Retrofitting old office buildings can reduce their energy usage and make them more desirable for commercial customers. It also can cut down on greenhouse-gas emissions since commercial real estate is responsible for 20 percent of U.S. energy use, environmentalists say.
Among the high-profile buildings undergoing energy updates are the Empire State Building and the Willis Tower, formerly the Sears Tower, in Chicago.
The green retrofit of the 78-year-old Empire State Building by Johnson Controls is expected to save $4.4 million a year on utility bills. The remodel of the Willis Tower will cost $350 million and reduce energy use by 80 percent, its owners say.
While these expenditures seem to make sense, few companies have the money to do this kind of work, says Roger Platt, senior vice president and counsel for the Real Estate Roundtable.
The hurdle rate is substantially higher than it was even a year ago, because of the fact that real-estate owners and investors need to preserve cash to deal with the recapitalization of real estate, he says.
Source: The Wall Street Journal, Noah Buhayar (09/21/2009)