New Legislation to Affect Commercial Real Estate

August 6, 2014

The State of California has enacted legislation in two key areas of the Energy Code. If you’re involved in commercial real estate operation or construction, here’s what you need to know.

Any commercial real estate or construction project permitted after July 1, 2014 will be required to comply with the new revisions, which affect all design disciplines related to lighting and electrical systems for non-residential tenant improvements. In addition to the lighting systems revisions, the code now includes an entire new section addressing electrical power distribution systems. Building owners and managers will need to consider central infrastructure upgrades and building standard design solutions in order to facilitate a smooth implementation.
Lighting Systems

+ Nearly all light fixtures in interior spaces will be required to be dimmed. Floor spaces adjacent to exterior windows—known as daylight zones—will require automatic dimming via photo sensors.

+ In buildings larger than 10,000 square feet, any new or remodeled space will be required to be able to reduce lighting power by 15% in response to a demand response signal from a utility company. A lighting control relay panel will need to be dedicated for this purpose. In buildings equipped with energy management systems, these system may already be capable of responding to a demand response signal and triggering a load shed command. Building owners and managers should look for solutions in implementing centralized demand response control systems which would interface with all new or remodeled interior spaces.

+ All interior lighting will be required to be shut off when the space is not occupied. This applies to most interior spaces in the current code and will now include corridors. Night lights are no longer allowed unless the space is occupied 24/7.

+ Allowed lighting power densities will be reduced, based on square feet of area type. This will require more efficient office space lighting design including consideration for high efficiency LED fixtures. Current Code requires spaces to comply with Allowed Lighting Power Density when 50% of the light fixtures in any space are relocated or replaced. This threshold is changing to 10%, which means that more remodels will trigger full compliance, resulting in additional cost to the owner.

+ Electrical Power Distribution Systems shall be organized so that loads are separated by load type, area, floor and tenant. The intent is to provide users with the ability to monitor and meter loads individually in order to study a building’s electrical power usage by load type. This load separation requirement will be implemented at different levels based on the size of an electrical service to a space. For most spaces, the minimum requirement will be to provide separate electrical panel boards for lighting, receptacle and HVAC loads. In office spaces, half of all general-use receptacles will be required to be automatically shutoff when no occupants are present. This will also apply to modular furniture systems.
Energy Ratings

+ Non-residential buildings over 10,000 square feet are required to input energy consumption and other building data into the Environmental Protection Agency’s Energy Star Portfolio Manager System, which generates an energy efficiency rating for the building. Buildings from 5,000 square feet to 9,999 square feet will also be required to provide this information, though the requirement date has been postponed and will likely be July 1st of 2015 or 2016. If a building reaches a score of 75 or higher, owners can apply for an Energy Star label, which must be certified by a licensed professional engineer.

+ Energy data and rating for the building’s previous year must be disclosed to prospective buyers, lessees, and lenders.

To fully understand how these laws may be relevant to your bottom line, contact Jock Ebner, President of Morlin Asset Management LP, a property management company based in Glendale, California with approximately 6 million square feet of office, medical, industrial and retail space under management.