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Turning green at any age can save commercial owners big green

5 min read

Last week, I introduced you to the Leadership in Energy and Environmental Design (LEED) certification program. It’s becoming increasingly popular nationwide, as well as right here in Southwest Florida.

To many people, building green is an encouraging trend, especially considering that commercial buildings consume more than 60 percent of the nation’s electricity consumption and generate 30 percent of all greenhouse gas emissions. Actually, top financial and property investment officials are now saying that to construct a building without LEED as a component makes it obsolescent.

Different Ratings Systems

Although LEED has emerged as the gold standard in green construction, it is not the only game in town. There is also the Energy Star label. While both have similar goals, they are two different programs.

The U.S. Environmental Protection Agency (EPA) administers the government-sanctioned Energy Star program, which focuses on simple, energy-saving strategies such as installing energy efficient windows, turning off computers at night and adding motion sensors to control lighting. It has been extremely successful at decreasing energy consumption. In fact, buildings that have earned the Energy Star label use an average of almost 40 percent less energy than typical buildings and emit 35 percent less carbon.

LEED was created by the U.S. Green Building Council (GBC), a non-profit group, and has become the industry standard for rating a property’s sustainability. Overall sustainability is measured according to points for features ranging from bike racks and rainwater collection/reuse systems to energy-efficient lighting and low-flow plumbing fixtures.

The Degree of Green

The LEED rating comprises specific programs tailored for new buildings, existing buildings and tenant build-outs, and awards three tiers of certification: Silver, Gold and Platinum. Ratings are based upon points earned in various categories on the LEED Registered Project Checklist.

For example, the New Construction checklist: Sustainable Sites, Water Efficiency, Energy & Atmosphere, Materials & Resources, Indoor Environmental Quality and Innovation & Design Process. The number of points varies from one category to another.

Under Sustainable Sites, for instance, a project could earn as many as 14 points for items such as protecting/restoring habitat, maximizing open space, and offering bicycle storage and changing rooms, and more. In terms of Indoor Environmental Quality, a total of 15 points may be given for such items as efficient lighting systems, the use of natural light and increased ventilation. Further, each category has certain non-negotiable requirements. For example, in the Materials & Resources category, projects must store and collect recyclables.

Unfortunately, buildings that feature green design and technology represent a small fraction of the nation’s estimated 4.5 million commercial properties, many of which were erected long before sustainable designs became de rigueur. Hence, this vast stock of older buildings presents a much greater opportunity to cut down on energy consumption and damaging carbon emissions.

Green Makes

Good Cents

A 2006 Green Building Council study found that by retrofitting buildings to LEED standards, owners can save 901/2 psf annually, on average, in energy and other costs, and earn back their investment in 2.5 years or less. “It just makes good business sense,” said George Denise, the general manager of Cushman & Wakefield’s client solutions group.

In its role as property manager, Cushman & Wakefield worked on one of the most successful retrofits to date: the headquarters of software maker Adobe Systems, which received a platinum LEED-EB (Existing Building) rating for its three towers in San Jose, CA in December 2006. Although Adobe spent $1.4 million on the project, it earned that back in savings in fewer than 10 months, the company said.

Since guidelines were streamlined last October, the LEED program has gained momentum, with hundreds of existing buildings lining up for certification. According to the GBC, the Adobe Towers project is one of more than 60 buildings nationwide to get certified. Reportedly, 840 more are in the process of doing so, representing more than a half-billion sf of commercial space.

Earlier this year, a study by CoStar Group found that sustainable buildings outperform comparable non-green assets in key areas such as occupancy, sale price and rental rates – sometimes by wide margins. The results indicate a broader demand by property investors and tenants for buildings that have earned either LEED certification or the Energy Star label, and also strengthen the case for green buildings as financially sound investments.

According to the study, LEED buildings command rent premiums of $11.24 psf over their non-LEED peers and have 3.8 percent higher occupancy. Rental rates in Energy Star buildings represent a $2.38 psf premium over comparable non-Energy Star buildings and have 3.6 percent higher occupancy.

Furthermore, in a trend that could signal greater attention from institutional investors, Energy Star buildings are selling for an average of $61 psf more than comparable non-green properties, while LEED buildings command a whopping $171 more psf.

Locally, the green movement is gaining momentum, as more commercial owners and developers realize the importance of environmental stewardship and social responsibility. In large part, we have the GBC to thank for this. Through its local chapters, the organization has been instrumental in raising green building awareness and providing excellent networking opportunities.

In Florida, there are several GBC chapters, including one in Tampa. Although there isn’t one in our area, individuals interested in green building on a local level can still become LEED Accredited Professionals. For more information, please visit www.gbci.org.

Gary Tasman is executive director of Cushman & Wakefield’s Southwest Florida office. For more information, please contact him at (239) 489-3600 or gary.tasman@cushwake.com.