Enron Makes Big Commercial Property Deals
Moving in on the office building market, Enron Energy Services
(EES) last week formed alliances with two of the country's largest
commercial property management companies.
By dealing with property managers, EES gets a foot in the door
to each of their clients instead of having to approach each client
company individually, explained Alan Butcher, general manager of
EES in Costa Mesa, CA.
"We have to deal with this divergent group of [property] owners.
The thing that makes this alliance so good and so exciting for us
is that we now have a common factor to work through. For all these
divergent companies, the commonality is the facility management
EES made alliances with Los Angeles-based CB Richard Ellis,
which has offices in 28 countries; and with Insignia/ESG Inc., a
subsidiary of Insignia Financial Group with operations in New York,
Chicago, Los Angeles, Dallas, Atlanta, Phoenix and Washington D.C.
EES will provide energy services to the firms' office and
industrial property clients.
Enron will analyze energy consumption of CB Richard Ellis'
properties in the western United States, totaling about 87 million
square feet, and provide cost savings through efficiency
enhancements and competitively priced electricity. Building owners
will be able to examine how and when they use energy, allowing them
to budget and prepare for energy expenses more accurately. This
month, Enron will begin educational seminars for CB Richard Ellis
senior managers and clients throughout the western states to
explain energy management services and the benefits of electricity
The CB Richard Ellis properties' average energy cost is about
$2.50 per square foot per year, Butcher said. "In California alone,
they're looking at $100 million a year in electricity. We would
probably look at a commensurate level of services, such as lighting
upgrades, chiller replacement, HVAC upgrades, building controls and
automation." He said the alliance is targeting modest energy
savings of about 20%. "Many of the buildings, we could actually do
considerably more, but there's a payback threshold that we have to
look at. So in order to stay within that payback threshold, 20% is
what we're targeting."
Insignia/ESG and EES formed a similar alliance for EES to
provide energy services for a 215 million-square-foot portfolio of
commercial and residential properties leased and managed by
Insignia/ESG throughout the United States. Enron will analyze
energy consumption and cut costs through efficiency enhancements.
"This program will allow us to take advantage of market
opportunities that have arisen from deregulation of the energy
industry," said Stephen B. Siegel, CEO of Insignia/ESG. Projects,
which focus on both supply side and demand side efficiencies, can
include equipment retrofits, replacement of heating and
air-conditioning components, new generation equipment or
transformers. "This alliance is a testimony to the benefits
customers can realize with energy-related savings, even without
deregulation," said Lou L. Pai, CEO of EES.
Joe Fisher, Houston