2727 Bryant Street
If location is everything, 2727 Bryant Street has it all. Situated in Denver’s bustling Lower Highlands neighborhood a mile west of Union Station, this 6-story office building with 32,247 rentable square feet is a unique asset in a dense, urban neighborhood. And with a diverse base of nearly two dozen tenants, it’s well-positioned to produce a steady and resilient income stream.
The challenge is that the building, constructed in 1974, needed significant capital investment. Its heating and air conditioning systems were completely separate and lacked granular control, meaning that they were often fighting one another, which drove up energy costs and resulted in less-than-ideal thermal comfort for tenants. Amazingly, the two 40-ton rooftop units (RTUs) that provided cooling for the building were original — and still running after 45 years! However, repair and maintenance costs were increasingly rapidly, so continuing to limp the RTUs along was not a viable strategy. The roof was also experiencing ponding and leakage issues that needed to be addressed.
With no immediate plans to sell the building, the owner wanted to pursue a project that would cost-effectively address the necessary capital upgrades and ensure a comfortable environment for their tenants. These goals were shared by Wheelhouse Commercial, a Denver-based property management firm with 2727 Bryant Street in its portfolio.
The rubber always meets the road when it comes to paying for improvements. Of course, the owner and property management group considered pursuing a short-term bank note. However, this option would have negatively impacted the financial performance of the investment property because the amortization period of a traditional bank note would not match the effective useful life of the equipment, which is the time period over which these capital costs can be recovered from tenants according to an analysis of the existing leases.
Commercial Property Assessed Clean Energy (C-PACE) financing provided an excellent solution. By financing 100% of the project and matching the amortization period to the effective useful life of the capital improvements, the building owner was able to overcome the upfront challenge that so often leads to further deferring necessary capital investment.
Our firm was brought in early in the project development phase to investigate and refine the project scope based on engineering and financial analyses. After evaluating a wide array of potential improvements and their associated cost/benefit, a final project scope was agreed upon. It included:
Replacing the building’s two aging RTUs with two new, high-efficiency RTUs
Installing automated control valves on the baseboard heating system
Installing a control system to sync and efficiently coordinate the building’s baseboard heating system and new RTUs
Replacing the existing roof with a new, insulated white roof
Replacing all interior and exterior lights with LEDs
This combination of improvements was selected because it captured meaningful energy savings, provided significant improvement to occupant comfort, and provided the most attractive ROI of all the potential project designs. The selected C-PACE project cost $550,000 and is forecast to reduce the building’s energy used by 42% and yield more than $473,000 in energy savings. Additionally, the project will secure significant operations and maintenance savings.
“Our experience with C-PACE has been overwhelmingly positive,” said Darlene Arber, the owner of 2727 Bryant Street. “The program enabled us to finance 100% of these much-needed capital improvements, and Building Energy Performance was very knowledgeable, thorough, and communicative throughout the project development process. As a result, we own a more valuable property and our tenants will have a more comfortable work environment.”