Altered state

By Huw Thomas

In films, it’s been scaled by a giant ape, vaporized by invading aliens and, most terrifyingly of all, witnessed a romantic clinch between Meg Ryan and Tom Hanks. In reality, it was the tallest structure in the world for over 40 years and is an unmistakable feature of New York City’s skyline. The Empire State Building is a true American icon: completed in 1931, it is still the third tallest building in the US and the 15th tallest in the world, a continuing reminder of the nation’s towering ambition and ingenuity.

With all that said, building construction has moved on significantly in the last 80 years or so, and the Empire State Building risks being left behind. A new generation of skyscrapers is springing up in cities across the globe, which employ cutting edge techniques and technologies to make them more ecologically friendly and sustainable than their predecessors. But as befits a building of its lofty status, the ESB is strongly resisting a slide into obsolescence.

The former king of the 20^th century is currently cementing its position in the 21^st with a massive $13.2 million retrofit program that will cut energy consumption by 38 percent and reaffirm its position as one of New York City's prime pieces of real estate. A groundbreaking collaboration between the building's owner Malkin Holdings, the Rocky Mountain Institute, Jones Lang LaSalle, the Clinton Climate Initiative and Johnson Controls is transforming the venerable property from the inside out. One of the world's most recognizable buildings is now becoming one of its most efficient.

For Tony Malkin, President of Malkin Holdings, the decision to pursue energy efficiency was a natural consequence of a major initiative called the Empire State Rebuilding Program. "We were actually in a position from the start that required us to reposition the building," tells me from his office in New York. "We were spending a tremendous amount of money on the building in any event; there was going to be no alternative to that. So we thought, why not incorporate the whole energy efficiency piece? And the reason for that is very straightforward: it's a tremendous economic reward for us to design our renovation and upgrade program with energy efficiency in mind. Our payback period is very short. The lasting competitive advantage that we create for our tenants and the way we compete in the marketplace is very real. Ultimately, it was a question of not, 'Why should we?' but, 'Why should we not?' and we could come up with no reason not to."

In this age of increased eco-consciousness, it is not that unusual for building owners to want to make their properties more efficient. What sets the ESB refit apart is the manner in which it was approached. Rather than looking at the project as a one-off job, it was viewed from the outset as an opportunity to create predictable and repeatable processes that can be applied time and again. "The entire idea behind our work was that it should be replicable," Malkin continues. "No question. If we did it only at the Empire State Building, it would be a failure. The significant commitment of the team members came from the conclusion that if we set up something which was open-source, free and easily repeated it could really have an impact."

That this project was undertaken on a property like the Empire State Building is also significant. "When we originally started work with the Clinton Climate Initiative on this, I had suggested that we work with another building we were renovating called 1333 Broadway," Malkin explains. "However the CCI were very insistent on working with the Empire State Building, in spite of the vast complexity of systems and operations of the building. They felt that if we did it at the Empire State Building, we'd get the attention of the world, and if we did it at 1333 Broadway, no one would notice and no one would care, even if we had a tremendous success."

Unique challenge

The bigger the challenge, the bigger the potential rewards. However, a retrofit on this scale with so many different aspects was unprecedented. Getting it right would require some specialized expertise. "We had an interesting role because in essence the owner needed support to help rethink the design ideas in order to emphasize the energy efficiency of the delivered product," says Robert 'Hutch' Hutchinson, Program Director for Research and Consulting at the Rocky Mountain Institute.

"We focused on a long list of energy relevant pieces of the project and ended up working with the project team to reframe what was done and what wasn't done, actually adding a bunch of things that were not in the original list. It was a major overhaul project that may have hundreds of particular pieces of the building that are being worked on or adapted in some way. So we started with a pretty long list."

This list originally ran to hundreds of items, many of which had zero impact on energy efficiency. These were swiftly discarded, with the remaining options being closely examined in order to decide which ones to keep and which to drop. The key consideration was how each element would interact with others in the precise environment in which they were being deployed.

"We call it integrated design," Hutchinson explains. "Of course not everything affects everything but you have to get a pretty decent handle on how things work within the context of a particular building, taking into account things like the physics of the weather and the usage. So we ended up with eight out of all those hundreds of options that had a net positive effect, meaning that if you didn't do one of those eight it would make the other seven less valuable."

This holistic approach led to a process that could be accurately quantified on both an environmental and economic level. "We have the ability to model the expenditure required for any variety of aspects of the program and to model the payback alone and in combination," says Malkin. "The biggest thing that we're doing compared to what other people have done historically is that we are approaching it from a quantitative rather than a qualitative perspective. We've established a system that allows economic modeling, so that we've been able to show the return on investment."

In practice, this means that those behind the renovation can confidently predict annual savings of $4.4 million, paying back the retrofit costs in full in less than four years. Environmental and sustainability concerns aside, it's this kind of data that is likely to be the clincher for many building owners considering sustainability retrofits.

"Every company of any size and value recognizes the importance of minimizing their carbon footprint, minimizing their cost," Malkin confirms. "It's not just a carbon thing. It's also the fact that they're looking for maximum return on their investments and minimizing their costs of occupancy in general. The neat thing about what we're doing is that it's not really built around carbon, it's built around saving energy and therefore money. The carbon comes along for free. This is not an additional expense, it's an investment, where once you conclude your payback, it's perennial savings. It's money in your pocket."

Along with the financial rewards, the ESB's retrofit has also resulted in some indirect benefits. Before the work, the building was, in Hutchinson's words, "a perfectly nice building but arguably not the one that top door firms wanted to be in". The upgrade has made it much more attractive to high-profile firms keen to be associated with such a forward-looking project, resulting in the potential for the owners to receive higher rents as tenants change over.

"We're never going to claim that an energy oriented intervention alone will do that for a building," cautions Hutchinson, "but if we consider that most of the buildings we have now are going to be around for a long time, this sort of sustainability repositioning is immensely valuable for the real estate world to learn how to do because it makes all the difference."

Good for tenants

Tenants in retrofitted buildings have not been left out of the benefit equation, as Malkin points out. "What typically happens when a building is built is you take a look at all the systems and make sure they are properly commissioned, that they're running correctly, that all the air distribution is balanced, that sort of thing. It's a bit like roasting a turkey, you set it and forget it. But uses change, and motors don't function the same way over time, and things fall out of balance.

"With the ESB project, the entire network is tied together: every fan has a variable-frequency drive. Every motor has a variable-frequency drive; every radiator is tied in to a digital control; so it's all linked to one master control system. This means that whenever one of those units malfunctions, it's immediately picked up by the system, which gives you actual, real-time, 24/7 commissioning. You're not in a position of having to recommission your building manually every year because it's done automatically."

Tenants, particularly the larger ones, are increasingly recognizing that their three biggest expenses are salary, rent and utilities. And the cost of utilities is one of the biggest variables, because the cost of energy varies so much, so a system that gives them more control is a major plus.

The ESB project contains a suite of tenant measures to be taken in steps, and Malkin says there is a general agreement with tenants that if the owners can show them that any energy efficiency investments they can make as they're building out their spaces will give them a five-year payback or less, they will put that work into their build-outs.

"Almost every single tenant is taking us up on that," Malkin says proudly. "We've done some very major installations that way. We're reducing our energy consumption per square foot, including air conditioning, to down around three-watt range. We have tenants fully installed, where their electric, including lights, air conditioning and computers, are all around the three-watt-per-square-foot range, which is shocking because the typical industry standard when concluding a lease is to demand six to eight watts."

There are wider implications than just savings - or increased earnings - for building owners and for tenants. Concerns about America's ability to keep the lights on have grown increasingly prominent in recent years. A growing population demands the power to fuel its 21^st century lifestyle. Without new sources of energy, capacity will struggle to match this demand, resulting in more expensive, less reliable supplies. Building new power generation facilities is a slow and costly business, and doesn't really address the issue of carbon emissions. By viewing energy efficiency almost as a power source in its own right, the rewards can be tremendous.

"The math goes like this," Malkin explains. "In New York City, 80 percent of the energy used is consumed by buildings. The Mayor's Office of Long-Term Planning has determined that 20 percent of the buildings in New York City consume 80 percent of that 80 percent. In other words, 64 percent of all energy consumed in New York City is consumed by 20 percent of the buildings. Our energy savings, in watts and BTUs, come to approximately 40 percent. Therefore, if you were to have the 20 percent of the buildings that consume 64 percent of the energy deploy our system, you would reduce total energy consumption in New York City by 25 percent."

Put another way, an energy saving of that size would be the equivalent of dropping a carbon-free alternative generation facility into the heart of New York, a facility capable of providing a quarter of the city's energy needs. It creates huge additional capacity without the need for new power stations or transmission lines, freeing up resources that can in turn enable quicker economic growth.

Knowledge needed

Given the obvious benefits for both businesses and the environment, why aren't these kinds of retrofits happening everywhere? In part it is due to a lack of knowledge and expertise in the market. "There's still a fairly significant element of learning by doing," says Hutchinson. "You have those projects where you have to mix the newbies in with folks that have done it a few times so that they learn and can go off and do it themselves. You have to feed the pipeline that way.

"The US government has made some very, very serious commitments in terms of building efficiency, so they're a very obvious market for people to try these new skills. Our friends in Washington tell us that a lot of people are coming to them and saying they can do these kinds of projects, but on the other hand it's still pretty hard to find a building they've actually done this way. There are a lot of people hoping to practice these techniques and frankly we're all for it. The guys in Washington call up and say, 'These people are sounding like they're as good as you are.' We say, 'Great. That's the point.'"

Another potential roadblock can be the sheer logistics of getting the work done. This becomes particularly clear when Malkin describes the ESB window re-fit. "No one has ever done anything like it before," he underlines. "We have set up a facility in the building, and we're taking the windows, splitting them apart, installing a Mylar sheet in the middle with a spacer, resealing them, and filling them with krypton-argon gas. We're reusing 96 percent of the glass and the window frames.

"We are taking every single one of the building's 6514 windows and taking them from an R2 rating to an R8 rating. That will cost $4.5 million. To get the equivalent benefits would have cost something more in the range of $3300 a window if we did them new. They're being done in the building, not transported off-site, with 96 percent reuse - so my point is that this is all about the economic argument. And hopefully it will result in a lot of people mimicking it, because it is about the replicability."

The good news for would-be 'replicators' is that technology is developing at lightning speed, and as the technology gets more sophisticated, doing large-scale retrofits on older buildings can only get easier. "Control systems are getting better and the proprietary systems that have been place for years are starting to develop cracks, which means that things become much cheaper," says Hutchinson. "You can put sensors in and wireless communication from that sensor at a fraction of the cost that it used to require.'

He points out that lighting technology has developed significantly, along with the understanding of the conditions required for human comfort and appropriate lighting levels. Computers and high-tech equipment, which are a major source of energy use in office buildings, are also much more efficient then they were five years ago, capable of giving the same performance at one-third of the energy use of previous models.

The ESB's retrofit has also resulted in some indirect benefits. Before the work, the building was, in Hutchinson's words, "a perfectly nice building but arguably not the one that top door firms wanted to be in". The upgrade has made it much more attractive to high-profile firms keen to be associated with such a forward-looking project, resulting in the potential for the owners to receive higher rents as tenants change over.

"We're never going to claim that an energy-oriented intervention alone will do that for a building," cautions Hutchinson, "but if we consider that most of the buildings we have now are going to be around for a long time, it is immensely valuable for the real estate world to learn how to do this sort of sustainability repositioning because it makes all the difference."

Theory and reality

Malkin believes that another reason more retrofits are not being done is that people got too hung up on theory. He tells the story of a representative from an environmental group coming to his office during the period when the initial groundwork for the ESB project had already started, but hadn't been made public yet.

"He sat down with me and gave me a presentation that was very much along the lines of what we were doing with the ESB project. I was taken aback, and I asked him how they had done it and what it had cost. He told me they had a consultant do it for $10,000.

"Then I said, 'Does any of this exist?' And the guy said, 'No.' It was all theory. And I realized that there hasn't been anything out there to support this theory and to give us something to work with. There was a only a lot of consultative stuff."

In Malkin's view, now is the time to go beyond theory and get down to the hard facts, to the dollars and cents. He stresses that in the case of ESB, because the quantitative analysis has been so rigorous, the building's savings on energy costs have been guaranteed by Johnson Controls' balance sheet. If the get the savings promised in the contract fail to materialize, the owners will be paid back proportionately. "There's nothing else out there like this," Malkin says, "and we're very hopeful that more people will take it on."

According to Hutchinson, the current slightly tenuous position of the real-estate world has helped stir up interest in refitting buildings for energy efficiency. "We do see a lot of service providers very interested in learning these things once they realize there's value there. We see investors saying they would like to be aware of it, although they also say they don't have much in the way of funding for new projects. A lot of folks are in learning mode, but it's because the commercial real estate world is in a tenuous situation.

"On the positive side, given that we have such a scarcity of skilled resources it does give us a bit of a window for training. We recently put together some training packages that were presented at the big building modelling conference, and we were absolutely overrun with folks who want to get on board, learn the tools and start practicing. There was an executive order from the government last year that set some very hard targets for federal buildings to meet, and that is going to start driving some activity as people learn the art of the possible. As people look through their inventories of assets, they'll start to figure how to better target where a deep energy retrofit would be a terrific investment right now."

If things go to plan, the Empire State Building's celluloid fame could soon be eclipsed by its renown as a leader in environmental conversions. Which can only be a good thing for building owners, tenants, and the environment as a whole.

Break it up

The component parts of the Empire State Building refit

Radiative barriers

Insulation behind more than 6500 radiators keeps heat inside the building, almost half of which was being lost prior to renovation.

Annual savings:

480 tons CO₂

$190K

Remanufactured windows

Existing windows are re-engineered on site. Thin film and gas are inserted between the panes cutting down on heat loss and gains.

Annual savings:

1150 tons CO₂

$410K

Lighting and power outlets

Maximizing daylight, installing more efficient lights and controls and providing load energy use monitors on power outlets significantly reduces energy needs.

Annual savings:

2060 tons CO₂

$941K

Air handling units

Replacing more than 300 air handling units with a smaller number of new more efficient units.

Annual savings:

1520 tons CO₂

$703K

Chiller plant retrofit

Replacing components on existing chiller plants, making them more efficient and controllable.

Annual savings:

1430 tons CO₂

$676K

Demand control ventilation

Uses measured CO₂ concentration to determine the appropriate amount of air to bring into the building.

Annual savings:

300 tons CO₂

$117K

Direct digital controls

Upgrading existing building controls and installing new ones helps to optimize HVAC system operation and provide more detailed sub-metering of energy use.

Annual savings:

1900 tons CO₂

$741K

Tenant energy management

Engages tenants in the building's sustainability efforts to realize energy savings over the next several years.

Annual savings:

743 tons CO₂

$387K

Source: esbsustainability.com