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Empire State Building Cuts Energy Waste, Becomes Unexpected Model of Efficiency

Peter Lehner

Posted October 26, 2012

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 The Empire State Building was never intended to be low-impact. It was built as a symbol of the power of New York--and today, it's a surprising case study in the power of efficiency. A series of cost-effective, energy-efficient retrofits have dramatically reduced energy waste in the Empire State Building, saving $2.4 million in operating costs in the first year alone. In the next few years, when the project is complete, the building is expected to reduce its energy use by nearly 40 percent--and save about $4.4 million each year.

The waste-cutting retrofits were designed as part of a larger overhaul of the building's aging infrastructure by owner Malkin Holdings. President Tony Malkin (husband of NRDC trustee Shelly Malkin), wasn't about to take a senseless risk with his single largest real estate asset. The proposition had to make business sense. "I'm a capitalist," Malkin told Harvard Magazine. "I wanted to make money. This is not charity."

Some buildings can waste as much as 80 percent of the energy they use, as a result of improper insulation, leaks, old HVAC systems, lighting, and other inefficiencies. All that energy waste is of course, a waste of money--building owners and tenants pay for electricity that's literally flying out the window. Yet many building owners perceive retrofits as an expense, rather than an opportunity for savings. Over nine months, a team of real estate, energy service and climate experts worked to prove to Malkin that an energy efficient retrofit made economic sense. Johnson Controls, an energy service company, guaranteed that its portion of the work would provide roughly 20 percent savings for 15 years--or they would foot the bill for the difference.

The project team considered about 60 potential strategies, finally selecting 8 projects that would dramatically reduce the building's energy use, and also pay for themselves within three years. The team knew that high-efficiency windows, for example, could dramatically cut energy waste. But replacing the building's 6,514 windows outright would cost $20 million.

The solution: rebuild the windows on site, reusing the existing glass, sash, and trim, and sandwiching a layer of high-tech insulating film between the two existing panes. This strategy reduced costs by more than $15 million, and created far less waste than tearing out the old windows and shipping in replacements. Because the windows are better insulated, the building and its tenants save roughly $410,000 on heating and cooling costs each year.

But no matter how efficient Malkin made the exterior of the building, ultimately, tenants would be responsible for about half the building's energy consumption. Working with new tenants as they built out the raw space to fit their needs would be a prime opportunity to put energy-saving measures in place--but it's also a time when tenants watch their costs very carefully.

During the retrofit analysis, the Empire State Building team included tenants in planning discussions. Construction firm Skanska, a new tenant on the 32nd floor, sought to create an energy-efficient office space that wouldn't cost more than a typical high-end office over the life of the lease. Skanska designed an open office floorplan to maximize natural light, and installed an under-floor ventilation system to bring in fresh air and allow individual temperature controls for workspaces. Incorporating measures like these at the time of build-out added minimal costs to the project--and those costs will be recouped in less than five years. Skanska has already cut its electric bills in half, per square foot, compared to its previous office space.

High performance tenant build-outs like this could become standard practice for the commercial real estate business. NRDC’s Center for Market Innovation is working with several tenants in the Empire State Building and elsewhere to demonstrate and quantify the energy savings and return on investment achievable by incorporating energy efficient measures during the build-out phase. The process targets an economic sweet spot of 30 to 50 percent energy savings, with a three-year to five-year payback on modest incremental costs.

Buildings represent one of our biggest opportunities to reduce energy waste and curb global warming pollution. If every commercial building in New York City instituted similar energy efficiency measures, the city could eliminate the need for an entire power plant. A national retrofit effort could eliminate the need for 31 power plants.

But not many people get into the real estate business in order to save the planet. By providing hard numbers on costs and savings, and proving that energy efficiency is a smart investment for owners and tenants, the Empire State Building retrofit is a model for commercial buildings everywhere. In Chicago, 14 major commercial buildings have just pledged to reduce their energy use by 20 percent. Most of the buildings standing today will still be around in 20 years--if each of them dramatically cut their energy use, and made money doing it, maybe real estate could save the planet after all.

[This post is part of our Wasteland series, featuring people, towns, businesses and industries that are finding innovative ways to cut waste, boost efficiency and save money, time and valuable resources.]

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