These four strategies can guide property owners down a greener path.
By Stephanie Bell
"You can’t just say, ‘I’m going to do green stuff,’ ” says Rick Walker, vice president of sustainability services for Transwestern in Milwaukee. “You need to be specific about what it means to be green.” With more commercial real estate professionals looking to improve their properties’ sustainability profile, it’s important to define energy efficiency and other elements to implement, rather than just saying they are “green.”
As sustainable design becomes more the norm rather than the exception, commercial real estate professionals should look into green benefits such as lower energy costs, overall operating cost savings, and higher building values, according to Turner Construction Co.’s 2008 Green Building Market Barometer, which surveyed 754 commercial real estate professionals. And despite recent credit market conditions, 75 percent of commercial real estate executives say it’s not likely to affect their plans to build green buildings.
While some aspects of building green tend not to be very wallet-friendly, commercial real estate professionals can implement sustainable features without breaking the bank. From overall savings to green building education, the following four strategies add sustainability to any project.
1. Assess Properties for Overall Savings
For both existing and new developments, it’s important to assess a property’s needs to determine what sustainable features make sense. For existing buildings, energy savings is a smart way to ensure lower utility costs while new developments can save on costs by incorporating recycled materials.
To achieve maximum savings for East Coast properties, Gregory Carbone, CCIM, CPM, vice president of property management for Trefoil Properties LP in Lansdale, Pa., makes sure that “Trefoil seeks ways to sensibly reduce consumption of energy, water, and other resources to reduce waste.” To do this, Trefoil hires a consultant to assess its properties and uses all Energy Star-rated appliances. Energy Star appliances are approved by the Environmental Protection Agency and the Department of Energy and use 5 percent to 10 percent less energy and water than standard models. Hiring a knowledgeable consultant and using Energy Star-approved appliances is “like picking low-hanging fruit,” Carbone says. “You don’t need to spend a lot of money.”
Part of Trefoil’s portfolio, this 77,500-sf office property in Lansdale, Pa., was designated Energy Star compliant in 2008.
To keep up energy efficiency, Trefoil formulated its own short- and long-term energy goals. One short-term goal encourages property managers to adjust timer settings for outdoor lighting during different seasons. Other short-term goals include converting exit signs and other incandescent lights to LED bulbs; using blinds for south-facing windows to reduce solar heat; installing occupancy sensors in common areas, hallways, and service rooms; and encouraging tenants to turn off appliances when they aren’t in use. “By starting with these short-term goals, you aren’t breaking the bank because you are getting an [immediate] payback,” Carbone says.
When it comes to assessing new developments, James V. Mascaro, CCIM, LEED AP, eastern regional development manager of DP Partners in Harrisburg, Pa., believes that recycling building materials at all stages is a sound green money-saving strategy. “Recycling construction waste and utilizing construction materials with recycled content help to reduce our carbon footprint,” he explains. DP Partners builds and manages mainly industrial and flex buildings between 200,000 square feet and 700,000 sf. Instead of using stone as the building’s base, DP Partners uses recycled concrete, Mascaro explains. This saves money by eliminating high shipping costs. “We are [getting] it from somewhere closer, such as a demolished project,” he says.
DP Partners also implements its own recycling program during construction. “We make sure [concrete] gets put into a Dumpster or pit so it can be cut out and sent to a recycling facility,” Mascaro says. The facility usually reimburses for recycled waste, “which is especially good in a down economy,” he notes. Plus, tipping fees for waste disposal are reduced as well as the cost for trash pickup. Overall, recycling and using recycled material adds value for his tenants because “we can keep our construction costs down, which, in turn, means lower rents.”
2. Seek Green Certification
For both existing and new developments, commercial real estate professionals should look into certification through the U.S. Green Building Council’s Leadership in Energy and Environmental Design program. This process provides independent, third-party verification that a building meets the industry’s most widely accepted green building and performance measures. For commercial real estate professionals who just want to include some green elements before going for full certification, “there are different points on each list that you can earn in the mean time,” Walker says.
The six LEED categories include sustainable sites; water efficiency; energy and atmosphere; materials and resources; indoor environmental quality; and innovation and design process. “The key to certifying a project is to get a score of 26 out of 69 total points,” says William E. Wiebe, CCIM, CRE, SIOR, senior vice president of Anchor Properties in Covington, Ky. “Each category can be tailored to suit your project’s use, location, and owner preferences,” he adds. Features such as close public transportation and a parking lot for both bicycles and cars are easy and cost-efficient ways to earn LEED points, Wiebe says. Shipping building products from within 500 miles as well as your total recycled weight that goes out also are ways to earn points, Mascaro notes.
Planning ahead also will help you earn points, Mascaro says. For example, to receive a LEED rating for a new 600,000-sf, build-to-suit warehouse in New Jersey, Mascaro made sure everyone on his team was on board with the LEED certification process. “In doing so, we were already ahead of the eight ball,” he says. “And, if something isn’t done green, it has to be redone,” he says. This means that all paints have to contain low or no volatile organic compounds and all glue has to be formaldehyde free. “Suppliers are cheaper than 10 years ago and products are easier to get a hold of,” Mascaro adds.
3. Take Advantage of Free Incentives
Several organizations currently offer free programs and guidelines to steer commercial real estate professionals in the right direction on the path to sustainability.
The Building Owners and Managers Association International offers free energy audits as well as several green initiatives. “About two years ago, BOMA International and Energy Star came up with the BOMA Energy Efficiency Program that includes case studies and research as well as six Webinars on low-cost strategies to reduce energy,” says Karen Penafiel, vice president of advocacy for BOMA International in Washington, D.C. “[Our research] found that the average building should be able to reduce its energy use 30 percent by 2012,” she says. The association created the Seven-Point Challenge program in 2007 to help industry professionals’ properties achieve energy reduction goals. For more information on the program visit www.boma.org/aboutboma/7pointchallenge.
BOMA also offers a green lease guide as well as a sample energy-performance contract for existing buildings. The lease guide assists property owners in drafting green practices into lease agreements ranging from recycling programs to hours of operation and tenant responsibilities, Penafiel explains. The contract offers a guide for commercial real estate professionals to incorporate energy-efficient retrofits into existing properties, according to BOMA. The contract also will “provide a better vehicle for property owners to enter into performance contracting and help remove some of the barriers that have provided disincentives in the past,” Penafiel says. The document includes energy-efficient terms and can be downloaded free at http://www.boma.org/.
GSH Group, an international facilities and energy management provider and Energy Star partner, also provides free energy audits. The audits include a 10-step checklist from evaluating a facility’s physical properties to developing an overall project economic evaluation using net present value, says Chris Lindberg, senior vice president and head of energy business at GSH’s U.S. headquarters in Pine Brook, N.J.
Aside from energy audits, GSH also offers clients a free program called energyplus. This program adds value because “most top real estate professionals are looking for ways to add more capital, reduce operating expenses, and be greener,” Lindberg says. GSH identifies engineering and design opportunities to save on energy consumption and also finds areas for on-site energy investments such as recommissioning of building management systems by checking operation and making corrections to ensure the system is functioning at maximum efficiency, Lindberg explains. Overall, the energyplus service guarantees a minimum of “5 to 10 percent savings at no cost to the client.”
Closer to home, many local groups also provide sustainability services. “The meat of our program is to do an environmental audit, which includes going to a property and checking out its daily operating activities,” says Anthony Santarelli, co-director of the Champaign-Urbana Green Business Association in Champaign, Ill. The GBA assists local businesses in “finding subsidies and incentive programs for sustainable improvement,” he explains. Santarelli and two partners currently are working on a pilot program that will allow them to gain experience, test assumptions, and become a central source for green business certification.
For property managers and landlords, GBA’s program can help them achieve a loyal customer base by using green practices and save money through increased environmental efficiency, Santarelli says. The assessment also helps property managers, owners, and landlords to identify and make cost-effective energy and water conservation improvements. GBA also is developing environmental resource packets to distribute to participating local businesses that will contain conservation information and checklists promoting sustainable practices, he adds.
4. Educate Tenants and Employees
From general research to earning LEED accreditation, commercial real estate professionals should look at all available resources when educating themselves and tenants about sustainable practices.
“We gather tenants together and explain what they can do to help out. This helps make sure everyone is on the same page,” Lindberg says.
Transwestern also has a program to educate its tenants by teaching them how to live efficiently in their facilities. “Everyone has a role to play,” Walker says. Transwestern provides recycling for office items and implements a heating, ventilating, and air-conditioning-free weekend policy throughout its portfolio.
Trefoil plans to create a team of tenants at each property to distribute green tasks while promoting conservation, Carbone says. The company also plans to publish a green newsletter for tenants to provide tips, information about new policies and improvements, and success stories, he adds.
“We also have a continuing education program focused on sustainable and green courses,” Carbone says, adding that LEED accreditation is encouraged among Trefoil employees. Started in 2001, the LEED Professional Accreditation is earned by industry professionals who have demonstrated a thorough understanding of the LEED rating system and green building practices. Each LEED-AP individual working on a project earns one point toward the property’s LEED certification. Candidates who start the process should have building industry knowledge as well as experience working with green building professionals from multiple disciplines, according to the Green Building Certification Institute.
Benefits of the accreditation include stronger green building qualifications, a better way to market knowledge, one point toward LEED certification, the ability to contribute to all aspects of a development, and overall industry recognition through a listing in GBCI’s directory. For more information visit http://www.gbci.org/.
“For me, the process was both simple and complex,” Mascaro says about
his own LEED-AP process. Overall, receiving the accreditation has “added
value to my business on several different levels,” he says. As DP Partners
certifies more of its properties, “we illustrate to potential clients that
the direct and indirect benefits of LEED development also benefits both
their businesses and their employees. We work hard to save both energy and
resources while still operating our core business development.”
To keep the interior green for St. Luke’s Hospital in Florence, Ky., low-VOC latex paint was used as well as linoleum made of linseed oil, ground wood, cork, and other natural materials. Photo credit: Roth Partnership
Stephanie Bell is associate editor of Commercial Investment Real Estate.
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