Green building

CCIM Green

CCIM Institute launches an efficient buildings platform for members.

The sustainability industry is at its tipping point. The past decade has been about educating the market and early adopters embraced sustainability piecemeal, but the industry has yet to achieve mass-market adoption. Many building owners and corporate users are just beginning to get their arms around the data to determine the best avenues for investing in efficiency. But in the next decade, as energy prices rise, technology matures, data becomes more accessible, and legislative mandates become more stringent, sustainable buildings will enter the mainstream.

To equip CCIM members with the expertise they need to pursue sustainability, CCIM Institute is providing a valuable new member benefit: CCIM Green. This innovative online platform allows users to increase net operating income through efficiency.

Members have already received log-in information to use CCIM Green. To learn more about the platform, CIRE magazine spoke with Dustin Gellman, CCIM, CEO of Green Per Square Foot, which is the engine behind CCIM Green. In this interview, Gellman talks about the value this new CCIM benefit provides to members and their clients.

CIRE: What is CCIM Green?

Dustin Gellman: CCIM Green is an online program that helps members identify efficiency retrofits and sustainability projects for commercial real estate properties. CCIM members can use the tool to profile buildings, get savings recommendations, and competitively bid projects to a network of more than 250,000 qualified solutions providers. Through a structured procurement process, members and their clients can achieve lower upfront costs and increase the internal rate of return on green projects.

What’s unique about the CCIM Green platform?

The magic of the platform is the online procurement system. Through competition, CCIM Green can reduce the client’s initial investment — the project cost — by 20 to 35 percent. The process is transparent, vendor-neutral, and hassle-free. Clients see every proposal, make their own decisions, and spend minimal time cutting to the chase. In addition, CCIM Green provides a number of free features, including energy benchmarking, management dashboards, and sustainability assessments.

What other tools are available within CCIM Green to help facilitate sustainability?

The platform features more than 150 detailed recommendations for conserving energy, water, and waste — which are displayed based on each building’s characteristics. We track nearly 10,000 government and utility incentives and match them to buildings by zip code. CCIM Green also syncs with Energy Star Portfolio Manager, allowing clients to import utility meter data, benchmark properties, and create an extensive array of reports and dashboards.

Just what is a green building, anyway?

From our perspective, green belongs on a T-bar. Efficient buildings consume less energy, water, and waste than comparable properties — and cost less to operate. By virtue of having lower operating expenses, these assets have higher NOI and are therefore worth more.

Why should CCIM members care about sustainability?

CCIM members — regardless of professional specialization — should care about increasing cash flow from real estate. Sustainability is about improving the bottom line through efficiency, which should be a priority for any broker, developer, property manager, or asset manager. In a changing industry that demands real estate professionals deliver more value, sustainability helps CCIMs go beyond traditional services and differentiate.

It sounds like you’re turning sustainability into a commodity — is that your objective?

The short answer is yes. The efficient buildings industry is expensive and inefficient because no two clients or projects are the same. Add to that a cluttered landscape of thousands of companies offering “green” products and services, and you’ve got confusion in the marketplace. Our goal is to help building owners, managers, and tenants leverage technology to find the right solutions for the lowest possible cost.

Can you provide an example of a recent project?

A few months ago, a CCIM member called us about a client who owns a 50,000-square-foot mixed-use building in Chicago. An industrial broker by specialization, she sold the building to the client in 2006. The property’s utility expenses were nearly twice the local average; not surprisingly, the tenants were upset. We performed an on-site inspection and then loaded the building’s information into the CCIM Green database. From there, we honed in on two issues: outdated lighting and a highly inefficient HVAC system.

Through the online procurement system, we bid out the projects. We solicited nine proposals from various local contractors. For a $30,000 lighting retrofit project, the client’s out-of-pocket expense was about $6,000 — utility rebates and competition reduced the upfront cost by 80 percent! The project will pay for itself in six months, and the owner and tenants will save operating expenses for years. The HVAC project is now underway, and we expect similar results.

The interesting part of the story is that the CCIM member initiated this project on a small, unglamorous industrial building owned by two brothers in Chicago. This project wasn’t about a shiny office tower getting LEED-certified in San Francisco, but rather an average building pursuing sustainability to keep tenants happy and improve NOI.

What sustainability projects yield the best ROI?

Because CCIMs practice across such a wide variety of disciplines, it’s difficult to say “go do X” until we learn a bit more. Generally speaking, within a real estate portfolio we focus first on older buildings in locations with high energy costs and strong financial incentives.

Does CCIM Green offer project financing to boost returns?

Through partnerships with several financing companies, CCIM Green provides access to traditional and emerging sources such as Property Assessed Clean Energy, or PACE, financing and energy service agreements to fund projects.

What is Green Per Square Foot?

GreenPSF is the technology partner behind CCIM Green. The company was founded 2010 by several CCIM members, including myself and Richard Juge, CCIM. We are headquartered in Chicago, about one block from the CCIM Institute.

How do CCIM members get started with CCIM Green?

Every CCIM member has free access to the CCIM Green. To get started, visit www.ccim.com/green. A variety of online help is available, and members can reach a live person by calling (888) 950-0474 or emailing ccim@greenpsf.com.

Is Green Worth It?

Taking measures to lower a building’s environmental impact is a sound investment for building owners and property managers. Studies by the Institute for Building Efficiency show that green buildings have higher asset values than their conventional code-compliant counterparts. This differential in asset value is proven by 6 to 35 percent higher resale values, 2 to 17 percent higher rental rates, 30 percent lower operating costs, and 1 to 18 percent higher occupancy rates. In short, green buildings are worth more.

One of the major drivers behind the increased asset value of sustainable properties is lower operating costs. Sustainable buildings are cheaper to operate due to greater energy efficiency, lower water waste, and reduced maintenance costs. Energy costs are especially easy and important to manage, since energy alone can comprise up to 30 percent of a building’s operating cost. Property owners and managers increase their property asset value by $3 for every $1 invested in energy efficiency technologies, according to the Environmental Protection Agency. This figure reflects the net present value of future energy savings added into the property’s resale value. For example, for a 200,000-square-foot office building that pays $2 per sf in energy costs, a 10 percent reduction in energy use adds up to an additional $40,000 in net operating income. At a capitalization rate of 8 percent, this translates into a $500,000 increase in asset value, according to Energy Star.

A second major driver is marketability. As the public becomes more socially and environmentally conscious, investors and tenants are recognizing the value of the green building label. Sustainable multifamily buildings feature improved air quality, lighting, and thermal comfort. And tenants find these features worth paying for: LEED-certified multifamily buildings command an average rent premium of almost 25 percent over conventional properties, according to a recent study published by CoStar.

In addition, today’s companies are focused on attracting, retaining, and getting the most from the best and the brightest employees. Sustainable buildings offer more comfortable workplaces, leading to increased productivity by the workforce, resulting in bottom-line benefits for the business. This helps property managers attract and retain tenants and allows owners to command higher rents and sales prices.

Sustainable buildings also have lower risk profiles. Energy efficient buildings are less affected by rising energy prices. Regulatory risks, such as mandatory disclosure, building codes, and laws banning inefficient equipment, may significantly affect rental income and future value of real estate assets. Proactive building equipment improvements and maintenance keep buildings running efficiently and reduce the risk of costly emergency repairs, energy rate hikes, and mandated upgrades.

While sustainable building improvements often require a large upfront cost, most governments and utilities offer tax refunds and incentives to reduce the initial cost and improve NOI. For example, the state of Maryland offers a property tax incentive of 10 to 75 percent of taxes owed for three to five years for high-performance buildings. However, as more property owners take advantage of these programs, the incentives are reduced or eliminated altogether. This means that the sooner improvements are made to a building, the more likely it will qualify for larger financial assistance.

For More Information

Download a webinar on how to get the most from CCIM Green at www.ccim.com/green.

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