Building better energy efficiency

Energy efficiency is increasingly being built into most large, new construction projects around Arizona, but small commercial buildings rarely go beyond the minimum building codes.

It is more difficult to justify the added construction costs for restaurants, retailers, auto dealers and other small to medium-size operations, so developers tend to leave fancy skylights, foam insulation and other electricity-saving amenities for big projects.

That’s putting their future tenants at a disadvantage because efficiently built structures are cheaper to run, experts say. Buildings that use the government’s Energy Star guidelines use 35 percent less energy than similar buildings and cost 50 cents-per-square-foot less to operate, according to the Energy Department.

Part of the reason small buildings are forgoing efficiency is that the owners are not usually the occupants of small buildings, distancing them from the utility bills. Another is lack of demand from renters, who tend to focus more on rental rates than efficiency. Plus, some developers struggle to find contractors familiar with common efficiency concepts.

This makes small businesses a prime target for retrofitting programs that cut energy use, utility officials said. But retrofitting buildings can do only so much to lower a business’ electricity bill.

Smart from the start

The better solution is to build smart from the start, said Dan Dreiling, Salt River Project’s manager of product development, which is why SRP is targeting building codes to bring up the standards.

“There is no time better to install cost-effective energy-efficiency measures than during the initial design and construction of a building,” Dreiling said. “Then you have long-term savings that last the life of that building from day one.”

Industry research confirms greater savings when buildings are constructed efficiently. Owners of efficiently built commercial projects report operating costs about 14 percent lower than average, while those who retrofit old buildings with efficient appliances achieve about 8.5 percent reduction in costs, according to studies by McGraw-Hill Construction.

Government structures such as firehouses and schools are almost universally built to higher efficiency standards. And large businesses like computer-server farms, where electricity use is high, increasingly are looking to save energy.

“Most of the larger commercial architects doing work on hospitals, universities, city halls, fire stations, they are pretty much doing all this stuff to green standards as a part of their practice,” said Thomas Rogers, a construction-management professor at Northern Arizona University and a founding member in 2001 of the Arizona chapter of the U.S. Green Building Council.

Small businesses, however, don’t usually plan 20 years into the future. And their strip malls and other small commercial projects usually are built by a developer who plans on flipping the property, giving that person no vested interest in saving electricity, officials said.

“Their interest is to make it as cheap as possible, and do the minimum to meet the customer’s needs,” he said. “The (small-business) clients don’t care. That’s a conundrum.”

Real-estate investor Michael Pollack, whose company owns about 45 commercial buildings in the state and frequently renovates shopping centers, said it is much more cost effective to build special features into structures from the start, though his company usually does as much as possible to make renovations efficient.

That can include efficient lighting, insulation and reflective glass. He said about half the tenants in his buildings have participated in SRP and Arizona Public Service Co. lighting-retrofit programs that help pay for those upgrades.

“That’s been a great program,” he said.

Other programs, such as incentives for efficient air-conditioners, are not big enough to replace that equipment except when it is taken out of service, he said. “With our company, we look for the long-term viability of our tenants,” he said. “If we can do something that is not cost-prohibitive to help them, that is what we are going to do, but within reason.”

He said, for example, that spending $12,000 on new cooling systems for a building where tenants pay $750 a month in rent is not a sufficient payback to justify the expense.

Builder’s challenge

Phoenix dentist Jim McDonald spent more than $1.6 million to “do the right thing” and build his new office at 44th Street and Campbell Avenue as efficiently as possible. But he soon learned that most contractors taking on small projects such as his knew little about green building.

His project involved mostly tearing down an older ranch-style house to build the 1,700-square-foot office. As he began to solicit bids for the work, he was met with either quizzical looks or outright resistance.

“I must have heard 100 times, ‘You can’t do that, I don’t know how to do that, why do you want to do that,’ ” he said of his interactions with contractors. “They just want to throw (buildings) up as fast as they can.”

McDonald and Rogers agree that the top construction firms and architects in the state are well-versed in energy-efficient building design. The problem, they said, is that those contractors usually stay away from small projects.

“This size project will be a pickup-sized contractor,” McDonald said of his office.

He was able to get reflective glass, foam insulation, a high-performance air-conditioning system and a host of other features in his building by working with contractor Danny Noma Sr. of Infinity Building, who said he had to work closely with subcontractors to build efficiently.

“They were willing to do it if you showed them how,” said Noma, who has worked in the industry since 1972. “Ninety-nine percent of the time, the subcontractors are not asked to do these things. When they were asked to do it, they didn’t know what to do. They just needed to be educated.”

Most small commercial projects are going to be rented, and that gives the owners little interest in energy efficiency because tenants pay the bills, he said. Tenants have little interest in making upgrades to buildings they don’t own.

“That’s just the way things are built,” Noma said. “It doesn’t seem to bother anybody. Nobody ever says to me, ‘Can we put more insulation in the ceiling?’ ”

McDonald isn’t sure how soon, if ever, his investment in efficiency will pay off. Unlike most building owners, he was interested in the environment first, but he still expects the value of his building to be higher because of the extra effort he put into the design.

“I’m a big environmental guy,” he said. “I tried to build this as environmentally sound as possible, including cutting my utility costs.”

Better codes

SRP is addressing this discrepancy among small businesses and efficiency by pushing for stricter building codes and by offering a variety of incentives for businesses to upgrade their lighting and other equipment with money from the utility, Dreiling said.

“I think there are some challenges and gaps in education and incorporating that into the normal design process,” he said.

To increase the number of buildings constructed efficiently from the start, SRP provides books and training sessions to municipalities regarding building energy efficiency and building codes. In the last fiscal year, it spent $17,000 on those efforts, but that will increase to $100,000 this year.

Thanks to a predicted rebound in construction, SRP officials expect 1,758 commercial structures to be built across its territory this year in municipalities where it helped increase building-code requirements. That is up from just 465 in the last fiscal year.

The Southwest Energy Efficiency Project also advocates for stricter building codes. It worked with the communities of Scottsdale, Peoria, Glendale, Phoenix, Chandler, El Mirage and Paradise Valley to adopt the so-called 2012 codes.

Suzanne Pletcher, communications director for SWEEP, said that new businesses built in those cities will be nearly as efficient as those certified by the U.S. Green Building Council for environmental design simply by meeting that code.

Most builders aren’t willing to spend as freely as McDonald on initial construction, which has led to a boom in the market for energy-efficiency upgrades on existing commercial buildings. For small businesses run from older buildings, the most cost-effective upgrade is usually lighting.

In the past fiscal year, SRP saw a 21 percent jump in the number of small businesses that participated in its small-business lighting-rebate program, with 1,407 companies replacing their lamps with more-efficient models.