Planners push 'green' real estate development

Widespread use of green and sustainable real estate development hinges on convincing the land use industry that applying the practices makes sound business sense, from energy savings to added property value, according to industry experts at a roundtable discussion recently co-hosted by the Urban Land Institute.

The roundtable, which focused on moving green and sustainable development techniques into the mainstream, included a variety of public officials and private-sector representatives from the development, investment, brokerage and environmental conservation communities. “This (the green and sustainable development movement) is about changing behavior,” said Roundtable Chairman Kenneth W. Hubbard, executive vice president of Hines in New York City. “Sustainability is the single most important movement facing architecture and design…Corporations have to press their leadership and architects to understand that good architecture is green architecture.”

The Hines real estate organization is known worldwide for its extraordinary green buildings. Since 1992, the company has been a partner in the U.S. Environmental Protection Agency’s (EPA) Energy Star program, which recognizes projects meeting EPA standards for superior energy management and conservation. Hines’ projects have received more than 70 Energy Star Label awards. Companies such as Hines can show through their buildings a “clear connection between quality, prestige and success,” helping build industry recognition that “by going green, you have the opportunity to be on the edge, but not out on a limb,” noted Roger Platt, chairman of ULI’s Sustainable Development Council.

According to Rick Fedrizzi, president of Green-Think LLC in Syracuse, N.Y., and a member of the World Green Building Council, there is a pressing need for more research and education to raise awareness of the benefits of green building among the industry and the public. When the council was established, its advocacy of green building was based entirely on environmental issues, and as a result, “there was little interest,” Fedrizzi said. Now, the council focuses on such bottom-line benefits as optimal building performance, reduced operating costs, improved employee productivity, enhanced asset value, reduced electricity consumption and improved indoor quality.

“To attract and engage the necessary funding for green buildings, you absolutely must make the business case,” Fedrizzi said. While the council continues to recognize the environmental good accomplished by green building, its ranking of the benefits starts with economic, followed by health, community (in terms of minimizing strain on infrastructure), and environmental.

In addition to Energy Star, the other pre-eminent green building-rating program in the United States is the Leadership in Energy and Environmental Design (LEED) system developed in 1999 by the U.S. Green Building Council (USGBC), which is part of the World Green Building Council. Fedrizzi credited the LEED program with spurring USGBC membership (the council now has more than 4,000 members and three percent of all new commercial construction in the United States has a LEED certification.) The council explains LEED “as the equivalent of miles per gallon for buildings,” he said.

A building with a LEED certification is branded as one that “treads lightly on the planet,” which is appealing to a growing number of environmentally conscious consumers, Fedrizzi noted. In addition to consumers, interest in green building is increasing at all levels of the public sector and by universities. “We are finding that companies are acting in an environmentally responsible way not because they are driven by government (laws or regulations), but by the marketplace,” Fedrizzi said.

In 2003, a report on the costs and benefits of green buildings was prepared by Capital E, a clean technology strategy firm, in partnership with the USGBC and California’s Sustainable Building Task Force. According to Gregory Kats, founding principal of Capital E, the report showed that green buildings cost an average of 2 percent more to build. Generally, the report found, the earlier the green building features are incorporated, the lower the cost. The report also determined that green buildings use, on average, 36 percent less energy than conventional buildings. “More data allows people who are risk averse to take steps toward it (green building),” Kats said.

Gary Jay Saulson, director of corporate real estate for PNC Financial Services Group in Pittsburgh, discussed the company’s decision to incorporate green building techniques in the PNC Firstside Center, which has a silver LEED rating. The 647,000-square-foot building, completed in 2001, includes raised flooring that makes the workspace flexible to reconfigure. The carpet contains 72 percent recycled material, and the material for hard floor surfaces is 100 percent recycled, made from sawdust and soda bottles. The decision to build green entailed substantial material and design changes from the original plans, which were for conventional construction, but Saulson said he was “determined to figure out how to do it, not how not to do it.”

The daylit interiors afford 90 percent of the occupants with an outdoor view. The urban infill site is adjacent to a bike trail and a light rail transit stop and has helped to revitalize the downtown area. “Why put employees in a black box when you can put them in an environment where they want to go to work? At PNC, our sick days are down…The (building) environment has taken over for them and productivity is up,” Saulson said. “Going green has been a way for us to differentiate our office buildings from others.”

Realtor Richard J. Rosenthal, chief executive officer of The Rosenthal Group in Venice Beach, Calif., described the National Association of Realtors’ new $47 million building, which will house the trade association’s offices in Washington, D.C. Now under construction, the wedge-shaped, glass-covered structure is expected to be the first LEED-certified building in the District of Columbia. It will contain 12 stories and 105,000 square feet, and is being designed to permit virtually every workspace access to natural light, Rosenthal noted. “We wanted a building that says ‘we believe in the green concept,'” said Rosenthal, who serves on the NAR committee overseeing the building design and construction.

Last year, ULI and the USGBC published a booklet listing 10 reasons that green development makes smart business sense: 1) Upfront costs can be recovered; 2) Integrated design lowers operating costs; 3) Better buildings mean better employee productivity; 4) Green technology provides healthier indoor air; 5) Healthier buildings reduce owner liability; 6) Tenants’ costs can be lowered; 7) Property values will rise; 8) Public and some private financial incentives are available; 9) Recognition as a good community steward builds public relations; and 10) Using best practices yields more predictable results. This booklet and other materials-including an upcoming book on green building to be published by ULI-are part of the institute’s efforts to clear up misinformation and help green and sustainable development become a standard practice.

Gaining broader acceptance of green and sustainable development is a priority for ULI Chairman Harry H. Frampton III. In a recent speech on green development, Frampton said, “As with smart growth, green and sustainable development involves a continuous education process, and moving it to the mainstream will require an unwavering commitment by those of us who are already sold on its value…As land use professionals, we are constantly faced with a choice of providing the ordinary or the extraordinary, and to me, choosing green and sustainable development is a choice for the extraordinary.”

The Urban Land Institute is a nonprofit education and research institute whose more than 20,000 members represent all aspects of land use and development disciplines.