CB Richard Ellis

Dave Pogue, Senior Managing Director, Asset Services, Western Region
Kurt Sarchet, General Manager, Seattle Municipal Tower

CB Richard Ellis (CBRE) is a leading global provider of real estate services, with more than 700 million square feet under management in the U.S. and 25 million square feet in the Pacific Northwest. In May of 2007, CBRE announced a company goal of becoming carbon neutral by 2010 and engaging its clients in environmental and energy initiatives.

Dave Pogue, Senior Managing Director for CBRE's Asset Services, Western Region, has 33 years of experience in commercial real estate. He has been largely responsible for CBRE's recent increased focus on environmental responsibility, having led the development of the company's environmental and energy team, the Green Knights. Dave is nationally known as a leader in the field. Kurt Sarchet, General Manager of the Seattle Municipal Tower, is a member of the Green Knights and an active proponent of green property management in CBRE's Northwest properties. He has 16 years of experience in commercial real estate management and earned CBRE's Real Estate Manager of the Year award in 2004.

BetterBricks: CBRE recently made a very aggressive announcement regarding carbon neutrality in spaces you occupy. How did this come about?

Dave: Given what we're hearing about climate change and the wide-ranging impact of our expanding global reach, it's appropriate that we begin to do business in a more responsible fashion and reduce the impact we have on the environment. To that end, as a company we have made a commitment to be carbon neutral by 2010. We are currently evaluating our carbon footprint - the greenhouse gases produced as a result of our business activities. We'll do a whole host of things to reduce that footprint - moving into LEED-certified spaces, encouraging our employees to carpool or telecommute, rethinking corporate travel, and much more.  To the extent that we can't totally reduce our footprint, we'll buy carbon offsets.

Separate from that, our business allows us to have an impact on lots of other real estate, in addition to the spaces we occupy. We will engage our clients in this discussion and lead them to carbon reductions as well. Enhancing the energy efficiency and energy management services we provide to clients is part of that.

BetterBricks: What was CBRE's motivation to focus on energy?

Dave: Initially, it was purely financial. Approximately 18 months ago, the combination of rising post-Katrina insurance costs and rising utility costs due to high energy prices caused us to seriously address expenses in areas we thought we might be able to control.  Some people in CBRE focused on insurance, and I started a group focused on how we could reduce energy costs.

Over the next six to nine months, it grew into something much bigger, when we realized there was this larger movement toward sustainability. In the summer of 2006 we began working with the EPA's ENERGY STAR® program. Now there are more than 400 CBRE-managed buildings that have benchmarked their energy performance with ENERGY STAR.

We also asked our Real Estate Managers to create energy management plans for their buildings. Nearly 300 buildings now have these plans in place. The goal of these efforts is to save 15% on energy in 2008 over 2007 levels. 2007 is the year of planning, training, and benchmarking; in 2008 we'll begin to see results.

BetterBricks: How have CBRE's services evolved to incorporate this commitment?

Dave: We're setting new standards for the way we manage our buildings - a basic set of things we'll do for each of our clients. A client can then make the choice to go further, in which case we'll provide additional services such as retrocommissioning or developing a LEED gap analysis.

To develop these standard services, we have made use of LEED principles, ENERGY STAR resources, and BOMA Energy Efficiency Program resources, which promote low- and no-cost approaches first. We will do everything possible to change behaviors and make improvements that aren't capital-intensive before we ask for any capital dollars from our clients. For example, we have a number of buildings that have been able to reduce or eliminate Saturday hours, even if they are required in the standard lease. If tenants want Saturday hours, they make a special request. It's made a big difference.

BetterBricks: That sounds like quite a change for your tenants. How are they involved in these initiatives?

Kurt: A large part of our efforts is educating tenants and their employees on how they can help with conservation. They can do simple things such as turning off computer monitors at night, purchasing automatic timers for small appliances that will automatically turn off after a period of time, closing window blinds on sunny days to reduce cooling loads, turning off lights, participating in carpools, and delamping fixtures. We also walk through buildings and calibrate thermostats on a quarterly basis, and install motion sensors wherever practical.

Dave: Much of what happens in a building involves changing tenants' behavior. For us to successfully make these changes, tenants must be willing to accept new ideas like daytime cleaning, higher thermostat set points, and robust recycling programs. Some of these changes - which we think are modest - do require acceptance and active participation.

Kurt: To facilitate this with my property, we hold biannual meetings with tenants to bring up energy conservation tips and find out how their suites are doing. We also send out newsletters, and we post articles on our building's Web site that show tenants they're making a difference.

Dave: We've developed a series of these newsletters. It's important to regularly communicate results to tenants in this way, equating their efforts to something meaningful like the number of trees we've saved or the equivalent number of cars taken off the road. We need to tell them why it's important, what they can do to make a difference, and what impact it has.

We also want to get people excited about sustainability so that they might take these things back to their homes and communities. For example, we're working with a national service provider who would help us hold CFL [energy-efficient compact fluorescent lights] sales at our buildings, where tenants could buy the bulbs at our discounted rate and use them in their homes.

BetterBricks: Who leads these energy and environmental efforts at your managed properties around the country?

Dave: The Green Knights, our nationwide energy and environmental team. We always strive for company-wide consistency in policy and practice. We've found that to achieve this, the best approach often is to find someone in a local market who has a personal commitment to whatever the program happens to be. They become that program's "champion." It didn't take me very long to recognize that we needed the same approach for our energy and sustainability programs - a group of committed local advocates who already had a personal commitment to sustainability. So we asked each of our Market Leaders to identify someone who fit those criteria. There are now 33 Green Knights.  Most of them are also managers of high-profile office buildings actively engaged in the ENERGY STAR program.

We brought these individuals together in three regional meetings and empowered them to be the eyes and ears in their local markets. We had them learn more about the topics so they could be an informed resource. They help write weekly communications for all of Asset Services, discussing real time, real world experiences. The goal is to have all the Green Knights certified as LEED Accredited Professionals by the end of the year - we want them to become technical experts in the field, to go along with their personal passion.

Kurt: As a Green Knight in the Northwest market, I work with our properties on the ENERGY STAR benchmarking platform, review operations and maintenance plans, earmark where they can make improvements, and facilitate training for the local market. The value in this approach is that we can each talk to other property managers in other parts of the country to find out what initiatives they've put in place and what savings they're seeing.

Dave: If we can drive the effort from the top down and touch all our properties consistently, we can ensure the same message gets out and reuse the same resources for different regions. For example, we have an excellent graphics and communications department that develops materials for use on a national level. The scale of the national program also gives us better purchasing leverage.

BetterBricks: What challenges, issues, or problems have you run into?

Dave: First of all, the fact that we don't own any of this property. We're trying to develop a consistent national program while recognizing that each of our owners have different approaches, agendas, hold periods, and opinions.
With that in mind, we still believe that we have a responsibility to make something positive happen at the property level, so we do a lot of things that don't require active owner participation or capital. No owner is going to be upset about us making energy efficiency a part of the way CBRE manages buildings, but some want to invest more or less capital in the effort than others.

Another challenge is that there are so many people out there right now that think they have the right answer, the right technology. It can be difficult to wade through it all and create a sensible approach.

Also, government regulations are going to come to commercial real estate sooner than we may think or want. We need to become more sensitive to how we do business on our own, or else someone is going to regulate it for us.

BetterBricks: What portfolio-wide financial benefits do you expect to see?

Dave: If we are able to reduce energy use by 15% on the entire managed office portfolio, we will reduce overall costs by nearly $100 million for tenants and owners. At current capitalization rates, that's nearly two billion dollars in value. And there will be a great impact on the environment at the same time.

There's power in big numbers for us because we touch so much square footage. Clients want and expect us to use our size for their benefit. This is a great example of where that is working.

BetterBricks: How are your properties in the Northwest doing?

Kurt: Currently we're tracking the energy performance of several of our office buildings that are 100,000 square feet or more. My tower has been utilizing the EPA's ENERGY STAR program since 2005 and qualifies for the ENERGY STAR label, with an energy performance rating of 84 out of 100. We're in the process of applying for this certification by fourth quarter 2007. We've performed improvements such as retrofitting the parking garage with T-5 fixtures, auto sensors, and daylight sensors, which is expected to have a 6-year payback with 225,000 kWh savings annually.

BetterBricks: What impact do you envision CBRE having on the rest of the industry?

Dave: I hope we have a huge impact.  The commercial building industry is a major source of greenhouse gas emissions. We have a responsibility to improve that, and because of our company's global reach, we can.

BetterBricks: What is your sense of the status of this market today, and where do you envision it going?

Dave: There will always be people who are leading and people who are trailing. Some owners take a short-sighted view, especially if they are selling the building and are only interested in keeping a single tenant happy, at whatever cost. And there will always be tenants who want business as usual, resisting even simple things like temperature changes and hours of operation.

But I've been in the business over 30 years, and I've never seen any other trend or movement progress with such speed and such depth as the issue of "green" and sustainability. I sometimes talk about the "crisis du jour" - this business has gone through things from asbestos to Y2K to 9/11, and each of those things was supposed to forever change the business.  This will. This will forever change the way people manage their buildings.