How do we build a business case to get building owners on board for major commercial retrofits?
It seems as though the main barrier to energy efficient retrofits in major commercial buildings is the fact that landlords must pay for upgrades, but tenants receive the immediate benefits.
In other words you have landlords saying why make the capital investment to improve the building since the tenant is the sole beneficiary of reduced operating expenses.

RMI and BOMA hypothesize that the human element of energy savings has been underemphasized, and increasing the collaboration between building owners and tenants can help accelerate adoption of efficiency improvements.

I am wondering if any major CRE people on here have any ideas on how to minimize this barrier. The empire state building recently completed a 500 million dollar retrofit and saw their initial investment completely paid back in just 3 years. Check out the numbers here: https://www.youtube.com/watch?v=vZw4bQuq9gI


There is evidence to suggest that retrofitting buildings to be more  efficient is not only better for the environment but also for businesses bottom line. 

Do you think it is possible to demonstrate the necessary financial paybacks owners must see in order to get onboard with a major retrofit project? How do we go about it? What needs to change? Are there types of leases that would allow owners to take advantage of low energy consumption? 

Some articles with good information/case studies:

http://gbssmag.com/2013/11/ledcor-renew/

http://www.greenbiz.com/blog/2012/06/22/busting-landlord-tenant-barriers-greater-energy-efficiency


[{"id": "cp0rage", "text": "A landlord could potentially start eating utility charges in exchange for higher rent (net equal to the tenant). In that scenario, the landlord could make the energy efficiency upgrades, reduce his expense, and increase his profits and cap rate. \nAssuming they want to keep the tenant on the bill, to prevent wasteful usage, the landlord could attempt to charge the savings to the tenant by modifying their contract. Ie. Tenant agrees to pay landlord the difference between the new energy bill and the 12 month average bill. \n\nI would start by interviewing potential landlords. \n\nTake me for example, we are about to try to lease up vacant units. I would love to have more energy efficient units. In fact, if I can show, without a shadow of a doubt, that that tenants pay $1000 less per month in energy bills, then I can charge $800 more rent. Or, I could charge market rents, but fill my vacancies faster due to savings I could pass on to tenants. ", "replies": [], "depth": 1}, {"id": "cp0rkht", "text": "At some properties, per the lease, Landlords can pass through the expense of capital improvements--typically on an amortized basis. The landlord may have to justify that the improvement will reduce future ongoing costs.\n\nIn your circumstance, you would want to include that language in new leases and thoroughly review current leases to see what tenants are liable for in expense recoveries. ", "replies": [], "depth": 1}, {"id": "cp255g4", "text": "We aren't doing any retrofits on our least efficient property because it would require a ton of capital and our financing precludes us from obtaining any additional financing.  If you can figure out a way for someone to just give us the money, we would happily green the building.", "replies": [{"id": "cp2y6a7", "text": "&gt; our financing precludes us from obtaining any additional financing.\n\nCMBS? ", "replies": [], "depth": 2}], "depth": 1}]