In April, former President Bill Clinton, Rocky Mountain Institute (RMI) Chief Scientist Amory Lovins, New York City Mayor Michael Bloomberg, and Empire State Building owner Tony Malkin, along with project partners Jones Lang LaSalle and Johnson Controls Inc. announced an audacious plan to reduce the energy use of the Empire State Building by 38 percent, and save $4.4 million annually in the process.
The plan was the result of a 12-month study, which included intensive building measurements, energy and financial modeling, and tenant engagement.
The Empire State Building project proved that a high level of energy savings can be captured cost effectively. Many other analyses, including work from McKinsey & Company, RMI, and Lawrence Berkeley National Laboratory, also find the existing stock of commercial buildings ripe with cost-effective energy-saving opportunities.
Recently, a flurry of public and private initiatives, like the American Recovery and Reinvestment Act, for instance, have been launched to capture cost-effective energy reductions via building retrofits. The opportunities are not new, but, in the past, a number of challenges have impeded progress, and most have yet to be overcome.
The Challenges Associated with Energy Efficient Retrofits
Industry, government, and NGOs commonly cite challenges to commercial building energy efficiency retrofits such as split incentives between owners and tenants (who pays the bills versus who pays for more efficient equipment, for example), poor information on the costs and benefits of energy saving measures, lack of knowledge on available service providers, too little capital and high discount rates.
As members of the Empire State Building Team, we identified several additional challenges to achieving the energy savings we knew were both possible and cost-effective. We believe these will also need addressing if our country wants to ramp up its building energy retrofit activity with the necessary speed and to the necessary scale.
• Taking a Comprehensive Approach: Most energy service companies (ESCOs) do not capture all available energy gains. This is because they rarely take a comprehensive building approach and building owners do not specifically ask for a "whole-building" analysis. Hence, most projects focus exclusively on meeting loads efficiently instead of reducing or eliminating them all together. This often leads to retrofit projects that generate about 10 percent to 15 percent savings from easy and quick payback measures, such as lighting and HVAC controls. By considering energy efficiency measures that reduce energy loads like building envelope changes and daylighting, in addition to more efficient systems to meet existing loads (e.g., lighting and HVAC), a whole-building retrofit can achieve much greater energy savings while improving the project economics.Addressing these barriers will be key to driving significant, cost-effective energy reductions across the commercial building stock, and for the entrepreneur who concocts a way to solve a barrier or two, financial, environmental and social benefits will prove ample.
• Aligning energy retrofits with equipment replacements: For an energy efficiency retrofit to be cost effective, the retrofit needs to align with planned replacement or upgrades of multiple building systems and components. For instance, the Empire State Building had plans under way to replace its chillers, fix and reseal some of its windows, change corridor lighting and install new tenant lighting as leases expired. Since these upgrades were already on the books, the team redesigned, eliminated and created projects that cost more than the initial budget but would generate significant energy savings over a 15-year period. When these energy savings were accounted for along with the added upfront project costs, the net present value of the energy efficient retrofit projects was better than that of the initial retrofit projects.
The key takeaway here is that you actually have to align retrofits with the scheduled replacement of equipment because the energy savings are typically not substantial enough to offset the full non-incremental capital cost and can only justify the incremental capital cost (e.g., the difference in cost between resealing windows and remanufacturing windows).
• Capturing tenant energy savings: In existing commercial buildings, capturing the full energy efficiency opportunity requires engaging with tenants. In the Empire State Building retrofit, over 50 percent of the energy savings required some level of tenant engagement. Often energy efficiency opportunities are not implemented because of numerous real or perceived barriers, including a hesitation to engage with tenants, split incentives, business interruption concerns, etc.
• Finding a financing model that works: Financing building retrofits through private capital alone will be difficult in today's lending environment. Given tight lending conditions, it is unlikely that private capital will be widely available for retrofits of privately owned commercial buildings. In addition, since most first mortgage liens cover existing equipment that will be replaced or upgraded in a retrofit, an inability to collateralize loans may further complicate the financing situation. A number of possible solutions that combine private capital with publicly funded loan guarantees and other public financing mechanisms have been proposed, but no single financing mechanism has gained national traction.
• Retrofitting small and medium-sized buildings: The ESCO business model, employed mostly for the retrofit of municipal, state, federal, university, school and hospital buildings and some large commercial office buildings, is not suited to small and medium-sized commercial buildings, where transaction costs are often disproportionately high relative to the profit opportunity for ESCOs. Small buildings with less than 50,000 square feet of floor space account for approximately 50 percent of the total commercial building stock in the United States. This presents a major opportunity for business model innovation to deliver retrofits to a large and underserved commercial building market segment.
For more on the Empire State Building retrofit, visit www.esbsustainability.com
Eric Maurer is a consultant with Rocky Mountain Institute's Built Environment Team, and Caroline Fluhrer is an analyst and Aalok Deshmukh is a senior consultant with the Built Environment Team.
Image courtesy of RMI, Johnson Controls and Jones Lang LaSalle.
Empire State Building
A Case Study in Successful Commercial Construction Management
The Empire State Building is a marvel of engineering and architecture, especially for the era in which it was built, and it occupies a unique place in the history of construction companies and construction management. Not only was the 1453-foot, 103-story structure built in just over 13 months, the construction company that took on the daunting job allegedly began with nothing on hand -- no equipment or supplies that would be sufficient for such an enormous undertaking. How they accomplished the task is a case study in early, successful commercial construction management.
Legend has it that General Motors executive John J. Raskob conceived of the project when he decided to best his arch-rival, Walter Chrysler, who had begun construction on the 1046-foot Chrysler Building. The Chrysler Building was already in competition with the Bank of Manhattan Building at 40 Wall Street to be the tallest building in the world.
Raskob rounded up a group of well known investors that included Coleman and Pierre S. duPont, Louis G. Kaufman and Ellis P. Earl to form Empire State, Inc. He appointed former Governor of New York and Presidential candidate Alfred E. Smith to head the group. Raskob then went to architectural firm Shreve, Lamb & Harmon Associates, who were known as the best skyscraper architects in the city. He told them he not only wanted an office building whose height would exceed that of the Chrysler Building, but he wanted it to be finished first.
The decade of the 1920s was known as the Art Deco Period in design. It was a period of visual excess characterized by zigzagged appliqués in architecture and decadent over-decoration, capturing the carefree atmosphere of the Roaring Twenties. The Empire State Building's architects wanted to make this building something that would stand out, even in this era. One way they did this was by creating a building with four facades facing the street, rather than just the one that most buildings have. The highlight of the building would be its imperious tower, set off by the buildup of the lower levels and the indented setbacks of the center. Steel columns and beams were to be used to form a stable 3-D grid. Because the column grids were to be closely spaced, the open spaces in the building would be obstructed. As a result, there would be no column-free spaces on any of the building's floors.
The schedule on this project was as adventurous as the design. The project would be done, the architects planned, in only eighteen months.
General contractors Starrett Brothers and Eken, who were known as the premier "skyline builders" of the 1920s, made a bold bid to win the job. Not only did they promise that they could get the job done on time, but they announced that they would purchase custom-fitted equipment to fulfill the contract. The Starrett Brothers were sure that other commercial contractors trying get the job had assured the client that they had plenty of equipment, and what they didn't have they would rent. The Starret Brothers decided to take a different tack. During the interview process, when asked how much equipment the construction company had on hand they answered that they didn't own anything that would be useful on this project. They explained to the investors that the size and scope of the Empire State Building would create unusual problems. Ordinary building equipment would not suffice so they would have to design and purchase all new, custom pieces. They would sell that equipment and credit the investors with the difference when the project was complete. Their opinion was that this would cost less than renting secondhand equipment and would be more efficient. The investment group agreed.
With such an extremely tight schedule, Starrett Bros. and Eken had to start planning immediately. They determined that more than sixty different types of trade people would be required and that most supplies would need to be ordered to specification because the immense job scope. The supplies had to be made at the plants in as close to finished state as possible, to minimize preparatory work needed at the site. The companies they hired had to be dependable, able to provide quality work, and willing to adhere to the allotted timetable. Time had to be scheduled nearly to the minute. The schedule dictated that each section of the building process overlapped - not a moment was to be wasted.
The Empire State Building was the first commercial construction project to employ the technique of fast-track construction, a commonplace approach today but very new in the early 20th Century. This technique consists of starting the construction process before the designs are fully completed in order to reduce delays and inflation costs. In this case, it was imperative to use the fast-track construction method to win the race for the tallest building. In order to make this work, the structural engineer makes a schematic design based upon the architect's sketches. The schematic design includes the materials to be used in construction (either reinforced concrete or steel), types of floors and column spacing.
The contractors began excavation for the new building in January 1930, even before the demolition of the site's previous occupant, the original Waldorf-Astoria Hotel, was complete. The Starrett Brothers had pioneered the simultaneous work of demolition and foundation-laying just a year earlier when building 40 Wall Street, an earlier competitor in the race to erect the world's highest building. Two shifts of 300 men worked day and night, digging through the hard rock and creating the foundation.
Less than two months later, in March 1930 construction began on the steel skeleton. The frame of the skyscraper rose at the rate of four and a half stories per week, or more than a story a day. No comparable building has been built at a similar rate of speed. This accomplishment came about through effective logistics combined with a skilled, organized workforce.
The project became a model of efficiency. The contractors created various innovations that saved time, money and manpower. The 60,000 tons of steel for the framework were manufactured in Pittsburgh and transported immediately to New York via train, barge and truck. Legend has it that the steel posts and beams arrived at the site marked with their place in the framework and with the number of the derrick that would hoist them. Workers could then swing the girders into place and have them riveted as quickly as 80 hours after coming out of the furnace and off the roller.
A railway was built at the construction site to move materials quickly. Since each railway car -- a cart pushed by people -- held eight times more than a wheelbarrow, the materials were also moved with less effort. The steel girders could not be raised more than 30 stories at a time, so several large derricks were used to pass the girders up to the higher floors.
In those days, bricks used for construction were usually dumped in the street and then moved from the pile to the bricklayer by wheelbarrow as needed. The streets would have to be closed off, while the labor of moving the bricks was backbreaking and inefficient. With ten million bricks needed for this job, the old method would be impractical and wasteful of time. Instead, Starrett Brothers and Eken devised a chute that led to a hopper in the basement. As the bricks arrived by truck, the contractors had them dumped down the chute. When they were needed, the bricks were released from the hopper and dropped into carts, which were then hoisted up to the appropriate floor.
While the outside of the building was being constructed, electricians and plumbers began installing the internal necessities of the building. Timing for each trade to start working was finely tuned, and the building rose as if being constructed on an assembly line - one where the assembly line did the moving and the finished product stayed put.
In addition to the steel frame, construction materials included 62,000 cubic yards of concrete; 200,000 cubic feet of Indiana limestone and granite, which comprised most of the exterior; 10,000 square feet of Rose Famosa and Estrallante marble; 6,500 windows, whose spandrels were sandblasted to blend their color into the tone of the windows; and 300,000 square feet of Hauteville and Rocheron marble for the elevator lobbies and the corridors on the office floors.
The Starrett Brothers managed a workforce of 3,500 men, who put in seven million man-hours including work on Sundays and holidays. The workers earned $15 a day, an excellent rate of pay in the early 1930s.
The project was completed ahead of schedule and under budget. Instead of taking 18 months as anticipated, the construction took just under fifteen. Due to reduced costs during the Depression, the final costs totaled only $24.7 million instead of the estimated $43 million.
In September of 1930, only partially finished, the Empire State Building officially became the world's tallest skyscraper. The 1046-foot Chrysler Building, which was completed in May 1930, had held the title for only a few months. When the 85th floor of the Empire State Building was completed, it officially eclipsed its rival.
Construction was completed on April 11, 1931, one year and 45 days after it had begun. President Herbert Hoover officially opened the building on May 1, 1931 by pressing a button in Washington, D.C. which turned on the building's lights. The Empire State Building remained the world's tallest skyscraper for more than 40 years, until the World Trade Center Towers were constructed in 1972.
Although it is no longer the tallest building in the world, the Empire State Building is a crowning achievement of architecture, a symbol of New York City, and most of all an amazing accomplishment in the field of commercial construction.
Seventy-three elevators wait to take visitors to the upper floors, but if you prefer the stairs you'll have to climb 1860 steps. Seventy million people have viewed the world from the platforms on the 86th and 102nd floors-approximately 35,000 a day. Famous visitors include Lassie, KISS, Prince Charles and Fidel Castro. The building has appeared in over 50 different movies, including "An Affair to Remember" and "When Harry Met Sally." Floodlights in 18 different color combinations shine on the top of the building on special occasions and holidays.
Interestingly, the building was designed to be a lightning rod for the area and it works: the Empire State Building is struck approximately 100 times each year. In 1945, the structural integrity of the building was tested when a twin-engine B-25 bomber crashed into the 79th floor. Fourteen people were tragically killed, but the building remained standing. Even though one of the plane's engine went right through the entire building, damage was confined to the outer wall.
The lobby of the building is a spectacular feat in itself. It rises five stories and is finished in Art Deco stylings, with large bronze medallions that honor the workers who created this amazing building. The crowning touch is a metal mosaic that features the building as the center of the universe. Marble and granite grace the lobby and are highlighted with brushed stainless steel.
Starrett Brothers and Eken had also served as general contractors on other skyscrapers such as 40 Wall Street - now known as The Trump Building - and the Metropolitan Life North Building in the 1920s and 1930s. They also constructed numerous other office towers, hospitals, banks and hospitals throughout the United States and Europe, mostly in the first four decades of the Twentieth Century. Today the company is named the Starrett Corporation. They serve as a comprehensive real estate firm, providing services from initial project planning through the development, financing, telecom, technology and energy integration, construction, sale and management of real estate projects.