October 24th 2023

How CBRE are leveraging IES technology to deliver improved sustainability outcomes in the commercial real estate sector

How CBRE are leveraging IES technology to deliver improved sustainability outcomes in the commercial real estate sector

The CBRE team in Europe are championing the use of IES software to help deliver accurate insights to their commercial real estate clients on how to optimise the energy and carbon performance of their assets, mitigate climate risks and make informed investment decisions to achieve their sustainability goals.

With demand for sustainability services in the commercial real estate sector expanding rapidly, the world’s largest commercial real estate advisory firm, CBRE, are acutely aware of the need to provide their clients with accurate and reliable insights to help them understand the energy and carbon reduction potential of their properties. That is why they use IES software to provide a range of building performance modelling services to help their clients keep up with increasingly stringent regulations and ESG requirements, pursue net zero targets, and enhance both the performance and value of their assets.

Their expanding global sustainability team have been using IES Virtual Environment (VE) software for a number of years now to perform detailed analysis of their client buildings. Within their newly appointed Energy & Carbon team covering Continental Europe, they use the full range of capabilities within the software to provide specialised services encompassing detailed energy modelling and dynamic simulation, energy advisory, asset and portfolio decarbonisation pathways (e.g. CRREM), sustainable retrofit, renewables feasibility studies, and much more.

The starting point for the team is always to develop a clear understanding of the current performance of each building - determining its current energy use and carbon impact, whether it is performing above or below its standard and where scope for improvements lie. By gathering as much data as possible on each individual building, their engineers are able to produce highly detailed models which accurately reflect the real-life performance of each asset, providing an accurate baseline from which to test and compare different optimisation strategies and investments.

In the real estate sector, it is often the default to use benchmarks, approximations and static calculations to inform decarbonisation strategies. At CBRE, they want to be able to offer greater accuracy and confidence that measures they advise will deliver on the sustainability objectives. The dynamic physics-based simulation engine which sits at the heart of IES’ solutions is key to delivering the detailed, unbiased and data-driven insights they strive for. Steffen Walvius, Energy & Carbon Lead, Continental Europe at CBRE, explains:

“Every building is very different. So, to use benchmark values, averages and approximations on an asset level can represent a risk. If you really want accurate data, you need to do dynamic building performance simulation. That is why, from very early on, from the strategic work, to the portfolio level work that we do, to coming up with CapEx plans for our asset managers, we want to be as precise as possible and IES software enables us to provide the intelligence our clients need.

“What is really helpful [about IES’ solutions] is that it is all based on building physics. So all of our analysis is really fact-based and non-biased. Our engineers just gather the facts about the building and we model those facts to see what the performance is. Then we can simulate different improvement scenarios to give results on what the energy and carbon savings will be. There's not much to argue about if you can say it like this.”

While in a typical project, Steffen and his team may expect to identify as much as 30-40% in energy savings for their clients, with just a CapEx of roughly 1% of the asset value, they are careful to point out that they can only be confident in achieving these types of savings once a detailed dynamic simulation analysis has been conducted to verify the anticipated outcomes. Walvius offers the example of one recent project:

“We recently had a client that wanted to know how much they could save on their energy bill by replacing all of their existing lighting with LED installations. Typically, if you were to ask an engineer for a ballpark estimate of the payback for such an investment, they might say it could be somewhere in the region of five years, because generally the payback on LED lighting is very fast.

“However, when we carried out the modelling, we discovered that the payback on this particular building was in fact more than 20 years, because the building’s heating was supplied by a district heating network and they had higher than average heating energy costs. By switching to an LED lighting source that does not emit waste heat, our analysis showed the heating system would have to kick in more to compensate for this, significantly driving up the heating and overall building energy costs.”

Beyond being able to pinpoint which strategies will perform best within the unique context of each individual building, the CBRE team find that the analysis outputs from the software can also play a crucial role in bridging the gap between landlords and tenants when it comes to conversations around net zero and cost sharing.

Often, they find that the landlord and the tenant both ultimately want the same thing – a highly energy efficient building – despite having different motivations. For the landlord, this can be driven by the need to comply with regulations, to obtain a green premium or avoid a brown discount for their assets, or to grow the pool of potential buyers. Meanwhile, the tenant will be driven by the prospect of lower operational costs, improved occupant wellbeing and productivity benefits, and a need to deliver on their own corporate sustainability targets.

Walvius argues that by employing dynamic simulation tools, they can present a neutral and unbiased view of the benefits of building upgrades in a way which is easily understood by both parties. By being able to present a very precise estimate of how much a particular investment will save in energy terms, a tenant can be reassured of the operational cost savings they will ultimately benefit from and therefore may be more willing to accept an increase in their rent, knowing that this will be compensated by the savings they will see in their energy bill. For the landlord, it can help incite confidence that their investments will deliver on expectations so that they can protect and even enhance their asset values.

While historically, the team have predominantly used IESVE to deliver detailed building performance insights for their clients, they are now expanding their service offering through the use of additional products within the IES digital twin technology suite - in particular the sustainable masterplanning tool, iCD.

“Normally, consultants will have a product in mind that they want to offer and they will start to look for a tool that suits their needs. Of course, we do that, and that's how we ended up using IESVE,” notes Walvius. “However, now IES is helping us so much to develop and supplement more services. Now we basically look at, okay, what new software services do you have? And we can just very effectively wrap our consultancy services around that. So, it's a very good partnership,” explains Walvius.

One of the key benefits for them in using iCD is that it provides a segue into the more detailed analysis they have traditionally offered using the VE. This can be particularly helpful in cases where a client may have a large portfolio with multiple buildings they need to conduct analysis on in a relatively short space of time. It can also support in cases where a client may simply want to conduct a more top-level, yet still accurate, analysis of the options available to them so they can understand the potential savings, before delving into or investing in any deeper analysis.

Walvius concludes: “If we are to achieve global climate targets, we really need to transition our buildings now. Only with tools like these can we identify the optimal and most feasible improvement measures to achieve decarbonisation goals. In my opinion, most other methods of analysis for investments are nothing more than guesswork in Excel. While ESG analyses and their reports may appear similar on the surface, taking a closer look at the methodology reveals the actual level of accuracy that one can expect from the outcomes. It is irresponsible to base an asset investment strategy on inaccurate numbers.”