Greening the Built Environment:
Where Do We Really Stand? As real estate owners, tenants and lenders continue to dig out from under the financial shackles of the recent Great Recession, Green Edge turns to the built environment this month. It is estimated that 85% of the building stock in 2030 will be buildings that exist today. Therefore, we focus our Green Edge sustainability lens on greening existing buildings and make the following observations. The Office Sector  In keeping with this idylic image, the office sector leads the charge when it comes to greening the existing building stock. Both Energy Star's Portfolio Manager tool and the Leadership in Energy and Environmental Design (LEED) green building rating system were originally designed for office properties. According to the US Green Building Council, of the thousands of projects participating in the LEED rating system, the most common type is office. BUT...although there are thousands of office buildings whose owners are implementing carbon footprint reduction strategies, there are millions of office buildings whose owners are not. The reasons range from the unavailability of capital for green building retrofits to the terms of most commercial leases which dictate a misalignment of the costs and benefits of these retrofits, often referred to as the "splint-incentive" disincentive. In spite of these and other challenges, greening the office sector continues to gain traction, slowly and  | |
The Hearst Tower is one of the
first LEED Gold renovations of an existing office building.
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surely. High profile examples include the LEED platinum certified Adobe Systems headquarters complex in San Jose, CA and the energy efficiency upgrade of the iconic Empire State Building in New York City. The $13M Empire State Building retrofit is projected to result in a 38% reduction in energy consumption and pay back period of less than 3 years, not to mention the added benefit of an almost doubling of base rental rates since the retrofit began. |
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The Retail Sector
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A big box retail rooftop solar array in Mountain View, CA
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While there are many notable exceptions, the greening of retail real estate generally lags behind its office counterpart. Among other factors, we are still waiting for the sustainabiltiy goals of many global retailers to trickle down to their real estate operations, not to mention the thousands of other retailers whose focus on staying in business unfortunately doesn't include greening their business. This lack of tenant demand for green retail space, coupled with the unavailability of capital and split- incentive disincentive noted above, makes it challenging for retail landlords to make meaningful green strides. Exceptions include the major mall operators which have begun to implement energy efficiency initiatives and retailers such as Walmart, which owns much of its real estate and has been investing heavily in greening all facets of its operations, including its buildings, since 2005.
Conclusion
The good news, in our opinion, is that the greening of the built environment will continue to accelerate, as a result of market forces and regulatory requirements. Notwithstanding the hurdles described above, owners are increasingly recognizing that greening their portfolios is a good business decision. On the regulatory front, green buidling attributes are being mandated and incentivized at all levels of government. We expect both of these forces to continue to produce "green" results and expect the market for "green building" retrofits to increase exponentially from its approximately $160M value in 2010.
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We Look Forward to Hearing from You
If you have questions about anything you've read in this newsletter or if you are wondering how to meet your own green challenges, contact me and I will be happy to respond via email.
Warmly,
greenedgellc.com
ellen@greenedgellc.com
212 828 3840
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 Ellen Sinreich is President of Green Edge, LLC, which helps organizations leverage the power of green through Green Edge Workshops and Green Edge Consulting.
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Join Green Edge in Baltimore for the "Dollars and Sense of Green" Program
On May 12th, in a program sponsered by the Prince George's County EDC, the Maryland Energy Administration and the International Council of Shopping Centers, Ellen Sinreich, Green Edge Founder and President will lead an open discussion with developers and retailers about strategies for greening their businesses and properties. For more informatoin please contact us or click here.
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Green Edge Opportunity:
Greening Your Real Estate
If you don't want to miss out on the greatest business opportunity of our time ---- sustainability---- let Green Edge help you identify and leverage green building opportunities. Here are some real estate examples of how carbon footprint reduction flows right to the bottom line.
Did You Know...
Existing buildings in the US account for roughly 70% of electricity consumption and 40% of CO2 emissions. There are over 5 million office buildings in the US and those that have achieved Energy Star certified efficiencies are expected to use an average of 40% less energy and emit 35% less carbon.
LED lights are almost 70% more energy efficient than incandescents, produce significantly less waste heat and can last an estimated 20 years. A national retailer estimates that use of LED lights will save the company 7M kilowatt hours (kWh) of electricity over 5 years and avoid $645,000 in costs over the same period.
A Canadian distribution center that is equipped with hydrogen fuel cells, solar thermal and wind power is expected to avoid approximately $4.8M in energy costs over a 5-year period.
Americans consume 26 billion gallons of water daily. Use of 2000 low flow toilets, urinals and faucets in 170 commercial locations throughout the southeastern US are estimated to save 53M gallons of water and $1M in costs annually.
$4B is spent annually in the US to run drinking water and wastewater facilities. A 10% reduction through increased efficiency could save $400M per year.
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Stay Tuned: Green Edge To Cover Major Real Estate Industry Conferences
In the next Green Edge Newsletter, we'll be reporting on two significant real estate industry events: the Spring Meeting of the Urban Land Institute in Phoenix and the annual ReCON convention of the International Council of Shopping Centers in Las Vegas. We'll take the pulse of the real estate industry as it relates to sustainability when we connect with the thousands of real estate professionals who will be attending. |
Green Edge Workshops and Consulting Services
Green Edge Workshops and Consulting Services provide a road map for developing and leveraging your Green Edge to maximize enterprise value. Basics, Signature and Premium Workshops can be tailored to meet your needs, budget, schedule and location.
If you have a green challenge you'd like to meet, contact us.
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The Green Edge Newsletter
If you'd like your company to be featured in one of the next issues of the Green Edge Newsletter, we'd love to hear from you. We are always looking for great green stories to share with our community of clients, colleagues and friends.
If you missed our previous issues, link to our archives home page or our blog.
The Green Edge Newsletter is published monthly by Green Edge, LLC.
EDITOR: Ellen Sinreich
CREATIVE DIRECTOR: Sara Mears
Copyright © 2011 Green Edge, LLC
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