Implementation Model: Accessing Tenant Utility Data In Triple-Net Leased Buildings
Commercial Real Estate
Lack of access to tenant utility data in triple-net leased buildings
Depending on property location:
- A clause in tenant lease language requiring utility data to be shared at the landlord’s request; or
- A utility authorization step added to the tenant move-in process
- Coordination with local utilities to access whole-building data
Benchmarking building energy use is a critical step in making energy efficiency improvements, and is increasingly important for both regulatory requirements and voluntary reporting programs. For Prologis, an owner, operator and developer of industrial real estate, benchmarking is a challenge because the majority of its portfolio consists of triple-net leased warehouses and distribution centers. Under a triple-net lease, customers are responsible for paying their own utility bills, which leaves Prologis with little or no insight into whole building energy consumption. Prologis has added utility data access language to leases, provided authorization forms during the move-in process, and worked directly with utilities in an effort to gain access to this data.
The Prologis sustainability team recognized that energy data was becoming increasingly important as a tool for addressing investor interest in environmental sustainability data, supporting customer operational efficiency, and complying with energy disclosure regulations. Prologis has employed three methods to access energy use data for tenant spaces:
Tenant Lease Language
Utility Authorization During the Move-In/ Move-Out Process
The Authorization Release Form will also be requested from customers whose leases are expiring, during an annual environmental survey walk-through. Both of these methods are in the pilot stage, but Prologis intends to proactively utilize them to meet the California regulation.
Whole-Building Data Access Through Utility
Prologis recommends the following best practices when working with utilities for whole-building data:
Tools & Resources
Energy Data Lease Language: Upon receipt of written request from Landlord, Tenant, at Tenant’s sole cost and expense, shall deliver to Landlord data regarding the electricity consumed in the operation of the Premises (the “Energy Data”) for purposes of regulatory compliance, manual and automated benchmarking, energy management, building environmental performance labeling and other related purposes, including but not limited, to the Environmental Protection Agency’s Energy Star rating system and other energy benchmarking systems. Landlord shall use commercially reasonable efforts to utilize automated data transmittal services offered by utility companies to access the Energy Data. Landlord shall not publicly disclose Energy Data without Tenant’s prior written consent. Landlord may, however, disclose Energy Data that has been modified, combined or aggregated in a manner such that the resulting data is not exclusively attributable to Tenant.
Armed with energy use data, Prologis is able to collaborate more effectively with customers to identify energy savings opportunities that can reduce customer operating costs. Prologis can utilize this visibility to identify buildings with higher Energy Use Intensities (EUI) and work with building occupants to identify and implement cost-effective energy-conserving upgrades.
Prologis is able to more efficiently meet whole-building energy disclosure regulations by streamlining the collection of aggregated building energy data. With the implementation of a streamlined process in California, there are opportunities to learn from the challenges and best practices and continue to enhance the process for other markets.
Prologis has successfully benchmarked electricity use for nine million square feet of properties primarily using the whole-building data access method. Prologis expects to continue to expand energy benchmarking utilizing all three strategies as a first step toward meeting our commitment to benchmark 100 million square feet and deliver 20 percent energy savings by 2020.