Cruzan Stays Nimble and Builds Asset Value with Gridium Analytics and Energy Expertise

Cruzan is a vertically integrated commercial real estate owner-operator with approximately 2.3 million square feet under management. Founded in 2002 by Dennis Cruzan, the firm transforms commercial assets into market leaders across the West Coast. Sustainable operation is key to how Cruzan builds value in their holdings, both by offering premium space that helps tenants maintain their sustainability commitments and by keeping utility costs down while upholding tenant comfort.

“We push our projects and people to the highest of environmental standards possible.”

Dennis Cruzan, Founder

The firm’s sustainability success is evidenced by their buildings’ accolades, including an average Energy Star of 85 for buildings on the Gridium platform.

Challenge

In his role as chief engineer for the Cruzan portfolio, Lawrence Virissimo’s job is to consider energy costs from every angle. Whether tenants or Cruzan are paying for energy, in such a competitive real estate market it serves the firm to keep costs down. But with a small team that isn’t always easy to do.

Energy Creep

While they run their buildings with energy efficiency always in mind, Cruzan’s properties are still subject to energy creep. Equipment gets left on, seasonal changes lead to buildings starting up too early or shutting down too late, dynamic time-of-use rates and demand charges lead to excessive bills when equipment cycles on too frequently. These are hard to preempt, and can even be hard to spot once they’re already driving costs up. 

After-Hours Costs

When lease structures leave tenants responsible for at least a share of the energy bills, negotiating after hours costs can be tricky. Especially in the post-COVID real estate market, neither tenants nor landlords can afford to overspend on utilities. But long workdays and evening functions often lead clients to need after-hours HVAC, lighting and elevator access.  Before Gridium, Cruzan was performing retrospective calculations to assess after-hours costs for each tenant. 

The Torrance | Torrance, CA (Source: Cruzan)

Due Diligence on New Acquisitions

When Cruzan considers new assets for purchase, estimating their operating costs and unearthing energy efficiency opportunities that could drive down those costs plays a big role. It isn’t always easy to get a good picture from looking at a potential acquisition’s utility bills alone, though. Potential costs from legacy equipment can hide in utility bills, and penciling out energy spend at different levels of occupancy from utility bills is near impossible. 

Budgeting

Forever an enormous time commitment, budgeting can tie up weeks of Virissimo’s already stretched time. Swings in occupancy, driven first by COVID then by the move towards remote-hybrid working, have made estimating the impact of occupancies or vacancies particularly difficult. Wildly variable energy costs make budgeting doubly hard, and utility providers weren’t always able to provide clear enough rate forecasts for the coming year during budget season.

“I don’t have time to keep up with all the energy rate market fluctuations, nor do my property managers or anybody on our team. It’s so nice to have Gridium as a resource that we trust to lead us in the right direction.”

Lawrence Virissimo, Portfolio-Wide Chief Engineer

Approach

Cruzan only piloted Gridium at one building for a few months before rolling the platform out across their whole Southern California portfolio. The value they got from the combined quickly-digestible analytics of the Gridium platform and the expertise of Gridium’s energy advisors helped the platform pay for itself in under a year.

Energy Creep

Every morning Virissimo spends 15 minutes glancing over energy trend profiles for his whole portfolio on the Gridium platform, looking for anomalies. “If I have any questions I call each chief,” explains Virissimo. “Most of them have a log-in directly. They’ll look to see what happened then call me back with an explanation, and, if something needs adjusting, a plan to get it resolved.”

The speed at which Virissimo and his team of chief engineers can accomplish this exchange is key to Cruzan’s operational success. “The guys out in the field are pulled in every direction,” says Virissimo. “So it’s critical to have another set of eyes.” 

Virissimo routinely compares buildings across his portfolio, trying to better understand why comparable buildings have differing baseloads, or differing nighttime usage profiles. When a building is between tenants, they lean even more on baseload comparisons in the Gridium platform to tighten down energy usage and catch equipment that shouldn’t be on. 

The Gild | Glendale, CA (Source: Cruzan)

After-Hours Costs

The Gridium platform lets Cruzan easily break after-hours costs out from energy costs during lease hours in real time. When they need to negotiate costs with a new tenant, they’re able to come into the conversation with a much better sense of what those costs will be, providing tenants clarity and helping Cruzan get ahead of costs. 

Due Diligence on New Acquisitions

When Cruzan is underwriting a building, they want to make sure they have a good grasp of what that asset’s utility consumption is going to be. If those numbers are out of line with expectation, it leads to a much closer consideration of the purchase. 

Cruzan is now able to compare the energy data they get from asset owners with energy data they have in Gridium for buildings with the same use types and similar square footage and mechanical systems. That rough estimate of average watts per SF helps them feel comfortable with the energy spend data they get from the asset owner. 

Budgeting

Gridium’s budgeting tool has both massively sped up Virissimo’s budgeting process and delivered a wealth of back-up information they can provide over to their partners. “Gridium helped us come out with good, understandable budget numbers without knowing what the building loads were going to be because of COVID,” said Virissimo. 

“Gridium’s weekly diagnostics email is easy to read, easy to tell where the energy spikes in my building were the week before, and easy to forward to the engineering team when I have questions.”

Kiley Berlinski, Property Manager

Results

Since 2020, Cruzan has leveraged Gridium to avoid excess costs through efficiency measures that cost them nothing to implement. “We catch snafus all the time,” said Virissimo. “Controllers that get stuck keeping systems on in the middle of the night that we never would have caught, for instance. There’s always something that we’re catching; that’s why we’re always looking.” As measured by Gridium’s bill variance analytics, year-on-year savings from operational and demand management were $108,000 in 2023.

 “I don’t do any of my own budgeting from scratch anymore. Gridium has the exportable templates I need, and they give me all the information I need to do my calculations. It cuts down on my time—I used to spend a solid week on each individual building, now I get it done within hours.”

Lawrence Virissimo, Portfolio-Wide Chief Engineer

Aside from better operational management, Cruzan has saved $70,000 per year simply by switching their buildings to more favorable utility rates. Gridium has made applying to the direct access energy procurement lottery effortless, giving Cruzan access to power from private power providers. “I don’t think we’d have the time to figure out the direct access procurement process,” said Virissimo. “As a boutique firm we get stretched pretty thin on all the stuff that we do, so we need to rely on our trusted vendors to help facilitate the deals that make sense for us. Gridium already knew how the whole direct access system worked, they had the process down. It took us about a week to get in.”