Commercial landlords concerned over increasing energy prices

Power Efficiency, the energy procurement and carbon strategy consultancy has today released the results of a survey conducted in conjunction with Property Week that underlines the level of concern amongst UK commercial landlords over increasing energy prices.

Two-thirds of respondents expect these rises to add up to a quarter to their bills over that period, and 28.6% expect it to add between one quarter and one half to the cost.

The research was conducted amongst Property Week readers between 19th and 30th April 2011, with a total of 269 respondents.

Wholesale energy prices were cited as a significant contributor to increases over the next three years by respondents (92.9%). However, 50.6% believe that taxes will also be a key area to watch, and 39.6% felt that legislation, for example, the CRC Energy Efficiency Scheme, would also negatively impact prices.

“There is no question that wholesale energy prices are going to continue to rise,” said Mark Callaway, Director of Energy Markets at Power Efficiency, which was recently acquired by Balfour Beatty. “There is little that tenants or landlords can do about it, other than try to procure the best contract energy deals, and cut energy consumption. This latter point is the hardest for landlords – they must have a strategy in place to educate tenants, as well as make buildings more efficient. Starting early will be key as it takes time to change behaviour and implement building upgrades – the earlier you start, the greater the gain.”

With so many elements of the energy pricing market out of the control of commercial landlords, in the foreseeable future the most effective thing they can do is to look at ways to cut energy use, to directly impact bills.

Power Efficiency provided energy management advice for a programme of landlord tenant cooperation achieving substantial cost reduction and energy efficiency improvement at 5, St Philips Place, a prime office building in Birmingham. The building is owned by sustainable property fund Climate Change Capital and the programme involved advice and energy efficiency investment measures working closely with the building’s tenants. A reduction of 33% in electricity use was achieved by this year with cost savings of £35,000 per year.

“Taking a holistic approach to energy purchase and reduction is only way that property organisations, or indeed any UK business, can hope to soften the blow of increased prices,” added Callaway. “At a time when margins are being squeezed for all, every avenue for cutting costs must be explored, particularly for the property and manufacturing industries.”

To download a copy of the research, please visit: ubmbuiltenvironment.com