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 group."

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 deregulation.

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

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