by Krystal Goff and Kasia Janczura
Green and Real Estate
While few may still believe "green" practices are merely a trend, that attitude is becoming fewer and farther between. As the need for environmentally sustainable practices grows, more of them become law. It is clear that being green is no longer a trend, but a reality.
As this happens, real estate professionals are seeing their businesses affected as well. Introduced in 2000, the Leadership in Energy and Environmental Design or “LEED®” green building rating system has been getting a lot of attention lately. Developed by the United States Green Building Council, the LEED® rating system establishes standards for environmentally sustainable building development, rating the construction either Certified, Silver, Gold, or Platinum. In addition, professionals in the real estate industry now have the option of becoming "LEED® Certified".
Geraldine Walsh of Grubb & Ellis has just recently received her LEED® Certification, bearing the new title "LEED® AP" (Accredited Professional). What does this mean? For Grubb & Ellis, it now has an in-house LEED® Professional with the authority to oversee and approve aspects of renovating or constructing a building to be up to LEED® standards. Prior to her certification, the firm would have had to hire an outside professional at an extra cost. In addition to the convenience, Grubb & Ellis gets an extra "point" in the LEED® rating system simply for having a LEED® professional overseeing all aspects of construction or renovation. Recognizing how profitable this is, Grubb & Ellis currently has 30 certified employees and 15 in the process of getting certified.
Is it worth it?
"Everything in a building can be green, from the lighting to the furniture to the percentage of recycled materials used in structural building, to the paint on the walls," Walsh explains. The myth that green spells out ‘more expensive’ tends to still circulate, as Walsh points out. Before anyone reaches conclusions, let’s present a few facts:
- Average LEED® energy use is 20-25% better than the national average, and the savings increase with higher LEED® certification
- As LEED® levels improve from certified to silver to gold/platinum, the Energy Use Intensity increases from 26% to 32% and 44%, respectively, as compared to regular national average
- LEED® Energy Star Rating median was 68, compared to national building stock median of 50, meaning that 68% of similar buildings are less energy efficient.
- LEED® building enhances the asset value and profits
- Employee productivity and satisfaction increase
As with every new investment, there are a few things that cost more simply due to initial lumpy expenditures, thus not showing an obvious payback. Environmentally friendly furniture made from sustainable materials is one example. This may change as time goes on and the demand for products like these increases.
A green building implies immediate and long term economic and social benefits. Better insulation and structural development, trailing resource conservation, allow for lower utility bills and, thus, lower operational costs and a better environment. You can invest in something knowing that you are making a difference for society as a whole.
With more and more people yielding towards this so called ‘trend’, one should not hesitate to wonder if a green investment is profitable. Simply looking at the demand side, as Walsh points out, customers take note of ‘green’ affiliation and LEED® certification, thus an increase in supply is needed.
Next Steps
Before her work at Grubb & Ellis, Geraldine Walsh helped the well-known Hearst Tower located at 57th Street and 8th Avenue in Manhattan reach Gold LEED® certification. Seeing the obvious benefits for both owners and renters alike, Grubb & Ellis is now working on a sustainability educational piece to inform readers about LEED® Standards and Practices. "Since this is so new, there is nothing like this on the internet now to inform people about LEED® Certification," says Walsh. "Other companies have hinted at getting something like this together but haven't acted on it." Grubb & Ellis hopes they will launch this as part of their website by early 2009.
Staying tuned with what is going on in the real estate industry when it comes to green developments, green regulations, and green initiatives is key for any individual who wants to stay in the loop. Making sure to act on the opportunities created within the evolving system is a successful path towards industry leadership.
Sources: Geraldine Walsh, Vice President at Grubb & Ellis, US Green Building Council, Energy Performance of LEED® for New Construction Buildings: Final Report March 2008 by Cathy Turner and Mike Frankel
