A black swan of occupancy

Today marks two weeks of isolation in the Bay Area due to the COVID-19 pandemic. Just enough time to reflect on where we are personally and professionally.

Our health is paramount; and two deaths this week of friends of friends in other states make me thankful for our public health leadership in the Bay Area in that we seem to have “bent the curve” more than other areas.

Yet we all know the crescendo of the crisis is a few weeks away, and I think we all know we are in for a long and bumpy ride as recover. The emotional stress of these times is real–I’m surprised and delighted that many of our customers continue to shoulder forward with their mission and are continuing to focus on the best for their buildings.

The idea that buildings would be empty for weeks (months?) is a black swan event.

Starting with the first tech clients to move to remote work in early March, we’ve noticed a large occupancy-related impact in our buildings. Nobody could anticipate this–our annual budget forecasts drive from leased occupancy.

Now that we have some data, the question is of course how much, and how to patiently explain the changes to a financial manager. Just because a building is closed, doesn’t mean the energy bill is zero!

Our engineering team sprung into action with new features, summarized by my cofounder Adam in today’s newsletter. The first step in a crisis is to make sure we can also answer the key questions and get a handle on the data, and Gridium is your partner in answering those questions.

Reporting helps describe the changes, but they are also motivating further changes among our customer buildings. A fully empty building should not have load variation in mild temperatures, so look out for bumps and changes that might indicate a zone that is still calling for cooling or heating. Smart chiefs are also using this as an opportunity to think critically about baseload levels—what runs 24×7 that just doesn’t need to anymore? What is our setback policy and could it be deeper?

For customers using Gridium for workflow, with reduced tenant demands, now is a great time to review preventative maintenance plans and asset archives.  For mechanical items where access is in the tenant space, consider changing schedules or performing condition-based checks so that occupants aren’t disturbed later when they return.

After years of leasing driving the value in commercial buildings, there is a good chance that as the economic cycles turns, value creation will increasingly come from operational excellence. Chances are in a few months every building manager will be asked what are they doing to cut costs, and energy is such a big expense that there are always opportunities!

In a crisis, cash is the ultimate call option.

Finally, if you’re already getting questions about your approved capital budget, consider project financing from Gridium. Many asset managers will prefer to keep powder dry.

Buildings are essential businesses, long the economic center-point of our economy. Concrete and steel are convening forces for our collaboration, both within our companies and among them. Despite rosy Twitter takes on permanent remote work, our buildings will re-open and the economy will eventually come back to life. We’re proud to be in the thick of it with our customers and support you fully in your role of recovery and stabilization.

About Tom Arnold

Tom Arnold is co-founder and CEO of Gridium. Prior to Gridium, Tom Arnold was the Vice President of Energy Efficiency at EnerNOC, and cofounder at TerraPass. Tom has an MBA from the Wharton School of Business at the University of Pennsylvania and a BA in Economics from Dartmouth College. When he isn't thinking about the future of buildings, he enjoys riding his bike and chasing after his two daughters.

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