By Allison Landa, News Editor<\/p>\n
Is building green the path to greater profits? That\u2019s the question developers continue to ask themselves when evaluating whether to go after Leadership in Energy and Environmental Design certification. Increasingly, the answer
\nis yes.<\/p>\n
According to the U.S. Green Building Council, U.S. buildings account for 72 percent of energy consumption, 39 percent of energy use, 38 percent of all carbon dioxide emissions, 40 percent of raw materials use, 30 percent of waste output and 14 percent of potable water consumption. The USGBC maintains that benefits of green building include enhanced ecosystems and biodiversity, improved air and water quality, and the reduction of solid waste.<\/p>\n
But What About the Bottom Line?<\/p>\n
The USGBC lists economic benefits of green building including reduced operating costs, enhanced asset value and products, improved employee productivity and satisfaction, and an optimized lifecycle economic performance.
\n\u201cPeople prefer doing business with companies that are actually looking to do the right thing,\u201d Walters Group president & founder Ed Walters told CPE. \u201cWal-Mart was just named the greenest company out there, which is a surprise to anybody, so Wal-Mart definitely did the demographics and studies and found that people are slowly but surely demanding some responsibility from these large companies.\u201d<\/p>\n
Since the ultimate goal is to make all buildings zero energy\u2014meaning they produce as much energy as they use\u2014by the year 2050, Walters believes that eventually real estate players will not have a choice when it comes
\nto building in a sustainable manner. Most are seeking silver LEED certification, or the third highest level, he noted.
\nHowever, he said that when it comes to his own company, sustainable building is less about a particular set of criteria and more about trying to produce the best possible construction.<\/p>\n
\u201cWe just take a different approach,\u201d he said. \u201cWe don\u2019t actually set out to hit certain criteria; we go through the whole process and try to do the best we can just to build the best product within our budget.\u201d<\/p>\n
And, he added, companies are not simply going green out of the goodness of their hearts. Rather, it is a calculated financial decision to figure out whether the savings will be worth the cost. Steven Core, COO of property service firm
\nRiverRock Real Estate Group Inc., finds himself making that calculation with every building his company oversees. Sometimes it is viable; sometimes it is not.<\/p>\n
\u201cNot all of our buildings can obtain certification, but all of them can operate in a sustainable manner,\u201d he told CPE<\/em>. \u201cThrough the use of smart irrigation systems, refuse and recycle monitoring, energy management systems, tenant education, policy modification and so on, we have seen substantial decreases in operation expenses. This drives value to the bottom line, keeps our properties competitive in the market and contributes to the health of While Core has not seen rental rates impacted by LEED, he has noted an increase in opportunity as a result of building green. RiverRock itself currently has several leasing opportunities pending where sustainability or LEED certification at some level was a qualifying criteria.<\/p>\n \u201cWhen there are two similar buildings competing for the same tenant, a sustainable or LEED-certified property will generally have the advantage,\u201d he said. <\/p>\n More interest in LEED is showing on the development side, according to Mar Ventures Inc. director of acquisitions Lionel Uhry. Most developers he knows are aware of LEED certification and often explicitly set certification as \u201cThere are some costs associated with designing and building a project that will receive a high LEED rating,\u201d he said. \u201cSome of these costs can be offset by quantifiable savings in utility consumption, but there are also added benefits from LEED certification that are not as easily quantifiable, such as market perception, public reception and tenant Holliday Fenoglio Fowler L.P. associate director Gail Wisner says the type of product will dictate whether or not to seek LEED certification. She has definitely seen an uptick among new Class A office construction, and has heard that to many it is synonymous with LEED, though like Core, she has not noticed LEED impacting rental rates. (Other property classes are not attracting nearly as much enthusiasm about building green\u2014at least, not yet, she said.)<\/p>\n \u201cBecause vacancy rates in the office sector are upwards of 20 percent in most major markets, tenants are not prepared to pay a premium for LEED right now,\u201d she said. \u201cTherefore, owners are focused on just trying to fill the space rather than on green initiatives.\u201d<\/p>\n Among Class B and C office properties, Wisner said, certification is not a point of interest. The same goes for the multi-family sector, which most experts see as lagging the curve. But, she explained, there are several Additionally, Wisner said the USGBC heavily markets in the office sector but not so much in others. \u201cIf anything,\u201d she said, \u201cit\u2019s Class A office.\u201d<\/p>\n LEED certification may not be widespread, but Wisner believes that is about to change, predicting that certifications will pick up in 2011 and prove very market-specific, with appearances in Chicago, Boston, Washington, D.C., and San Francisco.<\/p>\n This is good news to Walters. \u201cWhat it comes down to is changing how you approach your business, how you build, This article first appeared in the August issue of Commercial Property Executive.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Is building green the path to greater profits? That\u2019s the question developers continue to ask themselves when evaluating whether to go after Leadership in Energy and Environmental Design certification. Increasingly, the answer is yes.<\/p>\n","protected":false},"author":936,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21782,21742],"tags":[],"class_list":["post-1004022591","post","type-post","status-publish","format-standard","hentry","category-development","category-latest"],"acf":[],"yoast_head":"\n
\nthe environment.\u201d<\/p>\n
\na project goal. Uhry believes that those who seek certification will go after the highest level attainable within their budget constraints as well as overall design and development objectives. Of course, this comes at a price.<\/p>\n
\nretention.\u201d<\/p>\n
\nincentives for Class A office properties that may make certification more worthwhile than for other property classes. These include tax and insurance discounts.<\/p>\n
\nhow you think about things,\u201d he said. \u201cPeople are becoming aware that we can\u2019t be doing things the way we\u2019ve been doing them for the last hundred years. It\u2019s time. We need to be more responsible.\u201d<\/p>\n