Cost-control a priority for building owners

Ron Taylor didn't expect to learn much when he commissioned Reno architect Larry Macias to undertake a detailed energy audit of the Corporate Point office building near South McCarran Boulevard and South Virginia Street.

"It's not like it's 50 years old," says Taylor, who oversees management of the 84,000-square-foot building constructed in 1988 and owned by Ridgeview Plaza LLC.

So he was stunned when the architectural firm of Larry J. Macias, AIA, Ltd. reported that the owners potentially could save more than $30,000 a year just by bringing its lighting system to today's standards.

Taylor, like other managers and owners of office, industrial and retail properties throughout northern Nevada, is pushing hard to reduce operating costs at a time when vacancies are rising and existing tenants often seek reduced rent.

Owners are bringing janitorial crews to work during the daytime hours so they don't need to pay for lighting and air conditioning at night.

They're preparing to seek reductions in their property taxes.

They're delaying some maintenance striping of a parking lot, for instance that can be deferred without threatening the value of the property.

At Corporate Point, Macias who views energy audits as a growth area for his architectural practice focused his attention on lighting as well as modest improvements that might be possible in the heating, ventilation and air conditioning system.

Enlisting Jensen Engineering and Alpine Air as consultants, he found the building was 95 percent out of compliance with current standards for lighting.

Johnny Hargrove and Karen McGinley of NV Energy, meanwhile, provided data about electric consumption in the building at 15-minute intervals. Analyzing that data, Macias was able to spot situations in which usage jumped unusually.

Working with Kimberly Phipps-Nichol of Blue Water Studio in Reno, Macias developed plans to change out lighting fixtures to current standards, install timers and variable-speed motors on the HVAC system. He developed a regular maintenance system conducted by Westernaire Inc to keep equipment running most efficiently.

Much of the work qualifies for cash rebates under the SureBet energy incentives program provided by NV Energy.

While the building's owners don't want to take on all the work at once, Taylor notes it provides them with a road map they can use for budgeting in coming years.

For many owners of commercial and industrial properties, utility costs provide good opportunities to control a building's operating costs, says Laurie Trudell, a senior real estate manager with CB Richard Ellis in Reno.

Steps as simple as shutting off unneeded lights begin to save money.

Property owners, she says, have gone as far as installation of astronomical time clocks that shift the time that lights or signage are turned on as passing days grow shorter or longer.

Daytime janitorial service also promises to save energy costs, she says, as long as tenants agree to the disruption.

Property taxes also are getting a close look, Trudell says, as building owners prepare to argue that falling vacancy rates and declining rents have reduced the taxable value of their holdings.

Mike Bosma, who heads Bosma Group, a certified public accounting firm in Reno, says his staff is busy with owners of commercial property who are preparing appeals of the assessed tax value of their buildings.

"It's a no-brainer," Bosma says.

The firm is busy, too, with property owners who want a fresh look at the way that the costs of their buildings have been depreciated on federal income tax returns. Moving costs from the column of long-depreciation items into the column of faster write-offs can result in big savings, Bosma says.

Ryan Johnson of Johnson Group, a commercial real estate company in Reno, says management of cash and debt also is getting closer examination.

Property owners are increasingly diligent about investing cash balances in short-term, marketable securities to generate additional cash, he says.

Other property owners are talking with their banks about renegotiating loans to reduce interest costs.

Robert LaChance, a senior property manager with Colliers International in Reno, says the company has been taking a stern line with the dozens of vendors who provide services to the buildings managed by Colliers.

"We've gone back and asked them to really sharpen their pencils," he says, noting that even a $500 or $600 saving can be significant for a hard-pressed landlord.

Some big maintenance savings delaying replacement of aging landscaping, for instance, or sealing a cracked parking lot present difficult questions to property owners.

On one hand, LaChance says, the savings can be significant. But on the other hand, maintenance protects the value of the building and a well-maintained building is more likely to retain current tenants and attract new ones.

And Trudell says steps to retain tenants even at temporarily reduced rents generally are more important than cost-cutting to a property owner's bottom line.