Green Building Focus
Brownfieldscontaminated commercial and industrial sitesshould serve as both a major opportunity and warning for the commercial real estate community. There is more than five million acres of brownfields in the U.S., according to the U.S. Department of Housing and Urban Development. Combined, these take up the same amount of space as the top 60 cities in the country and could present significant upside with remediation and redevelopment.
One Bryant Park
Right now, however, most of this land is virtually worthless and these low values could also point to where older, inefficient buildings are headed as the green building movement progresses. PwCs Real Estate 2020: Building the Future projects that buildings without competitive sustainability ratings will suffer a brown discount in the future. It could be like the asbestos wave where, unless remediated, inefficiencies will drive down trade prices, explained Byron Carlock, PwCs U.S. Real Estate leader.
The emergence of green buildings is particularly apparent through the U.S. Green Building Councils Leadership in Energy & Environmental Design certification program, which was introduced a little more than 20 years ago. We are at the point where if your new building is not LEED-designed, you shouldnt do it. LEED is [so much] the norm that even if developers dont go for certification, they incorporate the principles of LEED, said Jean Savitsky, director of Energy and Sustainability Services at Jones Lang LaSalle.
For the pioneers, there are bragging rights tied to being one of the first to obtain the distinctive leaf-logo LEED plaque. One Bryant Park in Manhattan won The Durst Organization and Bank of America the title of designing the first LEED Platinum skyscraper. Although the 2.35 million-square-foot glass tower has reportedly struggled to keep pace with its initial energy efficiency targetsa challenge primarily imposed by new and more energy-intensive tenants, according to market sourcesit still sets the baseline for new real estate development in New York City, Savitsky said.
The buildings original design took all size and scale of sustainability measures into account, from building a 4.6 megawatt cogeneration plant on site down to seemingly small details that make a big impact, like waterless urinals, which save an estimated three million gallons of water annually.
One Bryant Park was unique in its headline-leading punch, but smaller developments have nevertheless had an impact locally. Skanska USAs 140,000-square-foot office and retail property at 1776 Wilson Blvd. was the first building to achieve LEED Platinum certification in Arlington, Va., when it came online in 2012. This is not an insignificant achievement in a Washington, D.C., submarket with more than 190 million square feet of office space and a long-standing green building incentive program. The buildings green design included a replenishment component on top of all of its future-savings features, having been built on a brownfield site.
That could be on the not-too-distant horizon considering how some refurbishment projects, such as the Zero Net Energy Center in the San Francisco Bay Area, are pushing the boundaries of performance efficiency. Indeed, the 46,000-square-foot building in San Leandro was the first retrofit to be recognized by the U.S. Department of Energy as an energy-neutral building. The property, which serves as an electrical workers educational and training center, opened in May 2013 in the shell of a 1980s office building. It boasts 75% better energy use over similar commercial buildings nationally and 30% better than new commercial buildings in California, thanks in large part to its use to use of wind and solar energy.
Redeveloping an existing property also saved investors millions more than building from scratch, said Jacob Arlein, partner at Environmental Building Strategies, which designed ZNEC. For example, removing duct work and using natural ventilation and window controls alone saved $2 million.
A key driver for progressive projects such as ZNEC is Californias building code revisions, which go into effect this year. The new codes will require zero net energy consumption for all new residential properties by 2020 and new commercial properties by 2030. Its really a forward-thinking move for California. And although at first glance developers think its impossible to achieve zero net energy, actually its not much more cost intensive, Arlein said.
While new city and state legislation or building certification programs have successfully driven energy savings and building performance improvements, the most sophisticated real estate owners are beginning to take a more holistic approach to sustainability.
Roosevelt Universitys new vertical campus in Chicago is one of the largest new education-sector real estate developments in the country. Without the space to build a traditional campus in downtown Chicago, Roosevelt developed plans to host an entire university, from classrooms to dormitories, in a single 470,000-square-foot building. Given the unusual set-up of the institution, Roosevelt had to consider how this single space would foster a healthy lifestyle and learning environment for the university community.
The sustainability aspect of this project was very important to the University. Roosevelt wanted to push the envelope, said Alicia Rucinski, project manager at the John Buck Company, which developed the Wabash Building for Roosevelt University.
The towers design naturally included performance efficiency and energy conservation features to ensure a minimum of LEED Silver certification. These included renewable energy generation that provides more than 50% of the campus energy, efficient heating and cooling systems, low-flow plumbing to surpass city water conservation requirements, and eco-friendly and recycled construction and flooring materials. (It was certified Gold when it opened in 2012.) But it also was built with ambiance and community-building in mind, with daylighting on three sides of the building and an 8,000-square-foot green roof that is used for gardening, shade and water conservation.
Its not always easy for developers and owners to look past the initial investment and know that, in return, you will most likely capture your entire ROI with a building that operates at a very high level of efficiency, but [also that] you are contributing to the health of every occupant in that building, Rucinski said.
Michael Kearney, director of development at Skanska USA, declined to comment. Calls to Jordan Barowitz, director of external affairs for Durst, were not returned.
There are more than 57,000 green projects worldwide, comprising 10.5 billion square feet of space.
Source: U.S. Green Building Council