LEEDing the Way
CCIMs discuss the value of green building experience.
Opus Northwest management is incorporating green features into Crescent ridge Corporate Center I, in Minnetonka, Minn., according to the Leadership in Energy and Environmental Design’s Existing Building guidelines.
To stay in the black, commercial real estate owners, investors, and tenants must think green. The U.S. market for green building materials and services jumped to nearly $12 billion last year, up from $7 billion in 2005, according to the U.S. Green Building Council, a nonprofit group comprised of more than 12,000 organizations dedicated to increasing energy-efficient building practices. This rise in spending supports the conclusion that many industry experts have reached: It’s a matter of when, not if, green buildings will become the industry standard.
The green movement’s growth presents opportunities for commercial real estate professionals to increase their knowledge, expand their marketability, and build new revenue sources. Educational and training resources, such as the USGBC’s Leadership in Energy and Environmental Design program, provide a foundation on which commercial real estate professionals can build their understanding of energy-efficient practices.
Commercial Investment Real Estate interviewed five CCIMs who have earned the USGBC’s LEED Professional Accreditation, which distinguishes real estate professionals with the knowledge and skills to successfully steward the LEED building certification process. These industry experts share the value their LEED training brings to their day-to-day business and offer tips for CCIMs who are interested in the LEED program.
CIRE: What advantages does your LEED expertise bring to your company and how does it affect your own marketability?
Gunderson: It provides a basis for the most current and informed decision making for our clients. They expect us to guide and assist them in the green building process, and frequently I have requests to discuss or educate both clients and peers. For-profit corporations, schools, and higher-education institutions are a huge part of this movement for many reasons including productivity, employee attraction and retention, and commitment to sustainability. Sustainability has entered into the realm of risk management as well, which likely will add momentum to the green movement. I see sustainable knowledge and expertise quickly becoming a requirement for commercial real estate professionals, especially if you intend to work with large or progressive clients.
Jeppesen: As the first commercial real estate broker in Utah to obtain LEED AP status, I have created a competitive advantage for our firm by showing our clients that we are innovators who are always looking for new ways to enhance our value to them and create better results for their investment portfolios.
Wong: The LEED AP accreditation has given me the knowledge of how to build green in new construction, major renovations, core and shell, existing buildings, and commercial interiors for tenant improvements. In terms of marketability, the accreditation is beneficial when I meet with architects, engineers, and national companies. They understand that I know what is required to build a green building.
Livingston: The knowledge gained through the LEED AP certification process allows for real estate practitioners to make educated design recommendations that positively benefit users, the environment, and building con-struction/operations. The finished product is a building that operates more efficiently and meets users’ needs for a longer time period. This provides for an increased, or at least more stable, net operating income, which in turn increases value to the buildings’ investors. Everyone wins.
Murphy: As market participants become more aware of the positive benefits of high performance green buildings, there will be a substantial increase in new construction [of green buildings] as well as conversions. Commercial real estate professionals will need to be knowledgeable in not only green principles and language, but the actual application of green concepts to appropriately market and value these improved properties.
CIRE: What advice can you offer to other CCIMs about the LEED AP accreditation process?
Jeppesen: The LEED guidelines for construction projects and existing buildings will become part of municipal and county codes for new construction and rehabs. Reduced risk, enhanced building performance, and more hospitable environments both indoors and out will be the drivers for governing authorities to begin mandatory enforcement of sustainable principles.
Wong: I advise people to read all that they can about buildings that have attained LEED certification and talk to professionals who have experience in the process. It is important to learn why and how a property owner decided to go for LEED certification, the challenges of building green, and how the challenges were overcome.
Murphy: The LEED AP exam is one of the most challenging I’ve ever taken. Not only should you take the USGBC’s educational courses, but studying the related materials also is essential.
Gunderson: You come out of the program with a more holistic understanding of real estate. That is one of the primary benefits. Planning, thought, and discussions now take place early on in the process and bring together all the disciplines that previously operated somewhat independently. This interdisciplinary process ultimately affects property performance and operations and gives us more sustainable real estate, whether we are users, owners, sellers, or managers.
CIRE: How do you use your LEED training in your day-to-day business?
Wong: I am using the knowledge to educate my colleagues and clients on green building principles. I am able to explain to them what a sustainable site is, how to improve water efficiency, reduce energy consumption, select materials and resources, and improve indoor air quality. Every day I am asked about building green, particularly from potential tenants and owners.
Jeppesen: As a commercial investment and leasing broker, I educate owners and investors about the value of greening their portfolios to increase cash flow and capitalized value. As a developer, I focus purely on sustainable projects that benefit the environment and the communities they are built in, the people who occupy them, and the investors that benefit from enhanced asset performance.
Gunderson: My focus is property management and Opus Corp. is incorporating sustainable practices and procedures in properties wherever feasible. The changes range from using environmentally friendly cleaning products to enhancing our recycling programs to greening our exterior maintenance. The largest focus area so far has been energy and resource conservation. We make use of the Energy Star Portfolio Manager as well as local utility programs to monitor usage and evaluate measures to improve our efficiency and reduce costs. We also are beginning to green our interior tenant improvement projects using LEED for commercial interiors as a guide.
Livingston: Whether I am working on a LEED project or a traditional development, I am now much more cognizant of potential design decisions that could negatively impact the environment, users, or the property management budget over the life of the building.
Provide an example of a project, negotiation process, or transaction where your LEED knowledge has added value.
Jeppesen: I represent a privately owned distribution company on a national basis. One of their regional managers was interested in sustainability, and he was assigned the task of building a new 100,000-square-foot warehouse in Sacramento, Calif. They had already started the design process with an architect who was not up to speed on the latest green building trends when I was engaged as the project’s sustainability consultant. I provided resources to the architect, engineers, and general contractor. The client was pleased that they were able to rely on me for more than just leasing expertise, and I opened another source of service revenue.
Wong: I am currently using my green building knowledge in the design of a 50,000-sf office project. The building is being designed to take into con-sideration five LEED categories — sustainable site, water efficiency, energy and atmosphere, materials and resources, and indoor environmental quality. Building green should result in reduced operating costs as the life cycle of the project is optimized. The green building also should be attractive to businesses and tenants looking to operate in a property that has reduced operating costs and improved employee productivity. The LEED AP designation also has given me creditability with some national tenants who recognize the need to go green and seek out professionals who understand the process too.
Livingston: I managed the design of a building that was precertified gold through the USGBC’s core and shell pilot program. The best value-added feature of the building is its insulated glass. The glass added a $1 psf premium to the building’s cost, but allowed for an almost 20 percent reduction in mechanical equipment. While this reduction did not fully offset the premium glass cost, the reduced operating expenses quickly made up the difference. As an added benefit, there is 20 percent less mechanical equipment to run, repair, and replace over the life of the building.
Murphy: I have not yet had the opportunity to appraise a LEED-certified building, but it has made me more insightful about the design and construction of green buildings. Green buildings will have to be accepted in the marketplace before their value will be recognized in the overall valuation process. This will become more prevalent as the parties in transactions become more knowledgeable of green building concepts and their effects on value.
Gunderson: Opus has a number of LEED APs with different areas of expertise. Depending on whether a client desires a one-time LEED certification at completion of construction or ongoing sustainable operations for their property or campus, different choices need to be made from the very beginning of the project. We direct them toward LEED credit choices that enhance their ability to accomplish their goals. The choices necessary to achieve sustainable operations are not always the same as those for certification of initial construction, and you need expertise in different areas to make the best long-term decisions.