought it was a great idea, as this enabled the tenants to get the lamps without needing to come up with the upfront capital. So, the building engineers conducted lighting audits of the participating tenant spaces, ordered the needed LEDs, and installed them, and then the asset management team billed the tenants for the lights in the CAM later on.

 Results

Half of the tenants participated in the program in its first year, and the installed LEDs are projected to save approximately 200,000 kwh annually. “It is important to embrace both new as well as proven methods to reduce energy in a building,” says Shanna Braga, Fremont Property Manager. “Working with tenants to reduce energy use is a win-win because it saves money and improves tenant satisfaction.” The building is hoping that the remaining tenants will participate in 2015. Further, other Kilroy asset management teams have learned about this program, and we are working to extend it to other portfolios in which the lease structure makes it difficult for us to do lighting retrofits in tenant spaces. This program removes a major barrier to energy efficiency in tenant-controlled spaces, and demonstrates that when tenants and landlords are willing to work together, many efficiency problems that exist as a result of lease structure can be overcome.

 

“It is important to embrace both new as well as proven methods to reduce energy in a building. Working with tenants to reduce energy use is a win-win because it
saves money and improves tenant satisfaction.”

- Shanna Braga, Property Manager