Brad White, SES Consulting’s “The Trillion Dollar Opportunity in Transforming Existing Buildings”

brad_white The $3/$30/$300 sq ft rule was the predominant theme in the June, 2016 edition of Ken Sinclair’s Automated Buildings. Brad White, SES Consulting, offers yet another compelling economic case for directing more of our efforts to the $300 variable in the equation. A 5% improvement in productivity represents a tremendous savings, while making employees more comfortable and our buildings better. Truly, an emerging trend as IoT delivers more relevant contextualization into the Building Renaissance and the Smart, Connected, and Intelligent Building formula.

From Brad White: If you had $3-$5 million to invest into a 50,000 sq ft office building could you significantly reduce energy consumption, improve space utilization, and increase worker productivity?

It recently occurred to me that buildings play an outsized role in our economy. In developed countries, a majority of economic activity happens entirely within the walls of commercial and institutional buildings. The fact that I’ve been working in the building sector for my entire professional career and this only recently occurred to me is slightly embarrassing. Another fact that most of us know all too well is that most buildings don’t operate nearly as well as they could, and that this has very real impacts on everything from energy use to occupant comfort. Put these two things together and you start to realize that there is a huge economic opportunity in making existing buildings better.

How much opportunity you ask? I find it is useful to use a tangible example to get a sense of the scale of the opportunity. If we took a typical 50,000 sq ft office building and apply the trusty 3 – 30 – 300 rule (which corresponds approximately to energy – rent – payroll in $/sq ft/year) you end up with a total expenditure of just over $16.5 million/year. If we could reduce energy consumption by 50%, improve space utilization by 10%, and improve worker productivity by 5% that represents an economic benefit equal to $1 million/year. If you’re willing to accept a payback in the 3 – 5 year range, that gives you $3 – $5 million to work with. This is a far cry from the slice of $3/sq ft that we’re often trying to use to justify investments in building upgrades, with the benefits to occupants considered at best a bonus or side benefit, rather than the main driver.

If you scale this example up to cover all of the commercial buildings in the US and Canada, you end up with a number around $1 Trillion. A trillion dollars is a hard number to get your head around. Usually we only consider numbers that large in the context of the GDP of major economies and financial system bailouts. In this case, a trillion dollars investment in our buildings buys you a happier, healthier, more productive workforce while achieving a significant reduction in environmental impact and greenhouse gas emissions. Certainly, much more money than this has been spent with much fewer positive outcomes to show for it.

To bring this back to a more manageable context and reframe it a little bit, if you had $3-$5 million to invest into a 50,000 sq ft office building could you significantly reduce energy consumption, improve space utilization, and increase worker productivity? I certainly believe this is possible and I hope to use the rest of this article to convince you that the opportunity is real and achievable today, or at least that it’s not entirely hogwash. The path to these outcomes is certainly not straightforward and requires pulling together many different components like deploying IOT and other smart building technologies, lighting upgrades, space planning, renewable energy, training and occupant engagement while also overcoming significant institutional obstacles.

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One Response

  1. Hi Brad, excellent piece properly demonstrating the need for 21st century approach to evaluating total costs and benefits of installed systems. If you add to this the positive outcomes described in a recent BSRIA piece of work on the benefits of “Convergence” (that is for example using an existing BMS control platform to also be the smart IoT lighting control then this not only supports but enhances your suggested outcome.

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