The Big Green Pay Off

Is investment in green sustainable buildings still paying off?

Absolutely, according to a study of properties managed by CBRE Group Inc. ("CBRE").

Sustainable buildings generate stronger investment returns than traditional managed properties, according to the ongoing study of a national office portfolio managed by CBRE.  The study found that there is a higher value and an increased demand for green, and in particular for LEED® certified buildings, which is demonstrated by increased occupancy and rental rates in comparison with the general market.

The study, which surveys approximately 150 CBRE-managed office buildings and more than 2,500 building occupants, shows how green building performance continues to trend higher than the general market, establishing a clear economic case for the value of green in existing buildings, with mid-sized markets leading the trend.  In particular, aggregated data on LEED certified buildings over three years shows an average 3.1% improvement in both rental rates and building occupancy in comparison to the general market. The 2011 phase reinforces earlier findings that demonstrate sub metering of utilities for tenant space reduces energy costs by 21% on average.

This report should not surprise anyone.  It is the building equivalent of purchasing an electric or hybrid automobile for all the same reasons, it saves energy, costs less to operate and is better for the environment.  Why not build, buy, or invest in one. 

The CBRE report also noted that economic uncertainty can cause downward pressure on an any organization's continuing commitment to sustainability.  Still, survey respondents consider green features important when selecting office space, with a healthy indoor environment as the leading factor. This finding supports other results of the study in which 19% of tenant respondents reported increased productivity and 94% of tenant managers registered higher employee satisfaction in green office space.  The study also shows a growing general awareness of green.

CBRE was ranked #30 among Newsweek's greenest companies in America in 2010, and #1 among the financial services sector.

Recall also that earlier in 2011 the Green Building Opportunity Index came out with the first office market assessment tool to provide weighted comparisons of top U.S. office markets on the basis of both real estate fundamentals and green development considerations.  The Index focuses on the primary factors that influence successful development, retrofitting, leasing and sales of investment grade green office buildings in the largest U.S. Central Business Districts.  It compares a market's relative position to its peers in six categories: Office Market Conditions, Investment Outlook, Green Adoption & Implementation, Local Mandates & Incentives, State Energy Initiatives and Green Culture.  For 2011, the Index has been enhanced by adding five new markets and refining the methodology and data inputs - yielding a more comprehensive view into market influences that determine where sustainable development brings competitive advantages.

As a tool to examine the overall climate for green building, the Index assists a broad spectrum of professionals to determine where the favorable conditions exist.  Investment/pension fund managers and developers can use this data to consider where to put their money and why.  City policy makers, utility staff and planners can examine the data to understand what new policies and incentives might be useful to accelerate green building activity.  Building owners, architects and green building consultants can determine where green development brings competitive advantages, or where it is simply an emerging standard.

According to Cushman & Wakefield the 2011 Green Building Opportunity Index's top 10 markets overall shows that five cities on the West Coast are on that prestigious list:  (1. San Francisco; 5. Los Angeles; 8. Portland; 9. Seattle; and 10. Oakland).  One very recent entry into the green sustainable office market in Portland is making news.   

Portland’s city council approved plans for the Oregon Sustainability Center last week (see image above). The city and its project partners hope the Center will be the world’s first and tallest mixed-use office building to achieve Living Building status.  The decision to support the Center represents the city’s commitment to build (and pay for) a sustainable building.  With a construction budget of $62 million, the 150,000 square foot tower will cost 15 to 20 percent more than comparable buildings in Portland’s downtown area.  The city’s fiscal pledge to green building recognizes a return on investment bigger than rental income.

The project is jointly supported by the Oregon University system, the Portland Development Commission, the City of Portland Bureau of Planning and Sustainability, and an assortment of for-profit and non-profit groups with interests in sustainability and social equity.  In June of 2011, the Oregon state legislature held their approval for funds on the conditions that private sector tenants were found and signed to leases, and that the city of Portland foot the costs of architecture and engineering services.  Ultimately the Center will be owned by the city and the Oregon University system.

Sustainable buildings at the commercial and institutional scale are relatively expensive to build. Innovations, especially in the early stages, often come at a premium.  Some of the Center’s premium technologies include triple-glazed glass, solar panels, a high capacity underground water tank, and a geothermal well system that will provide heating and cooling.  The energy saving and energy generating materials make up a heavy, but worthwhile expense. 

Targeted for a 2012 groundbreaking, the Oregon Sustainability Center is an example of the importance of total buy-in for sustainable building.  Mayor Sam Adams understands the value of the experience: “We’re never going to be the biggest city, but I want us to be the scrappiest, most successful international city.  To do that you’ve got to invest in innovation.”

So not only is the market for green sustainable buildings currently viable, the City of Portland is betting $62 million that the trend will continue into 2013.  

 

Seattle Bites the Green Bullitt

 

At the end of last month, the City of Seattle broke ground on The Bullitt Center, located at 1501 East Madison Street, which is touted to be the greenest commercial building...in the world. 

Seattle Mayor Mike McGinn claimed the $30 million Bullitt Center project will create green jobs on every level, the 94 jobs for the construction workers who will receive green building training on-site, the future 141 permanent jobs for employees in the building and the people in the green building industry who will teach classes and receive green building certificates at the project’s Center for Energy and Urban Ecology.

So Seattle voters, in recession, new jobs are good but is this project just another green monument that may prove to be a drain on taxpayers?  

No, says the Mayor and the Bullitt Foundation.  The new Bullitt Center will be taking net zero building trends to new heights.  This six story tall, 52,000 square-foot office building is designed to be both a net-zero energy building and a net-zero water building while managing all of its own waste needs.  It will produce as much energy as it consumes, provide all of its own water, and process all of its own sewage.  It will also use only 1/3 as much energy as an average, similar-sized building – or half as much as a certified LEED platinum building!
 
Achieving these goals may not be an easy feat but if successful, will make the building much more affordable to operate.  Some of the green technologies used in the building include: 
  • A triple-glazed curtain wall system
  • Windows that open and close automatically depending on outside conditions
  • A closed-loop geothermal system
  • Radiant floor heating and cooling
  • Extensive daylighting thanks, in part, to taller than average ceilings and windows
  • Rooftop solar system designed to generate 100 percent of the building’s energy needs
The green tax dollar savings allegedly won't stop after construction is complete.  Tenants in the building will be required to use electronics that are extremely energy efficient and are designed to automatically shut down at night.  Although this sounds like a Machiavellian requirement for tenants to meet, four of the six floors have already been rented out.
 
If the project delivers the expected performance ratings, then kudos will be in the offing to the design and construction team behind this premier green building project, the Miller Hull Partnership, Point32, Schuchart Construction and PAE Consulting Engineers.
 
The project's success would probably be good for the Mayor's performance rating too! 

Obama's Better Building Initiative Aims to Improve Energy Efficiency and Reduce Costs

In the Better Building Initiative, President Obama proposes new measures to improve energy efficiency in commercial buildings around the United States. The initiative aims to make commercial buildings 20 percent more energy efficient over the next decade by encouraging private sector investment with incentives to upgrade offices, stores, schools, municipal buildings, universities, hospitals, and other commercial buildings.

The goal is to increase cost effective upgrades that will reduce energy bills and save business owners money. The hope is that this cost savings will be used to hire more workers, invent new products, and create shareholder value.

The initiative calls for a reform of existing tax and other incentives for commercial building retrofits, and proposes a new competitive grant program. President Obama is also asking corporate leaders to commit to making progress towards these energy goals. The President’s budget proposal will include efforts to make American businesses more energy efficient through several new initiatives:

  • President Obama is asking Congress to redesign the current tax deduction for commercial building upgrades to make the current deduction a tax credit that is more generous and will encourage building owners and real estate investment trusts to retrofit their properties.
     
  • President Obama is also making an effort to address the financing access problems for building retrofits. The Small Business Administration is working to encourage lenders to take advantage of increased loan size limits to promote new energy efficiency retrofit loans for small businesses. Further, the President’s budget will also propose a new Department of Energy program that will guarantee loans for energy efficiency upgrades at hospitals, schools and other commercial buildings.
     
  • The President’s budget will also propose new competitive grants to states and local governments that streamline commercial energy efficiency standards to encourage upgrades.
     
  • President Obama is challenging CEOs and University Presidents to have their organizations set an example in saving energy. Committing to a series of actions to make their facilities more efficient will make the organizations eligible for many benefits including public recognition, technical assistance, and best practices sharing with their peers.
     
  • The Obama Administration is also working to implement reforms that will improve transparency around energy efficiency performance and provide more training in energy auditing and building operations.

The end goal of the Better Building Initiative is to increase energy efficiency in commercial buildings by 20 percent and create a potential cost savings of $40 billion per year.

Green is Good, But is it Enough?

I’ve been thinking a lot lately about the relationship between green building and sustainable development.  “Green” and “sustainable” are often used interchangeably when talking about responsible development, but they aren’t always synonymous.  While a “green” building may have achieved a significant reduction in energy consumption, it might not be a good example of “sustainable” development.  Green buildings and the efficiencies they create cannot really be considered sustainable unless they also address the broader impacts of development.  For example, an otherwise green building may actually generate a high carbon footprint if its occupants have to make a long daily commute, all alone in their cars, to get there.

Architects Joshua Prince-Ramus, Randolph Croxton and Tuomas Toivonen agree that “green building” alone is not sufficient to achieve a meaningful reduction in our ecological footprint.  In a recent article, they suggest that maximizing the existing infrastructure in our urban cores must form the basis of a sustainable future. As Prince-Ramus puts it, “urban living itself is the embodiment of sustainability.”

In addition to increasing urban density, Prince-Ramus and his co-authors present several other strategies that can be implemented to incentivize growth and development while reducing our overall carbon footprint, including the use of urban growth boundaries, transferrable development rights, community-based metrics of sustainability, and the development of more flexible urban structures that can accommodate a variety of uses.  While these aren’t necessarily new concepts, Prince-Ramus suggests that perhaps they should play a larger role when considering the overall impact of a project’s design – so that in addition to “greening” the technical aspects of design and construction, the development itself can help to positively change human behavior.  In other words, truly sustainable development requires a holistic approach, one that incorporates systemic solutions such as increasing density, limiting sprawl, and changing our automobile-centric ways.

Do you agree with Prince-Ramus and his colleagues?  What long-term strategies do you think will be most effective in reducing our ecological footprint while encouraging responsible development?
 

Bastyr Goes For LEED Platinum

Bastyr University claims to be the first school in the country to be in line to earn a LEED Platinum certification for its just completed student housing project. Consisting of 11 three story buildings housing 132 students, the project marks Bastyr’s first addition to the school’s campus since the natural health arts and sciences school took over its current home at the 51 acre site of a former Catholic monastery in Kenmore, Washington. Bastyr formally celebrated the project opening on June 22, 2010.

Bastyr and its general contractor, Shuchart Corporation, went through many steps to reach Platinum status. Energy efficient construction was used throughout the project, including high r-value insulation, energy efficient and long lasting fiberglass windows with ultra high performance glass, and radiant floor heating with super high efficiency gas boilers. Energy efficient light fixtures, appliances, and plumbing fixtures were used throughout the project and harvested rain water will be used throughout the complex for non-drinking purposes.

During construction, the contractor was able to recycle a remarkable 96 percent of the construction waste, primarily through training of subcontractors, critical layout of recycling containers, and proactive arrangements with local facilities for recycling of materials. Benches and other items were made form scraps and leftovers, and some chairs and benches were made from the webbing of old car seat belts.

Outside, buildings are connected by a series of garden paths, courtyards, and outdoor living spaces carefully designed to be energy efficient and mitigate the impact on the local environment. Ample bike storage promotes students' use of their bikes for transportation and an extensive bioswale and sediment pond system treats recovered surface water before releasing it back slowly into neighboring wetlands.

Bastyr utilized a LEED consultant for the project, Seattle’s O’Brien and Company, and early on in the project applied for and received a grant from the King County LEED Grants Program. This program is part of the county’s “Green Tools” program to encourage sustainable building outside the city of Seattle.

Bastyr University is proud of its sparkling new sustainable building. Its president, Daniel K. Church, said: “Providing students with eco-friendly, on-campus housing is a significant milestone in furthering our mission to enhance the health and well-being of the human community.”