Monday, June 30, 2008

High-rise security from the ground up

The design and installation of an access control system raises a host of issues beyond the technology itself.

from Building Operating Management, October 24, 2007

"The attacks of Sept. 11, 2001, made high-rise security a prominent issue for building owners. But it would be a mistake for building owners to focus so much on measures to prevent terrorist attacks that they neglect other security threats like workplace violence, theft and domestic violence. Although these other incidents are less severe in scope than a terrorist attack, they also occur with far greater frequency.

One way to address the spectrum of security risks in a high-rise building is with an access control and alarm monitoring system that complements the security measures of tenants. Such a system can prevent or delay a criminal from entering, make the building less inviting as a target and establish an image of a safe and secure environment.

Even though the installation of an access control and alarm monitoring system seems straightforward, it can be problematic and very costly when security is not part of a cohesive architectural program. The most opportune time to incorporate access control is at the beginning of the planning and programming process.

This requires that multitenant buildings be segregated into two broad

Base Building

The structure, building support, and common spaces and equipment under the domain of the building owner.

Tenant Fit-Out

Space specifically built out and occupied by the tenant; in some instances, separate design and construction teams could be working in this space.

When a high-rise will have multiple tenants, it is important to ensure that the access control system used by the base building will be interoperable with the ones used by tenants; otherwise, tenants will have to use two types of credentials.
The control of grade entrances and below grade entrances - loading docks, main entrances, tertiary grade entrances and so forth - represents the first and most important part of a building's security. Security at these locations should unobtrusively allow access to legitimate users, prevent illegitimate access, and segregate visitor traffic to a concierge or security desk to validate a visitor's need to access the building.

Different spaces, different needs

The best method for accomplishing these goals at main lobby entries is with optical turnstiles. Optical turnstiles are especially valuable in large open atriums, where the size of the space and the number of people present significant security challenges. Optical turnstiles provide a quick and relatively unobtrusive way to ensure that people passing through have proper access credentials. These turnstiles can be equipped with or without barriers; the devices can have electric photo sensors that identify and sound an alarm if someone attempts to enter without presenting an access control credential.

By contrast with main entry lobbies, loading docks require the use of doors with hardware and equipment rated for high-volume use.

One way to improve security in both the base building and the tenant spaces is to sub-compartmentalize elevator and floor access. This approach involves adding security controls - for instance, locked doors or optical turnstiles - at various points to deter potential criminals.
For example, outside a building, the landscape might direct visitors to a certain entrance. The visitor might be required to use an access control credential to enter the building. At the elevator, the visitor might again have to use an access control credential to proceed to a specific floor.

Compartmentalization is easily done if it is planned into the architecture of the building.

In particular, it is important to control the vertical pedestrian core - stairwells, elevators and service elevators. This further compartmentalizes the facility, making a malevolent act more difficult to carry out. These controls provide a level of base building security in addition to security measures taken by individual tenants.

Providing the right space

In a high-rise environment, properly designed security systems will be distributed throughout the structure, and planners need to incorporate into the program enough space for the system to be monitored and administered and to properly house the front-end systems. Without adequate space, the effectiveness of the security system may be compromised. And if that space isn't provided in the initial planning, it will be more costly to make room for it after the building has been fully programmed.

In a major high-rise, a good rule of thumb is that 1,000 to 1,500 square feet of space will be required for the area that will support the monitoring and maintenance of the system. This space is not solely for the access control and monitoring system; a variety of other activities will be occurring in this area. For example, this space might house a locksmith or provide room for security officers to write up reports. The amount of space depends on the specifics of the security program, but it is important in programming to provide ample space. Later, it is easier to reduce the amount of space than to increase it.

Another important spatial consideration is the need for a continuous stacked security riser. Stacking is basically programming these spaces vertically so they are located at the same point on every floor. This is beneficial in maintenance and can also keep conduit costs to a minimum.

The riser closet does not need to be large; a simple four-foot deep by six-foot wide room with a double door opening should be sufficient to support distributed security requirements for the foreseeable future.
Closets on each floor should have dedicated 110v power, telecommunications and a minimum of a four-inch continuous sleeve. This approach will make it easier to add and delete devices for each floor independently and allows the building to adapt quickly to the security needs of its clientele.

In some instances, the security system shares closets with the telecommunications system. This is not recommended because the telecommunications and security staff have different priorities.

In one project, security closets were eliminated from the design to save money, and the access control and alarm monitoring system was moved to the telecommunications closets. At the closeout of the project, the telecommunications department was charging for the time their personnel spent to provide access to the closets and to oversee the installation and maintenance of security panels.

Finally, it's worth considering providing space for remote badging stations. From time to time, the access control credential will have to be replaced. Providing space for remote badging stations will aid in the badging process and make security unobtrusive. For example, a remote badging station might be located on a floor with the cafeteria or a workout room. That would save occupants needing a new badge the time and trouble of going to a badging station on the main floor that is busy issuing temporary badges for visitors and handling other matters.

Architectural Design and Security

The placement of access control readers requires careful attention. For instance, credential readers need to be mounted so as to meet the requirements of the Americans with Disabilities Act (ADA) for both frontal and side approach. The location of the credential reader is especially important, because the device will seem obtrusive if it is improperly placed. As an example, in the case of a single door, the access control reader should be placed 42 inches above the finished floor and on the same side as the door handle.

Proper design and placement of readers can prevent problems. In one case, a reader was mounted on the left side of a door that swung open to the left. As a user reached over to present the credential, someone else exited through the door, wedging the first person between the wall and the door.

The options for placing a reader can be affected in the construction process by other trades. For example, the place where one electrical contractor installs conduit for light switches may limit the choices another electrician has for the placement of the credential reader. The best way to avoid this problem is to have a single electrical contractor on the project. If this is not possible, the security designer should coordinate electrical requirements with the electrical designer to ensure all electrical subcontractors are aware of other equipment that will need to be installed.

In some instances, the architecture of the building presents areas where mounting a credential reader is impractical, inconvenient or not possible. Only a small space is required to mount a reader, so if the security designer works with architects early in the process it should be possible to eliminate problem areas.

Taking the time during planning to coordinate door hardware choices with the access control and alarm system design will also pay substantial dividends. In many cases, doors within tenant spaces are glass and, therefore, require different door hardware than typical wood doors. By ensuring that the architect and security designer work together early on to identify door hardware requirements, the facility executive can protect both the budget and the schedule from unexpected shocks.

There are other ways in which early planning makes it possible for architectural design to improve security. One example is placing doors on opposite sides of an elevator vestibule. This approach compartmentalizes the vestibule, creating another zone of security on the floor. This is an excellent way to prevent elevator surfing by an individual who may be casing the high-rise.

It's important to remember building code compliance in these cases.
If doors are placed on both sides of an elevator vestibule, there is no longer an unimpeded path of egress for someone exiting the elevator. By properly blending architectural and security designs, it is possible to meet life-safety requirements as well as security needs. For example, an exit stairwell can be placed directly off the elevator vestibule to provide a means of egress. That approach would maximize security while providing code compliance.

The design and installation of an effective access control and alarm-monitoring system raises a host of issues beyond the technology itself, from the use of architectural barriers, to code compliance, to effective placement of readers. The only way to address those issues is with communication during the design process. It takes time and effort, but the result will be a system that serves the needs of the building owner, tenants and visitors for years to come."
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Tuesday, June 24, 2008

Bayport North Phase II signs up first tenant

St. George Trucking & Warehousing of Texas Inc. is set to become the first tenant at Bayport North Industrial Park, Phase II, after signing a long-term lease with landlord Vantage Cos. LLC.
St. George, a Houston-based third-party warehousing and trucking provider, will lease 129,000 square feet of office and warehouse space in the 800,000-square-foot, two-building project.
The recently completed property is located in Pasadena.
St. George is seeking to expanding to a larger facility that is closer to the Port of Houston. The company's previous location was on the east side of Loop 610, said Walter Menuet, Vantage vice president of marketing.
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Monday, June 23, 2008

Major Lease docks

Palmer Distribution Services Inc. signed a lease in InterPort Distribution Center last week for 468,000 square feet of space -- representing the largest lease ever executed in a speculative warehouse in the Houston area.
The Houston-based company, which operates under the name Palmer Logistics, is a third-party logistics provider that handles warehousing and trucking for customers on an outsourced basis.
The new lease represents a 61 percent increase in warehouse space for Palmer Logistics, which already occupies 1.2 million square feet of space in 12 locations around Houston. This is the first major site close to the Port of Houston for the company.
"We felt that it was really necessary to position ourselves in the Port market to capitalize on the growth in imports and exports," says Brett Mears, executive vice president of Palmer Logistics.
Phase I of InterPort Distribution Center consists of a 598,000-square-foot facility at 13001 Bay Area Blvd. The building was completed last November by developer First Industrial Realty Trust Inc. and immediately sold to USAA of San Antonio.
David Munson, senior leasing manager for First Industrial, represented USAA on the recent lease transaction. Palmer Logistics was represented by Bob Berry of The Staubach Co.
The 130,000 square feet remaining in Phase I is also on Palmer Logistics' radar screen.
"We're planning on expanding into the entire building," Mears says.
With this lease under its belt, First Industrial is ready to move forward with Phase II of InterPort Distribution Center.
The Chicago-based firm will break ground in two months on a building with nearly 733,000 square feet of warehouse space. The building will be developed on a spec basis, and sold after completion.
"The (Palmer Logistics) transaction definitely gave us the confidence to move forward on the next phase," says Troy MacMane, regional manager in Houston for First Industrial.
Setting records
Charles Turner, chief financial officer of developer PinPoint Commercial LP, says this will likely be one of the largest industrial lease transactions of 2008.
"It's a pretty big deal," Turner says. "You only get a few of those; maybe only one or two a year."
The Palmer Logistics deal is a little bit larger than another major lease signed last year by Wilson Industries Inc. for 450,000 square feet in Underwood Distribution Center I, a 900,000-square-foot industrial facility built by Clay Development & Construction Inc.
Palmer Logistics will be ready to occupy all of its newly leased space in about three months when tenant improvements are completed. A specialized location scanner system will be incorporated into the warehouse as part of the customization.
"It's going to be a brand-new facility we get to design," Mears says. "It's going to better position us relative to our competition."
BASF Corp., Palmer Logistics' largest customer, will use a sizeable portion of the building. BASF's operations will be consolidated from five other Palmer Logistics locations into InterPort Distribution Center.
"It was really an optimization project for that customer," Mears says. "It decreases the cost to the customer. That's the primary goal."
Palmer Logistics will keep the warehouse space that BASF currently uses and will work to fill it with new customers.
The firm currently has 150 employees, but expects to add 30 more when the new space is ready.
Deal details
Landlord: USAA Tenant: Palmer Distribution Services Inc.Space: 468,000 square feetSite: InterPort Distribution Center at 13001 Bay Area Blvd. For more information see: or or

Thursday, June 19, 2008

Planners, developers foresee future for Houston

As geographically massive as it is complex, Houston and its growth are frequently the topic of conversation among its residents.
"Houston is a multinucleus city that has allowed sprawl to generate around those centers," writes one Internet blogger.
"Ironic that all the growth in Houston is occurring in the most zoned parts of the city -- the master-planned communities," writes another.
But topics such as Houston's lack of zoning have also drawn praise to the city for shielding it from the housing crisis and strengthening the local economy.
"It's an absolute plus," says Ed Wulfe, founder and managing principal of Wulfe & Co. "We've been able to respond to economic opportunities and also to retain a strong qualify of life through deed restrictions."
Wulfe, with more than 40 years experience in developing, restoring and renovating commercial properties, sees Houston becoming a much more densely packed city and stresses that planners and developers must take on the difficult task of envisioning their city as it will look 10 or 20 years from today.
"We have to try to envision the city that we want to be," he says. "Mobility is a big issue. We have to be sensitive to the needs of pedestrians and of the communities that exist now."
Like other U.S. cities, many Houston-area developers are turning to a concept known as "new urbanism," which embraces a pedestrian-friendly mix of retail, residential and community facilities within neighborhoods.
"New urbanism is actually old urbanism reborn," says Patricia Knudson Joiner, CEO of Houston-based urban planning company Knudson & Associates LP and former city planner for Houston. "In the 1930s and '40s, you had a standard of a grid system of tree-lined neighborhood streets interconnected with larger thoroughfares. Streets were mostly straight, instead of curvilinear. You had churches, schools and corner stores within walking distance of users. And then came the '50s and people had mobility. They had the automobile."
One bonus with this type of "old-fashioned" community, besides being pedestrian-friendly, is that most of the traffic burden is spread out among a grid system of larger thoroughfares rather than all emptying into one (often clogged) artery.
"I take exception to people saying Houston had no transportation plan," Joiner says. "There has been a major thoroughfare plan in place since 1941."
Transportation and urban planning have a more symbiotic relationship than most people realize. Joiner points out an example with the slow decline of visitors to the once thriving Gulfgate Shopping Center during the 1980s, combined with a slow but steady decline in the quality of apartments and in vacancy rates. Before the mall underwent redevelopment by Wulfe in 2001, it was discovered that nearby freeway access had changed during a road project, and transportation planners had inadvertently affected the Gulfgate area by causing would-be shoppers to take an easier to access exit down the road. And blight, she says, is like water on a glass table. for more information see: or or

Monday, June 16, 2008

Commercial real estate contracts keep buyers, sellers on same page

Although commercial contracts are more complex, the same concepts generally hold true as in buying and selling a home.
In selling a home, the seller wants a substantial deposit from the buyer, does not want to make representations about the home that will get him in trouble later, and wants to walk away from the closing without liability. The seller does not want the buyer coming back later alleging that the condition of the roof was misrepresented and asking for a new roof. On the other hand, the buyer wants to deposit as little money as possible, wants to know about problems in advance and wants to make sure that the home received at closing has no surprise problems.
Understanding key provisions in a commercial contract helps in negotiating the most favorable deal.
Property description. The real estate contract must be in writing, signed by the parties and contain a good legal description of the real property. It is also important to have a good description of leases, service contracts and personal property. Any exclusions from the sale need to be addressed. For example, the rights to architectural plans may be owned by the architect rather than the seller. The seller may also want to exclude its trade name.
Earnest money and inspection. Earnest money, which serves as a pool of funds for the seller to retain if the buyer defaults, is often not at risk until the end of an inspection period. In Texas, a contract with an inspection period is a form of option that is not enforceable without some type of consideration changing hands, so a sum of money in addition to the earnest money is typically paid to the seller.
Title and environmental. Contracts generally allow a buyer to review a title commitment and survey and to obtain an environmental report. A title commitment contains a search of the deed records and discloses record ownership and any encumbrances. The survey drawing should depict the encumbrances. It is key to look at the title commitment and survey together. The utility easement in the title commitment may look harmless, but the survey may show that it runs through the middle of a building. An environmental report prepared by an environmental consultant detects environmental issues and also provides the buyer with certain defenses to liability under federal environmental laws.
Estoppel certificates. An estoppel certificate is a signed statement from a tenant that confirms the lease documents and material terms of the tenant's lease. The certificate may provide a defense to the buyer in a post-closing lawsuit by a tenant claiming that it had a side deal with the former seller\landlord to change the terms of its lease.
Operating covenants. The buyer will want approval over how the property is operated to make sure that no costly capital improvements are made and no below-market leases or new service contracts are entered into. Prior to the earnest money being at risk, the buyer typically has less approval rights. Once the buyer's earnest money is at risk, the buyer is typically accorded greater approval rights.
Representations and warranties. The seller will generally want to sell the property with limited representations and warranties, while the buyer will want more in order to flag issues. The parties will also often negotiate whether the representations and warranties are to be qualified to the knowledge of only certain individuals, the length of time they will survive closing, whether a parent company guarantee or post-closing escrow of the purchase price will stand behind them and whether there will be a cap on potential recourse against the seller for breaches.
Remedies. Contract remedies for default are negotiable. If the buyer defaults, the seller is often allowed to retain the earnest money. If the seller defaults, the buyer is often given the choice of either terminating the contract and receiving the earnest money back or suing for specific performance. Buyers often negotiate for the right to recoup out-of-pocket inspection costs in addition to the return of the earnest money. If remedies are to be limited, the contract should clearly state this intention, otherwise a court may construe the list of remedies to be permissive as opposed to exclusive.
Market conditions and resulting leverage drive the negotiations of many contractual provisions. If there is good communication between the parties, reasonable compromises can be made. The seller can hopefully obtain a fair price for the property, while the buyer obtains a property that he wants and in the condition that he expects.
Mark Biskamp is a partner in the Houston office of Mayer Brown LLP (

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Thursday, June 12, 2008

International Law Firm Relocating to Bank of America Center

Hogan & Hartson LLP, an international law firm founded in Washington, DC with 24 offices worldwide, signed a 10-year lease for the entire, 17,519-square-foot 43rd floor of 700 Louisiana Street. The company will relocate from its current office at 711 Louisiana Street by the end of this year. Bank of America Center is a 56-story, 1.25-million-square-foot, Class A office building with a tenant roster including Bank of America, KPMG, Mayer Brown and Simmons & Company International. The building features 32 passenger elevators, on site management, card key access and a restaurant. John Spafford of PM Realty Group represented the landlord, The Novati Group. Rock Rome and Nicole Miller of Studley’s Washington, DC office, along with Kevin Hodges of Studley’s Houston office, represented the tenant. For more information see: or

Wednesday, June 11, 2008

REITS looking for troubles and hard times in 2008

The U.S. commercial property market will avoid the massive troubles crippling the single-family housing sector but will face hard times in the coming year, according to presenters at NAREIT’s annual REIT Week conference that took place in New York City from June 4 to June 6. Coming out of ICSC’s RECon show in Las Vegas in May, retail REIT executives said retailers were worried about sluggish consumer spending and continued to scale back store openings. Few, however, have asked for outright rent relief. Overall, the market environment seems to be more stable than everyone feared, leading to predictions that the industry will weather a long, but mild recession.
Rising food and gas prices currently present the biggest challenge for shopping center operators, according to Milton Cooper, chairman and CEO of Kimco Realty Corp., a New Hyde Park, N.Y.-based shopping center REIT with a 120-million-square-foot portfolio. With gas costing more than $4 a gallon, U.S. consumers are cutting back on everything but the essentials. Even luxury retailers have started to feel the impact, said John Bucksbaum, chairman and CEO of General Growth Properties, Inc., a Chicago-based regional mall REIT with a 180-million-square-foot portfolio.
“In the past couple of years, everybody wanted to trade up,” Bucksbaum said describing the trend of middle-income consumers dabbling in the luxury sector. “Today, so many of those people are scaling back. It’s all at the margins, but it makes a big difference to the retailers.”
Despite the hit to consumers, most REIT executives reported that leasing activity during the RECon show remained healthy, though below last year’s robust levels. The retailers holding on right now include discounters, warehouse clubs and supermarkets, which are benefiting from inflation on food prices, according to Cooper. On the flip side, restaurants are hurting, said Craig Macnab, chairman and CEO of National Retail Properties, Inc., an Orlando-based REIT that owns approximately 10.6 million square feet in single-tenant retail assets.
This lackluster environment will likely last for another year or so, according to Kenneth Rosen, professor of real estate and urban economics at the University of California-Berkeley, who estimates the economy has entered a recession, but thinks there's a 50 percent it will remain mild. The wild card, however, is the price of oil. If that jumps significantly, all bets are off.
Despite the broader economic challenges, commercial real estate fundamentals remain solid in part because developers have scaled back on new projects, limiting the amount of new supply. That will provide a buffer against the kind of precipitous price declines experienced in the residential sector, Rosen said. However, there will at least be a modest drop in prices this year, he predicted.
In the past 12 months, cap rates on A-class retail assets have increased between 25 basis points and 50 basis points to approximately 6.5 percent, according to Kenneth Bernstein, president and CEO of Acadia Realty Trust, a White Plains, N.Y.-based shopping center REIT with an 8-million-square-foot portfolio. Cap rates on class-B and class-C assets have moved up 100 basis points, meanwhile, and may still go higher.
As a result of the slowdown in leasing and the difficulty of obtaining construction financing, most of the REITs are taking a more measured approach to new development—Acadia, for example, expects to have a five-year turnaround for its new projects, instead of the usual three-year plan. But the majority of REIT executives expect that they will be able to get through the current downturn unscathed.
“I am optimistic about the long range, we just have to be patient,” said Cooper. “I am very hopeful and optimistic that the market will change next year. Whoever is elected president, there will likely be an increase in taxes, which will be good for the dollar. And there will be a push to make America less dependent on oil."
--Elaine Misonzhnik

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Monday, June 9, 2008

Institutions Struggle with Denominator Effect

Just when many institutional investors have committed larger pools of money to the commercial real estate sector for the first time in years, those same investors are potentially facing the very real need to sell off a portion of their commercial real estate portfolios in order to maintain pre-set target investment allocation levels.This quandary is known as the “denominator effect.” As the value of different asset classes — stocks and bonds for example — falls, the value of allocations to other assets, including commercial real estate, rises above allocation targets, triggering needed adjustments, i.e. sales. But the sales market for real estate assets has come to a virtual standstill as investors wait for the gap between buyer and seller pricing expectations to narrow.While waiting, some pension fund advisors have begun telling clients to cut back on future funding to commercial real estate. Recently the City and County of San Francisco Employees’ Retirement System (SFER) reduced its target allocation to real estate by 73%, from $750 million to only $200 million in its next fiscal year beginning in July. SFER’s advisor, the Townsend Group, also recommended that the fund invest only in non-core assets.“By all accounts, large sums of equity capital from foreign and domestic sources remain available [to invest in commercial real estate] but appear content to sit on the sidelines for now,” according to a recent research report from Parsippany, N.J.-based Prudential Real Estate Investors. The report also notes that core funds are seeing more withdrawals as more pension funds grapple with over-allocations to real estate caused by the sharp downturn in the equity and bond markets over the past year. “It’s been a long time since core funds had queues of investors trying to get out, but the risk that many of the large open-end commingled funds will be in such a position by year-end has increased.”According to New York-based researcher Real Capital Analytics, institutions have slowed their acquisition pace dramatically in 2008, with only $4.9 billion in office building transactions in April, down 80% from a year ago. And if history is any indicator, pension funds and others will lag any upturn in the markets.“Institutional investors are notoriously slow to react and are usually followers as opposed to leaders,” says Robert White, president of Real Capital Analytics. That was the case in 2003 and 2004, when institutions stayed out of the market as more opportunistic investors waded in. “Like everyone else, they want greater clarity of where the economy is going. They really didn’t start to become active in a big way until 2005 and 2006, well into the bull run,” says White.That experience looks to have taken hold in the present market environment. “At this point, investors are wary of becoming buyers too soon rather than responding to any urgency over concern that they will miss the upside,” says Sam Chandan, chief economist and senior vice president at New York-based Reis. The recent sale of the General Motors Building in Midtown Manhattan for an estimated $2.9 billion has given some sellers a tiny sliver of hope, but most observers don’t believe it was a seminal event that will uncork an explosion in deal making.“No doubt the sale is a good sign, especially at that price, but I don’t think it’s going to be a strong signal to the market since it is such a special, one-of-a-kind property,” says White.Chandan agrees. “There are few conclusions that can be drawn from its sale — the roster of participants to the transaction or the structure of the financing that are directly relevant for more common properties available for sale.”As White puts it, “There was a lot of ego in that deal, not necessarily economics.” For more information see: and or

This article is written by Ben Johnson, National Real Estate Investor 6/9/08

Making energy data pay for itself

Monitoring how occupants and tenants use energy can result in savings — and sometimes immediate payback on the cost of such analysis.

from Building Operating Management, October 18, 2006

"Information from utility meters and customer submeters provides much more than just total usage and cost data. Some facility executives are using meters and data handling systems to cut energy costs and recoup more money from both tenants and government agencies.

Electric meters for commercial and institutional facilities typically measure both use and the rate of use. Usage, called consumption, is defined by the number of kilowatt-hours received during a billing period, which is usually a month. The maximum rate of use, called peak demand, is determined by the highest kilowatt level measured during the billing period.

Most utilities measure peak demand by counting the kwh in a 15- or 30-minute period and dividing by the length of that period, defined as a percentage of an hour. For example, 2,000 kwh used in 15 minutes - a quarter of an hour - yields a billed peak demand of 8,000 kw. In some parts of the country, peak demand accounts for roughly half the electric bill, so understanding how fast a facility uses power may be just as important as knowing how much electricity is being consumed. Some real estate personnel mix up these terms, using kw when they mean kwh.
Confusing the two units has cost a few of them dearly.

Experience with routine monthly monitoring of meter data shows potential savings between 2 and 15%, with most results in the single digits. For customers spending a million dollars on energy annually, that's $20,000 or more a year. The cost for such analysis should be only a fraction of that amount, yielding an immediate payback on the effort. As data handling becomes more sophisticated - through submetering, interval data review and linking with operations in near real-time, for example - savings may rise.

Energy data is only valuable when it's converted into useful information, such as invoices, usage trends, potential savings, options for cost recovery and planning for growth. To make that conversion, personnel experienced in analyzing energy data, preferably equipped with appropriate software, are essential.

Start by reviewing how energy costs are allocated among tenants, departments and other occupants. When only a single utility meter is in use, most facilities apportion costs based either on a square footage formula, plus a portion of common area usage, or through one-time surveys of occupant loads and assumed operating hours. Before negotiating another lease or allocation, consider installing temporary or permanent submeters on the largest tenants to assess how accurately such methods are working. Occupant peak loads change over time and, in some cases, may have always been responsible for a greater percentage of the total building use than was assumed. The same may be true for operating hours: modern electronic submeters record the time of usage in intervals, showing when and how fast energy is being used. Where time-of-use electric rates and high demand charges are in effect, this information alone may open the door to adjusting an occupant's share of the electric bill.

Meter Service Options

Whenever possible, permanent submeters should become the basis for internal monthly energy billing. Experience shows that merely receiving a monthly energy bill results in lower consumption - more than 20% lower in a few cases - and sometimes lower peak demand. Such revenue-grade electronic submeters may also be used to verify the utility meter's reading. In one case, catching and correcting one large error in a utility meter nearly covered the annual cost for submetering. Such cost may, depending on lease terms, be added to tenant or department energy bills, making submetering a self-financing effort over time.

In many cities, private meter data service providers install and read submeters. In a few states, utility metering has been deregulated, allowing replacement of utility meters with more modern and more useful equipment. In New York and California, metering service providers are now certified to handle such tasks.

The Bucks Keep Coming

Submetering may also provide the basis for improving indirect cost recovery at institutions performing federally supported activities, such as research. Those facilities are reimbursed for a portion of the operating and maintenance expenses related to those activities. Unless otherwise determined, those operating and maintenance costs are based on the usual percentage square footage formula, regardless of the intensity of usage. At one university, using data from submeters significantly increased the indirect cost recovery for that facility.
Reducing peak demand by billing tenants for their demand as well as their consumption may translate into avoided costs for power distribution reinforcement or expansion, as well as better terms when purchasing deregulated electricity. Sudden changes to usage seen on a submeter may reveal operating problems such as equipment or controls failures, steam leakage, or open windows. Such anomalies might also indicate potential problems with loads that are approaching or exceeding the capacity of transformers, pipes and other infrastructure.
Reviewing usage and demand for portions of a building or campus, instead of lumping it all on one utility meter, may help plan facility expansion and budgeting. Some facility executives have used such data in the development, for example, of on-site distributed generation systems for critical loads.
Many large facilities having only one electric account may already have some free utility submetering. As facilities grow, utilities may add new electric services, each with its own meter, and simply add that meter to the existing bill. A quick review of the meter readings on an electric bill will show how many utility meters are in use. In large buildings, utility meters may exist on individual electric risers or transformers, potentially allowing segregation based on end usage. In one case, a utility meter was found to monitor only lighting loads, all of which were fed by a single riser. Data from that utility meter was used to prove savings from a lighting upgrade. Where electric distribution diagrams are not available to show how loads are separated by riser or transformer, an electrician can use a signal tracing system to determine which loads are being seen by each meter.
With utility permission, a shadow meter or data logger may be connected to output ports on some utility meters that allows a customer to monitor in real-time the power passing through that meter. While far from perfect, this option is often a first good step toward understanding how a building uses its power over time.
Where a performance contract is involved that is based on claimed energy savings, such meter data collection may help enforce the contract.
Surveys of energy managers have found that difficulty finding and measuring such savings is one of the leading reasons such contracts are contested.
Getting Sophisticated

Complex facilities having multiple HVAC systems, concentrated usage, such as that on trading floors, and process loads, including computers, labs and food service equipment, have benefited from analysis of interval data from time-of-use meters. That process focuses attention on how power is used during 15- or 30-minute intervals across days, months and even years. Such analysis provides detail much greater than available using only monthly meter readings.
Using such techniques, even highly efficient facilities can find ways to further trim peak demand, eliminate off-peak energy waste, and correct controls malfunctions. What's more, where power costs exceed the national average of 8 cents per kwh, this process may be cost-effectively pursued with the help of a consultant or training of in-house personnel. When applied in real time, such data may be used to automatically control some building systems to minimize peak demand charges.
Getting a good handle on hourly load profiles may also lead to cheaper power in deregulated electric markets. Without access to a customer's actual load shape, power marketers routinely use standard utility customer load profiles that may, or may not, be appropriate.
Customers whose operations run 24/7, or involve unusual HVAC systems like thermal storage or gas-fired chillers, often have load profiles quite different from those used by utilities to develop tariff pricing.
Some large customers have used detailed load profile data to show why their use of power should cost less to serve and have secured lower power prices from marketers as a result.
In another case, close analysis of data from multiple meters at a single building resulted in a switch from individual utility metering to a master account meter. Previously used as an apartment building, the facility had been converted to offices that were all part of one firm.
More than 100 separate electrical accounts were maintained, but all bills were paid by the firm's centralized accounting staff. Office managers were not responsible for power use, losing much of the value of the existing metering.
Finding Wasted Dollars

The internal cost to handle and pay those electric bills was
significant: studies of invoicing costs found them to be $5 or higher per account each month, resulting in a hidden cost exceeding $6,000 a year. In addition, each account had a base service charge of about $12 per month that was levied even when an office was empty. Because of churn and growth within the firm, some offices were empty for months at a time, resulting in an additional $15,000 a year in wasted dollars.
Overlaid on that waste was the differential in electric rates between the utility and the power marketer serving the firm's larger accounts. Because the existing meters were simple electromechanical units with no demand or time-of-use capability, standard utility profiles applied. In some deregulated power markets, a portion of the electric rate is based on an installed capacity charge that defines the peak demand of a small customer based solely on consumption during several summer months in the prior year. That charge may be 5 to 20% of the total bill. The total charge for the building was therefore based on several assumptions that did not apply to this facility - but the existing metering would not allow any change to it.
When a temporary master time-of-use and demand meter was installed, actual peak coincident demand was found to be about 30% lower than the total derived demand used by the utility to set its power pricing. An examination of the base, consumption and demand rates that would apply to a large commercial account replacing the 100 small accounts revealed overall savings sufficient to cover the cost to convert to master metering.
Such goodies do not always fall only into the landlord's lap. During several submetering installations, tenant electric services were found to be serving some common areas, including lighting in hallways, stairwells and rest rooms, resulting in a few tenants paying directly for costs that should have been shared by all tenants or paid solely by the landlord. Appropriate refunds became part of pending lease renewal negotiations.
In another case, a landlord who was unaware of this circuiting peculiarity paid for a lighting upgrade of common-area lighting - but saw no savings. The tenants, however, all saw their electric bills drop
- at no cost to them."
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Friday, June 6, 2008

Redstone points Compass in new directionReal estate owner to tear down Compass Bank building on Post Oak in favor of redevelopment

Redstone Cos. is preparing to raze the Compass Bank building on Post Oak and replace it with a new development -- a move that real estate watchers have been speculating about for years.
The multitenant office building at 2200 Post Oak near Westheimer sits on approximately four acres of prime land near the Galleria. The site is owned by an affiliate of Houston-based Redstone, a well-funded firm that owns the Houstonian Hotel, Club & Spa and specializes in private equity, hospitality and real estate.
Redstone has been signing only short-term leases in anticipation of a redevelopment project. Tenants in the 123,000-square-foot building were notified two weeks ago that their leases would be terminated, effective Dec. 1. The seven-story building, which was constructed in 1967, has been home to some of the businesses for many years.
"Our current plans include the demolition of the existing office building," states the termination letter which was signed by Steven Lerner, executive vice president of Redstone. for more information see: or