Case Brief Reawakening the World s Most Famous Office Building

Topics: Project management, Construction, World energy resources and consumption Pages: 5 (1422 words) Published: June 29, 2015
Professor Bell
RE798

Case Brief: Reawakening the World’s Most Famous Office Building

Section I
Anthony E. Malkin president of Malking Holdings is considering transforming the Empire State Building into one of the most energy-efficient and environmentally conscious office towers in the world. ESB is one of the worlds most famous office buildings attracting more than 4 million visitors annually its 1,472 feet tall and containing 2.85 million square feet of leasable office space. Malking Holdings is a New York City based property asset company that is supervising more than 14 million square feet of office, retail, residential, and warehouse/distribution properties in fifteen different states. The objective of achieving energy efficiency with the ESB project is to create a model to showcase that whole-building retrofit for pre-war buildings can achieve a defined economic return. Malkin acknowledges the importance of showcasing the feasibility of this project due to the fact that majority of carbon emissions in New York City are emitted from the large-scale pre-war buildings and that building new green buildings will not be sufficient to offset and mitigate the carbon emissions problem. There are numerous factors that made improving energy efficiency in commercial buildings a low priority. Energy expenses are a small fraction of company’s expenses, thus not being seen as having a major impact on their cash flow. Conflicts exist between the tenets and landlords about energy use. Many tenets aren’t interested investing in energy efficiency upgrades because they would only enjoy those benefits thought the end of their leases. In order to achieve the ESB project objectives a team of expert consultants from interdisciplinary fields was established. These consultants consisted of experts in climate change, real estate sustainability, environmental design, and energy services to help determine the best plan for the project. They created a four-phase project development plan that included: inventory & programming, design development, design documentation, final documentation. The project development plan evaluates the current performance of ESB, analyze opportunities to improve performance, and determine which projects to implement. The problem with retrofitting such a large building that would be economically feasible is finding projects that could be integrated in with the $93 million capital project for 2008 that are planned or underway and within the total $550 million program of restoration and upgrades at ESB. I chose eight projects from the 16 that were created by ESSB team to analyze their economic feasibility and return by calculating the NPV for a fifteen-year period. The findings showcase that only three out the eight projects had a positive return. However, other projects could generate a positive return over a longer period of time. This is a potentially risky project for Makling Holdings to commit to, but I don’t believe they have a better choice than to pursue their goals of energy efficiency. They are a large and well-established real estate management company that has sufficient funds to improve a historic building. Their choices are limited in other options if they are seeking to attract tenets that are seeking for office space that are sustainable.

Section II
The ESB projects goal is to showcase that whole building energy efficiency retrofit can be economically feasible. This is important due to rising costs of energy and volatile markets. Malkin believes that by completing this project he will be able to charge higher rents and create a competitive advantage in attracting companies that value sustainability. This would result in higher occupancy and enhance the buildings long-term value. The four-phase project development plan that the team created addresses all the important aspects of the project. The Inventory and Programming Phase reviewed how energy efficiency opportunities could be...
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