Existing developments and funded projects under development face longer-term challenges to their economic viability,
strategic position, and operating costs. Green buildings are
considered “Tier 1” properties in the commercial and residential market. All else has been relegated to “Tier 2.” If today’s
trend continues, renewing tenants will choose green buildings
over others, driving up the rate of vacancy at Tier 2 properties.
Tenants who stay will likely insist that energy costs be capped
to match the lower energy co sts of green c ompetitors. Consequently, as leases renew, look for sharp depreciation and escalating management costs associated with Tier 2 real estate.
LEED in g the Way to Sustainable Design
Most observers agree that sustainable design is the next
phase of green building. Although often used interchangeably, not all green building incorporates sustainable design.
Green building, as it has come to be understood, means
resource efficient and environmentally conscious construction. By contrast, sustainable design goes a step further and
looks to harmonize energy conservation, resource conservation, and quality of life, such as functional spatial design and
improved indoor air quality.
The federal government has taken the lead in instituting
this next phase in green building. The Leadership in Energy
and Environmental Design (“LEED™”) Green Building Rating
System™ is the broadest and most well-known federal
initiative to promote sustainable building for construction
in new and existing offices, retail establishments, libraries,
schools, museums, religious institutions, hotels, and residential buildings with at least four or more habitable stories.
LEED™ certification levels are Certified, Silver, Gold, and
Platinum. LEED™-certified buildings have lower operating
costs, reduced waste, and increased energy conservation.
The majority of states have adopted LEED™ as the baseline for sustainable design. LEED™ evaluates environmental
performance from a “whole building” perspective over
a building’s life cycle based on accepted energy and
environmental principles. More than what is required for
green building, LEED™ focuses on six major design categories:
> SUSTAINABLE SITES
> WATER EFFICIENCY
> ENERGY AND ATMOSPHERE
> MATERIALS AND RESOURCES
> INDOOR ENVIRONMENTAL QUALITY
> INNOVATION AND DESIGN PROCESS
Since launching its LEE D ™ ra tin g system in 2000, the U.S.
Green Building Council’s Leadership h as registered nearly 8,000
projects and certified nearly 1,000 buildings. According to the
same report, at the same time, more than 38,000 professionals
in the commercial building industry h a ve become LEED™-
certified. LEED™ is the fi rst broadly accepted program to
obj e ctivel y meas ur e all n ew and existing construction.
A large number of California cities, among others throughout the country, have embraced the LEED™ paradigm and
mandate that new construction be designed and built based
on LEED™ certification standards. In fact, building owners,
architects, developers, and contractors are required in many
respects to incorporate meaningful sustainable building goals
early in the building design process.
The City of Calabasas has adopted the Green Development Standards, which require that all construction or replacement of privately-owned and city-owned, non-residential
structures over 500 square feet comply with the Calabasas-LEED™ rating prior to the issuance of a certificate of
occupancy (Calabasas Munipal Code, Chapter 17. 34).
Structures up to 5,000 square feet must at least meet the
standards established by the Certified rating while structures
over 5,000 square feet must meet the Silver rating.
In the City of Pleasanton, the Pleasanton Commercial and
Civic Green Building Ordinance requires that commercial
projects of 20,000 square feet or more meet a minimum
LEED™ Certified rating as a condition of approval (Pleasanton
Municipal Code, Chapter 17. 50).
Some California cities, such as the City of Santa Monica,
provide expedited plan check processing for projects
registered under LEED™ (Santa Monica Municipal Code,
Section 8.108.050). Many other California cities have mandatory building requirements outside the scope of LEED™, and
some have instituted voluntary programs, which will likely
become mandatory in the near future.
The Color of the Future
Green building principles already dominate commercial
and residential development. The adoption and implementation of the LEED™ rating system leaves little doubt that
green building will soon incorporate sustainable design as a
standard, and in some cases, mandatory part of development.
These are remarkable changes to conventional real estate, and
promise to define modern development practices.