Real Estate Forum - November 2008

infancy, it is too early to tell whether they will decrease over “Educating customers is very important,” observed a man-time due to more measured use of electricity and other energy ager at an international REIT. “If green buildings are able to sources. Furthermore, sustainable buildings are generally see higher rental rates, lower occupancies and higher sales young assets in most firms’ portfolios, and it will take time to prices, then the need for subsidies is diminished and the see how costs shake out in the long term. excuses for not building green are gone.”

That said, 80.6% of participants stated that their firms have In house, companies are doing a number of things, such as allocated funds toward sustainable practices, versus just 63.9% hosting lunchtime informational sessions and encouraging in last year’s poll. And 86% will spend the same or more on employees to attend seminars sponsored by USGBC, BOMA such programs next year. But green still doesn’t account for a and other professional organizations. Other measures being large share of their companies’ overall spending. The major- taken are more hands on, such as green cleaning initiatives and ity— 59.4%—remarked that it comprises less than 5% of the training on how to properly recycle materials.

^overall ^{capital-expenditure} ^budget. ^Meanwhile, ²⁵^{.3% said} ^it ^lies ^between ^6% ^and ^10% ^of ^total ^{CapEx. One} ^respondent, ^however, ^pointed ^out ^that ^there ^{are ways} ^of ^going ^green ^that ^don’t ^involve ^significant ^{cash outlays.} “^We ^need ^to ^dispel ^the ^myth ^that ^the ^only ^way “^Reduced ^utilityto be green is through capital investment,” said a man- aging director with a national development and invest- usage is only keeping _ment _firm. “_Not _that _investment _isn’t _called _for _in _{some instances,} _but _it _isn’t _always _necessary.” _costs _in _line _rather _than_Along _that _vein, _many _companies _have _{instituted formal} _programs _to _educate _their _customers _{and employees} _on _all _things _green. _Slightly _more _than _60% _reducing _them _fromof those polled said they have such programs in place to _help _tenants _launch _and _maintain _{sustainability} _plans where we were several ^within ^their ^own ^spaces. ^Exactly ^72% ^provide ^{instruc- tion} ^for ^building ^personnel ^to ^maintain ^green ^practices ^years ^ago.^at ^their ^properties.“^To ^meet ^our ^annual ^energy ^reduction ^goal ^of ^{10% over} ^the ^prior ^year, ^all ^staff ^need ^to ^be ^involved ^{and trained,}” ^remarked ^a ^facility ^manager ^for ^a ^governmental ^Although ^firms ^are”^advocating ^that ^employees ^{become agency. LEED} ^certified, ^the ^number ^of ^staffers ^with ^the ^designationOn the tenant side, landlords are offering recycling training, accounts for a small segment of the workforce. About 77% of _seminars _on _the _{implementation} _of _green _methods _and _{news- respondents} _said _that _only _5% _or _fewer _of _their _total _number _{of letters} _that _offer _tips _on _{sustainability.} _Others _have _{LEED- employees} _are _applying _for _or _hold _LEED _AP _{credentials. accredited} _staff _members _that _are “_go _to” _people _for _tenants “_While _less _than _5% _of _our _total _staff _is _LEED _AP, _some _80%with questions. to 90% of our North American project managers are,” noted a

“We assist tenants with their construction, and we provide manager with an international REIT.
helpful tips that they can apply to their office space as well as However, there are those who don’t see the need to earn
their lives outside of the office,” said a chief operating officer of LEED credentials at this point. A director of real estate at a
a private equity firm. Northeast-based development firm pointed out, “We’re a devel-
opment company, not engineers or architects. We hire engi-
neers and architects who are LEED AP.” Others say they are still
evaluating the relative merit of holding the designation.

^Who ^Are ^They?That’s not to say that property owners aren’t actively incorporating eco-friendly programs in their own buildings. Just over 90% of those polled said they employ some kind of energy conservation method. Nearly 88% recycle, almost 82% have a water-conservation program and 70.2% use Energy Star products. Also ranking high with respondents were indoor air quality programs ( 62.2%) and whole-building cleaning and maintenance issues ( 59.2%).

Often the programs in place depend on the asset, said an associate at an international ownership firm. “For some buildings, it is Energy Star, for some it is LEED and for others we look purely at normalized utility usage.”

Supposedly this strategy has worked—and worked well. Nearly 80% said that energy-saving efforts have helped defray costs.

“Our retro-commissioning efforts result in an average 12% savings and additional measures will bring higher results,” noted a sustainability manager for a state agency in the West.

“It certainly has helped,” noted a VP of facilities management

WHO RESPONDED TO THE SECOND ANNUAL GREEN survey? In terms of types of firms, property owners won out, with 22.1% of participants. Property managers accounted for 21.7%, while developers comprised 21.3%. Some 5% were asset managers, while 4.2% were REIT executives. A total of 19.6% categorize themselves as “other,” while investment banks, life companies, sponsors, asset management firms, pension funds and private equity concerns make up the rest of those polled.

Most of our respondents (75.8%) are male, and parti-pants have an average of 18. 4 years in the real estate business.

Geographically, our poll covered the waterfront and the midlands, with respondents representing the Northeast ( 19.9%); West ( 16.9%); Southeast ( 13.6%); Midwest ( 11.4%); and Southwest ( 9.3%). Approximately 21.6% operate nationally, while 7.2% have an international reach.