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One More Thing to Worry About

Commercial property owners, who already are dealing with shrinking revenue, now must comply with tighter water restrictions in California.

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February 10, 2009 North Bay Business Journal (Calif.)
Industry News

The prospect of having to spend thousands of dollars to comply with tighter water rationing couldn’t come at a worse time for commercial property owners who are dealing with shrinking revenue.

On Feb. 2 the Sonoma County Water Agency called for a reduction of water use by 30 percent to 50 percent this year for the 750,000 people served in Sonoma and northern Marin counties, and managers of commercial property are starting to look for ways to cut back.

The sources of savings for commercial real estate vary by property type. Interior uses include faucets, toilets and cooling towers in office buildings to wash-down facilities and boilers for wineries or industrial users to dishwashers and kitchens for restaurants. Yet irrigation of landscaping is a big area to look for potential cuts.

Agilent Technologies in northwest Santa Rosa, Calif., was fortunate to have undertaken a major overhaul of its landscaping last year as part of a $50 million renovation project. The company hired Richmond-based Gardeners’ Guild , one of the largest landscaping contractors serving the North Bay, to replace most all the turf with drought-resistant plants, install “smart” irrigation controllers that adjust themselves based on the weather and set up the system to use reclaimed water.

The contractor also has been working for a while with Fireman’s Fund Insurance Co. on changes to the expansive landscaping around its Novato campus. Novato-based large landscaper Cagwin Dorward used the BayFriendly system by StopWaste.org to replace traditional landscaping at Equity Office’s Drakes Landing office property last fall.

However, holding onto tenants is a far higher priority for many property owners than saving water, according to Ed Lewis, director of the property management division of Keegan Coppin. The group manages 90 properties with almost 1,000 tenants and 2.5 million square feet.

Vacancies are rising as companies trim their staffs, shut down or relocate to more compact quarters to ride out the turbulent times.

“We’re spending a lot more time dealing with tenants that are behind or calling for help or walking away from leases,” Lewis said.

It’s also tough on owners of property whose tenants are leaving for a better deal elsewhere. One of the buildings Keegan Coppin manages was examined eight months ago for water-saving upgrade incentives offered by Santa Rosa. One bid to replace turf and sprayers ran about $15,000, not counting up to $4,000 in rebates. Yet the pending loss of a key tenant has put that project on hold.

North Bay Commercial Real Estate is talking to landscaping contractors about economically feasible water-conservation options for the 80 properties the firm manages in California and Arizona, according to General Manager Dennis Park.

Some of the properties already were scheduled for a transition to drip irrigation before the economy soured. Now, the owners are hoping they can get by for some more months before having to pay for the work, yet the owners hope to avoid paying higher rates or fines for water use during rationing.

“If the weather persists like this, it may force our hand,” he said.

One approach developed from the days of the last major California drought is use of compost and mulch to foster symbiotic microorganisms. Developing this “soil food web,” as it’s called, can increase the moisture-holding potential of soil by up to 30 percent, according to Jacob Voit, sustainability manager for Cagwin Dorward. He pointed to early work in this area by the founders of Gardeners’ Guild.

Cagwin Dorward is developing a return-on-investment calculator for working with companies on reducing water use without soaking their landscaping budgets or dipping into their emergency-repair reserves, according to Voit. The goal is to eke out small savings now to fund pay for big savings later.

“We say, give us a few more hours a week to adjust the system, and if after saving 20 percent for six to 12 months, they can use the savings to convert from spray to drip or from turf to native plants,” Voit said. “Some of our commercial sites are really big, so 20 percent is a lot of money.”

Other commercial property owners have built-in water-wise improvements in their budgets. Since the late 1970s’ drought, overhauling properties to cut energy and water use is part of the acquisition budget for San Rafael-based Seagate Properties, which owns more than 2.5 million square feet, including the Montecito Plaza shopping center in San Rafael and the San Rafael Corporate Center office complex now being expanded.

“We knew it would happen again, and sure enough we’re here again,” said partner Wick Polite.

The company is pursuing certification of the San Rafael Corporate Center under the U.S. Green Building Council’s Leadership in Energy and Environmental Design. One of the requirements on the certification checklist, as well as on a checklist being developed by the Bay Area Green Program for property managers, is dramatic reduction in water use.

Water agency director Randy Poole will be holding a seminar at the Doubletree Hotel in Rohnert Park on Feb. 27 to teach business owners how to adapt to the water rationing. The water agency and other local governments offer to audit water use on a building to identify sources of waste.

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