By Art Gering

2003 Blackout Pushes
Demand For Backup Power?

A recently issued report, “The 2003 Blackout: Lessons for Property Owners and Managers,” identifies problems in life-safety, communication and utility systems that arose during the massive blackout in August 2003. Gary Graham, the vice president of energy services at real estate services firm Jones Lang LaSalle and author of the reports, says despite increased attention, tenants’ attitudes toward backup on-site power generation have been difficult to gauge.

“There was a spike in interest in discussion of it from a tenant standpoint,” Graham says. “Has there been a big push for demanding it in leases or requesting it in leases? It’s probably too early to say.”

While it may be premature to ascertain tenants’ preferences, office building owners seem to be seizing the initiative on redundant energy. Reckson’s Todd Rechler adds that because of the blackout and deregulated energy markets, the firm has been investigating adding “additional generation—both backup power and distributed generation—in our buildings.”

According to the California Energy Commission, distributed power generation, also known as co-generation, utilizes small-scale generation technologies, usually less than 10,000 kilowatts, located close to the point of usage to provide an alternative to or an enhancement of traditional power systems.

Equity Office Properties plans to invest $15 million in distributed generation projects in 12 buildings in five cities within the next year, according to Equity Office’s Frank Frankini. “Lower energy costs for tenants, increased revenues for landlords and improved reliability are a few of the advantages provided by distributed generation,” he explains.

Equity Office has identified several markets, including Chicago, Boston, New York and San Francisco, where distributed generation may be a feasible alternative to traditional power supplies. “We focus on those MSAs (metropolitan statistical area) where we have a significantly sized portfolio, where financial conditions are attractive and where city and state incentives are offered,” Frankini says.