The Delphi Group © 2011

Green Real Estate Forum:

Tenants A Critical Link in the

Sustainability Value Chain

Bruce Dudley

Senior VP

March 9th, 2011

The Delphi Group © 2011

Delphi – Corporate Overview

• Premier strategic consulting firm founded in 1988

• Completed over 500 projects for more than 200 clients

• Work for 25 of Canada’s largest 100 firms (17 of top 50)

• Climate Change and Sustainability services– Strategy development & implementation

– GHG inventory, reporting & compliance management

– Regulatory/Policy analysis & design

– Offset project analysis and documentation

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Defining the Target Audience

• Two Principal audiences with very different profiles (knowledge level, motivation)

– Residential

– Commercial

o Corporate

o Government

o Industrial

• Tenant engagement must take into account different stakeholders in order to realize the value proposition of sustainability

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Tenants’ Role in the Value Proposition

• Tenant as Prospective Buyers (marketing sustainability – LEED brand)– Ability to attract high value tenants (marketing the green

value proposition)

– Differentiating with key value propositions (brand, $ savings, comfort, health and productivity)

• Tenants as Occupants– Occupant behaviour is a critical factor in achieving

property/corporate sustainability goals

– Engagement, education and support, measurement and reporting of activities

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Tenant Engagement – Best Practices

• Tenant engagement is relatively new but evolving very quickly

• Technology investment has been a key focus (HVAC, water conservation, building envelope, lighting)

• Technology as best practice – Smart Buildings• Tenant-owner/operator programming examples:

– Green leases– MOUs– Educational programs

• Direct engagement: surveys, partnerships, regular communications, online feedback, events

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Tenant Engagement – Opportunities

• Cost reductions

– Energy and non-energy related

• Products and processes

• Human resources

• Regulatory relations

• Health and Productivity

• Quality of life

• Public relations

• Revenue growth

• Innovation

• Risk Management

• License to Operate

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Marketing - Best Practices

• Influence from sustainability on sales and marketing is very early stages

• Key focus is on use of building construction, maintenance and operating systems – performance brands– LEED for New Build

– LEED for Existing Buildings

– BREAM, BOMA and others

• Recognition that sustainability leadership and corporate reputation is relevant to commercial tenants

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Trends and Outcomes in Marketing Efforts

• Corporate/commercial demand for green buildings as a visible statement of their organization’s sustainability commitment

– Attracting and retaining tenants

– Platform to engage tenants in sustainability initiatives

• Vacancies left by commercial clients moving into green buildings is creating demand for retrofits to green standards (ripple effect)

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What Will the Future Hold

• Market ultimately rewards sustainability:– Gaining competitive advantage

o Tenant recruitment and retention

o Productivity, energy efficiency

o Differentiation from competitors

– Tangible benefits such as premium pricing and protected market share

– Enabling new age of building innovation (e.g., Smart Buildings)

– Fundamental shift in tenant owner/operator relationship

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Conclusions – Key Take-homes

• The significant environmental impact of buildings means huge potential for sustainability initiatives

• Attracting high value tenants will be key to achieving sustainability goals and providing differentiation in the market

• Aligning tenant expectations with corporate sustainability objectives is an important step in attracting tenants and engaging them in the solutions

• The technology – human interface will be key to achieving the reduction in building footprints that will be required in the near term

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Key Questions to be Addressed

• What motivates prospective tenants to select greener properties and does Sustainability offer a point of differentiation?

• How should an organization identify which elements of green buildings best align with tenant expectations?

• Do we need look any further than LEED and LEED-like brands as a marketing tool – how relevant are other statements of an organization’s Sustainability Leadership?

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Key Questions to be Addressed (cont’d)

• To what extent can education and tenant expectation play in achieving sustainability goals?

• What additional (more effective?) tools are required to tenants in Sustainability?

• If tenants are key to the success should they share in rewards?

• Is the marketplace ready for Smart Buildings or did Orwell ruin our chances of optimizing our built environments?

The Delphi Group © 2011

For More Information

Delphi is transforming the way Canada’s top businesses are thinking about environmental

strategies. We want to show you how sustainability can lead to a better business

position for your company.

Thank you!

OTTAWA OFFICE: 428 GILMOUR STREET ON, CANADA K2P 0R8

TEL: 613-562-2005 FAX: 613-562-2008

TORONTO OFFICE: 196 SPADINA AVENUE, SUITE 402, ON, CANADA M5T 2C2

TEL: 647-727-4736 FAX: 416-642-0905

Bruce DudleySenior Vice President