By Art Gering
Is Energy a Factor
in Site Selection?
Office towers in Laramie? Garden-style apartments in Casper?
If low electricity costs were all that mattered to commercial real estate companies and their tenants, there would be a lot of building going on in Wyoming. According to the Energy
Information Administration of the U.S. Department of Energy, Wyoming's average cost per kilowatt-hour of 4.8 cents is the lowest figure for the 50 states and the District of Columbia.
Meter Readings
Average cost of electricity costs per kilowatt-hour in
the 10 most expensive states. |
| State |
August 2003 |
August 2002 |
| Hawaii |
$0.1403 |
$0.1324 |
| New York |
0.1278 |
0.1194 |
| California |
0.123 |
0.1258 |
| Rhode Island |
0.1157 |
0.0938 |
| Massachusetts |
0.115 |
0.1002 |
| New Jersey |
0.1137 |
0.0981 |
| Vermont |
0.1101 |
0.1075 |
| New Hampshire |
0.1077 |
0.1026 |
| Connecticut |
0.1049 |
0.0961 |
| Alaska |
0.1032 |
0.1033 |
| U.S. AVERAGE |
0.0789 |
0.0756 |
| Source: Energy Information Administration of the
U.S. Department of Energy |
Of course, tenants' site selection decisions are not based on utility costs alone. Different types of tenants have different needs, ones that typically override energy factors.
"The things that are important to our tenants are features that you would typically find in Class-A industrial properties," says a spokesperson for San Francisco-based AMB Property Corp. "This might be truck court parking, specific clear heights or cross docks. Those factors become the driving reasons behind decisions to lease, not necessarily energy
efficiency."
Office tenants require locations in major cities for many reasons, including access to intellectual talent. New York, San Francisco and Boston, all major office markets, have
the highest electricity cost per square foot, according to the 2003 BOMA "Experience Exchange Report", a survey conducted by BOMA.
For facilities such as call centers or data backup centers, however, office tenants don't need a central business district (CBD) location. "Those facilities could be located anywhere and you can often take advantage of a big difference in electricity costs from one state to another," says David Houck,
a senior vice president in the Washington, D.C. office of Staubach Co., a tenant representation firm. "Deregulated states have an advantage over regulated states."
