Becoming an energy efficiency tenant Featured

9:59am EDT July 22, 2002

Part 2 of 2

Diane and Bill Johns, owners of the Coxsackie Antique Center in upstate New York, pay the utility bills for the building they rent for their antique shop. The building's ambiance was cozy, but its atmosphere wasn't, particularly in winter. Frigid drafts swirled through the uninsulated building, literally freezing out the shop's customers.

After discussing the problem with their landlord, the Johnses spent $1,100 to insulate the building and their landlord paid for a new roof. Annual energy savings should amount to $400, which doesn't include potential sales increases. That means the Johnses should recover their costs in less than three years. Both parties profited: The tenants slashed operating costs and the landlord got a more valuable building. If the Johnses ever relocate, the landlord can more easily attract tenants to his energy efficient building.

Most small businesses give little thought to utility costs. If you're like most owners, you view energy costs as a line item in the budget, a necessity which has little direct impact on the success of your operations. But ignoring those costs, whether you pay them directly or as part of your rent, affects your bottom line.

All businesses can profit from energy efficiency upgrades. Programs such as the EPA's Energy Star Small Business Program can help get your started.

Save yourself money

Investing in energy efficiency upgrades can cut your monthly utility bills and create a comfortable work environment for your employees. In a retail setting, new energy efficient lighting provides better color rendition, which means your merchandise will look more appealing.

Your landlord will also have a more valuable building because of your efforts, so you should negotiate a mutually beneficial deal. Your landlord may agree to lower your rent or to subsidize the upgrades. Remind your landlord that capital improvements to the building are tax deductible.

For example, two tenants lease similar stores in a shopping center. Both spend about $6,400 on electricity per year. Tenant A pays for utilities, but Tenant B has utilities included in the rent. Both propose upgrading lighting at a cost of about $3,000, with resulting savings of about $960 per year. Tenant A will get back the investment in slightly more than three years and increase profits by $960 every year after that. If Tenant B persuades the landlord to reduce the rent by $80 per month or $960 per year, both will benefit equally.

Getting started

If you're not sure how to get started, or you need support to get your landlord moving in the right direction, the EPA's Energy Star Small Business Program helps small business owners implement energy-efficiency upgrades. Partners agree to voluntarily upgrade their equipment's efficiency within three years, but only if the upgrades are profitable and the quality and comfort of their facility can be maintained. Partners also agree to consider Energy Star-labeled products when they buy or replace office equipment. There are no reporting requirements, but partners can receive public recognition if they inform the EPA about successful upgrades. For more information on becoming a partner, call the Energy Star hot line at (888) STAR-YES or visit its Web site at www.epa.gov/smallbiz.

Just because you are a tenant, do not pass up the savings that can result from energy efficiency upgrades. As a tenant, you will probably not replace a heating or air conditioning system or put a new roof on a building, but you can improve energy efficiency in other ways. Most upgrades cost nothing or very little but result in significant energy savings. So become a partner in the Energy Star Small Business program and begin to enjoy the benefits of lower energy costs. SBN

Robert J. Smith is senior project engineer with Aspen Systems Corp. in Rockville, Md.