2023 Summer Issue of Urban Land - 69

Turning a 50-Year-old, 20-story office
tower into a LEED Platinum-certified building
clearly required a deep retrofit. In 2017, when
LaSalle Investment Management acquired
275 Slater Street in Ottawa, its underwriting
included those next-level improvements.
Whether a simple energy efficiency upgrade
or a larger overhaul is needed, retrofitting
is becoming an important component of the
real estate industry.
" In Ottawa, we were making a classic
investment thesis for a core long-term hold,
so we were looking at a five- to 10-year plan
to phase in energy-efficient retrofits alongside
other capital improvements, " says Elena
Alschuler, Americas head of sustainability for
LaSalle Investment Management.
LaSalle reduced energy use by about
20 percent in the building, Alschuler says,
with incremental steps such as replacing the
lighting, improving the building facade, and
installing variable-speed drives for the heating,
ventilation, and air-conditioning (HVAC)
system. LaSalle also installed low-flow water
fixtures to cut water use.
While property owners embrace retrofits
to improve operating efficiency, attract
tenants, and meet their own sustainability
goals, other forces are also driving interest
in retrofits. " Institutional investors have
ESG [environmental, social, and governance]
goals, so property owners may be required
to meet energy targets to receive funding, "
says Chris Gray, chief technology officer of
RENU Communities, a subsidiary of Taurus
Investment Holdings. " Approximately half of
all multifamily buildings in the U.S. were built
before 1990, which means they're more than
30 years old and need upgrades. "
In addition, national, state, and local
governments are introducing codes that
will force property owners to meet energy
efficiency goals. Local Law 97 in New York
City, for example, requires large buildings to
reduce their greenhouse gas emissions by 40
percent in 2030 and by 80 percent in 2050.
" About 40 jurisdictions already have
carbon emission reductions in place, and
we're anticipating that number to grow, "
says Alschuler. " There's also more tenant
SUMMER 2023
URBAN LAND
69
demand and investor demand for sustainable
improvements. "
It's easy to see why. Buildings account
for 40 percent of carbon emissions globally.
Eighty percent of buildings that will exist in
2050 are already standing in cities around
the world. To achieve net zero carbon emissions
by 2050, a goal embraced by numerous
countries including the United States, it
will be necessary to retrofit existing buildings.
Acquisition Analysis and Portfolio
Reviews
At RENU and throughout Taurus Investment's
portfolio, every property, whether it is being
considered as an acquisition or for a retrofit,
has an energy plan, Gray says.
" We start with a high-level analysis, then
we bid it out, do a deeper dive, and generate
computerized models to understand
preferred solutions in the context of our
investment threshold, " he says.
Sustainability improvements often start
with a review of consumption patterns, followed
by an individualized plan for retrofits.
" At Hines, our mission is to reduce energy
use first before looking at adding renewable
energy sources, " says Michael Izzo, vice
president for carbon strategy at Hines. " The
Located in downtown
Ottawa, 275 Slater
Street is a 55-year-old
property upgraded
to achieve LEED
Platinum and Energy
Star certifications. The
property's systems,
including lighting,
HVAC, a heat curtain,
and water and
elevator controls, were
upgraded, resulting in
a more energy-efficient
building.
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2023 Summer Issue of Urban Land

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