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5 Key Benefits To Submetering Tenant Spaces

The next generation of commercial tenants can afford to be picky. The number of highly coveted amenities is increasing every day, and tenants are taking advantage of all of the leasing options available. So why not offer the best benefits?Submetering tenant spaces is a win for both landlords and tenants. Tenants can use submeter data to reach sustainability targets, ensure accurate billing, and reduce their utility bills. Property managers and other key stakeholders benefit from increased tenant engagement, reduced resource consumption, and potentially an improved EnergySTAR or LEED score.Here are 5 reasons why submetering tenant spaces should be a priority for both tenants and landlords:

1. Rely On Accurate and Effortless Tenant Billing

Under a triple net lease, tenants trust landlords to accurately and fairly charge them for energy use. But without submeters, how does a landlord know how much to charge?Often, landlords will charge each tenant a portion of the total energy bill equivalent to the square feet that tenant occupies out of the total leased space. This can lead to unfair billing. For example, if a restaurant (a water-intensive business) and a clothing retail shop (not water-intensive) occupy the same square footage in a building, they also pay an equal share of the water bill, even though one tenant consumes much more than the other.With submeters, landlords can charge each tenant for their exact consumption during that billing period, rather than making a manual, time-consuming estimation.To make this process even easier, landlords can use an automated tenant billing system that calculates tenant invoices using data digitally collected from submeters. Engineers and property managers won't need to walk through the building to collect data from each meter by hand anymore, and tenants will be able to trust that their bills are accurate and on-time every billing cycle.

2. Give Tenants Access To Energy Consumption Data

Many tenants also want to see real-time data for their spaces.With real-time energy data, tenants can see how their behavioral changes affect utility bills. Each sustainability effort tenants make will be visible in the energy consumption data, motivating them to reduce their energy consumption through simple adjustments to things like plug load and heating during off hours.Submetering tenant spaces will help make informed efficiency decisions and advance sustainability initiatives. Meanwhile, these efforts also make buildings more sustainable and help equipment and machinery last longer.Tenants are increasingly negotiating submeters as part of their leases: Baumann Consulting’s Washington, D.C. office wanted to reduce their energy consumption and better understand how their buildings operate.

“What we like about having our space submetered is the interest it raises within our team, and the internal bets we have between ourselves to discuss which ECMs will have the biggest impact, and the results often surprise us.”
- Kelly Adighije, Baumann Consulting
3. Track ROI with Measurement and Verification

Let’s face it: One of the major reasons why sustainability is still a “nice to have” and not a "must have" in the commercial real estate industry is the notion that sustainability projects are expensive. But it’s just a myth; property managers and tenants alike have found great value in taking the steps necessary to be more energy efficient.For every energy conservation measure (ECM) taken, key performance indicators and data are necessary. Before investing in new lighting or implementing other ECMs, it's important to have the right metrics in place to track the return on your investment. Submeters can collect data to establish a baseline energy consumption, track progress, and let you see the exact payback of each initiative.

4. Become a Corporate Responsibility Leader

Corporate responsibility is an increasingly important factor in every organization. Many companies – tenants, property managers, and building owners alike – want to understand their effects on the planet. Submetering provides visibility into how and when energy is consumed, giving key decision-makers the tools they need to identify inefficiencies and take immediate action to curb waste.Submeter data allows tenants and property managers to participate in sustainability and energy efficiency competitions like the Smarter DC Challenge. These prestigious competitions look at electricity, water, and gas consumption to rank buildings on sustainable design and operation. Winning can bring positive attention to an asset and even increase its dollar value.

5. Participate In Energy Benchmarking & Reporting

Benchmarking and reporting of electricity, water, and gas data using submeters provide the best look into how your building stacks up next to the competition. EnergySTAR provides a score from 0-100 that rates a building on energy efficiency compared to similar use buildings in comparable climates. GRESB is a new and growing benchmarking system that is particularly popular among asset managers and other investors to validate ESG scores and building performance.Increasingly, local governments are requiring benchmarking and making the results available to the public. As the movement for transparency grows, more buildings will likely be required to report accurate consumption data. Submeters help property managers collect investor grade data while providing the information needed to effectively reduce consumption. Plus, there is evidence to suggest that reporting energy data publicly can help property managers operate more efficiently.Often times, property managers and tenants have similar building goals: Both want to save money, be recognized for corporate responsibility efforts, engage stakeholders, and have transparent access to their energy consumption. Submetering provides a single solution for all of these needs. Isn’t it time to take your space to the next level?