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Archive for Business Practices

The Proximity Hotel in Greensboro, North Carolina has earned a coveted LEED Platinum certification - the first hotel in North America to do so.

The hotel features solar hot water,  a geothermal system, 97% daylighting, low-flow fixtures that are estimated to save in excess of 2 million gallons of water each year, and a regenerative drive elevator.

To find out more about the 70+ sustainable initiatives that add up to more than 39% energy saving each year visit Proximity Hotel’s site here.

Probably the most basic (and often easiest to achieve) LEED prerequisite is Storage & Collection of Recyclables under the MR division.  It’s exactly this simplistic nature that can cause it to be overlooked as a major contributor towards reducing the environmental impact of a building.

It being Earth Day, I would like to offer some evidence that is often the little things that make a big difference.  In our relatively small 4,500 square foot office in Chicago, our paper recycling program has had the following effect in the past 12 months:

  • Paper Recycled:                   7,406 pounds
  • Trees Saved:                         63 trees
  • Water Conserved:                25,919 gallons
  • Pollutants Unreleased:       222 pounds
  • Landfill Preserved:               19 cubic yards

Consider what these numbers would be in a larger office or an entire office building - these numbers can grow to a staggering level.

If you have any statistics for your office or workplace, please share them with us.

Stop and ShopNew England grocery retailer Stop & Shop has received LEED-EB certification on 51 locations totaling 3.4 million square feet.

“At a time when economic challenges may force companies to move away from these commitments, Stop & Shop continues to move forward toward its goals of balancing the interests of people, the planet and profit to create a business that is profitable and sustainable. We’re proud of our accomplishments to date and will continue to move forward,” said Faith Weiner, Stop & Shop’s Director of Public Affairs.

Among other building attributes that helped the company achieve the certification, Stop & Shop employed high-albedo roofs, high-efficiency refrigeration systems, T5 fluorescent lighting, daylighting, occupancy sensors and an aggressive recycling program.

Stop & Shop operates in 7 New England states and employs more than 59,000 associates.

Office Depot is opening it’s first LEED-certified prototype store in Austin, TX.  What makes this store so significant is that the prototype that has been approved by the USGBC to be replicated in order to streamline future LEED-certified locations.

The model location features, among other items, 52 skylights for EQ, solar panels providing 10% of energy needed to operate the store for EA,  native low-irrigation landscaping for WE, a high-albedo roof and preferred parking for EEV’s towards SS and high recycled content concrete and parking curbs for MR.

Kudos to Office Depot  - learn more about their environmental stewardship program here.

As  adoption rates for LEED and other sustainable building certification systems continue to grow, a looming challenge for the appraisal industry, and in turn the development world,  is the proper and uniform valuation of green buildings.

There are essentially three methods of valuing property: the income approach, the replacement approach and the comparison approach.  Each presents it’s challenges when considering LEED and most appraisals combine, to some extent, all three of the approaches to derive a final value.

The income approach values a property based on the gross or, more typically, net income of a property. A multiple is then applied to determine the market value of a property.  Assuming the operating expenses of a more efficient building are lower, it would stand to reason that the end value would be higher.  However, in a a tenant-metered and billed building, the full impact of the energy savings doesn’t hit the bottom line in operating expenses and may not be fully realized in the form a higher rent, especially in a down market.  And, in the instance of a fully or partially vacant building, some credence must be given the value of unoccupied space.

The replacement approach is just what it sounds like - it’s based on the cost to re-create a building.  If we assume that a sustainable building is marginally more expensive to construct than a traditional building, it should be valued higher than the latter.   Again, there’s a missing component.  The value of a property includes not only the improvements, but the land on which it is erected.

The comparison approach looks at the sale prices of other, similar properties.  Basically, this is the market demand check in the process.  What occurs following data collection is a reconciliation, where the value of the subject property is adjusted based on  it’s strengths and weaknesses versus the other, comparable properties.   The glaring issue here is that there are a limited number of LEED certified and other sustainable buildings that have traded hands.

In a perfect world, there would be a uniform standard for crediting values for more efficient, better built buildings against their peers.  But, there isn’t one - it’s a subjective process and appraisers have no uniform standard to follow.

If you are an appraiser or building owner that has recently addressed sustainable construction issues in property valuation, we would greatly appreciate your feedback.

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Fairmont Dallas

Fairmont Dallas

Fairmont Hotels & Resorts recently announced a system-wide adoption of LEED standards.  The company, which operates 48 hotels worldwide, with another 26 under construction, has committed to full adoption by 2012.

In addition to LEED practices, Fairmont recently joined the World Wildlife Foundation’s Climate Savers program.   Other member companies include Sony, Coca Cola, IBM and Nokia, all with a goal of dramatically reducing carbon emissions by an aggregate estimate of 14 million tons annually in 2010.

Some highlights of Fairmont’s recent operational ‘greening’ include:

  • A graywater golf course irrigation system at the Fairmont Southampton in Bermuda.
  • A laundry management system at the Fairmont Royal Park in Toronto that will save more than  125,000 gallons of water each day.
  • An energy initiative at the Fairmont Dallas that reduce electricity consumption by and estimated 625,000 kWh.

With these practices, added to the relocation of the corporate headquarters to a LEED Gold building and a sustainability mandate with its largest suppliers, Fairmont hopes achieve a 20% net reduction of CO2 emissions compared to 2006.

Real estate news and commentary site GlobeSt.com recently published an article on commercial real estate brokers and green building education.  Brokers should take notice that if they’re not up to speed on sustainable real estate, they’re doing their clients a disservice.  And, they may see their clients start looking for service providers that have the necessary expertise on the product they want.

Consider the number of Fortune 500 companies that have sustainability mandates.  The first step in introspection by these companies is to look at their facilities, existing and new, to determine what changes can be made.  Pick a company, visit their corporate website and you’ll likely see mention of a green building on their ‘Corporate Responsibility’ page.

Don’t believe that businesses are serious about sustainability?   Think again.  Retailers from quick-service food ( Subway, Chipotle, Dunkin’ Donuts, KFC, Taco Bell and Pizza Hut) to big boxes (Target, WalMart, Kohl’s, Best Buy) are all opening green stores.

Not a retail broker?  GE Real Estate, the GSA, almost every major university, and most REIT’s also have a requirement that either a portion of or all of their portfolio be LEED certified or equivalent.  Additionally, many municipalities (including Chicago, San Francisco, Seattle and Denver) have LEED requirements attached to either city-assisted programs such as TIF and even zoning changes.

Taking all of this into account, it’s a strong argument for brokers to become educated on LEED and sustainable construction.  The USGBC has recently rolled out a series of courses, which are available online, to help bridge the knowledge gap for brokers.

If you’re a real estate broker and have had an experience with LEED in your business, please share.

Photo Credit: Dunkin' Brands

Photo Credit: Dunkin' Brands

As sustainable construction continues to become a standard practice for many, it’s not surprising that retailers are responding to their consumers’ interests.   But, what may surprise you is the extent to which fast food retailers are testing LEED certified store concepts.

Yum! Brands, the parent company of KFC, Taco Bell and Pizza hut has opened its first LEED certified store in Northampton, MA.  This KFC-Taco Bell boasts LED lighting, high percentages of recycled content in building materials, preferred parking for EEV’s, solar preheating of intake fresh air and stormwater harvesting for landscape irrigation.  The energy model shows a 30% reduction in utility costs versus a standard store.

Dunkin’ Brands recently brought their first LEED certified store online in St. Petersburg, FL.   Sustainable highlights of the outlet include an ICF-based structure, low flow fixtures and motion sensing lighting in the restrooms, well water for irrigation and (check this) an onsite earthworm casting facility.  A solar powered tank hosts 80 pounds of earthworms that convert organic waste into fertilizer.

Subway, in December, opened it’s fifth ‘Eco-Store’, this one a LEED Silver property in Kissimmee, FL.  The store employs LED interior and signage lighting, remote condensing for cooling and ice makers, sustainable building materials and finishes and low-flow fixures.  Notably, Subway has benchmarked their ‘Eco-Stores’ against standard stores and shown a 20% reduction in exnergy costs.

Chipotle has three stores on path to LEED Certification, including a recently opened location in Gurnee, IL.  The Gurnee location features high-albedo roofing and hardscape, low-E windows, a 2,500-gallon cistern for rainwater irrigation of the native landscaping, low-VOC finishes, and an on-site wind turbine that generates 10% of the total required electricity.

Considering the depth and density of the fast food sector in America today,  it’s encouraging to see these retailers stepping up.  If you have any fast food retailers following suit in your area, please share your stories.

Photo Credit: Icynene

Photo Credit: Icynene

Ontario, Canada-based Icynene has developed an expanding,  spray foam insulation and air barrier product derived from castor oil.  The product exceeds ASTM standards for bio-based materials, is 100% water-blown and insulates and seals in one step.

For those that don’t know, as I didn’t until I conducted some research, the castor plant is an incredibly sustainable  and non-toxic crop.  Castor beans don’t require irrigation (in normal conditions), do not need to be treated with pesticides or fungicides and yield more than twice the oil of soybeans by weight.  In addition to the oil’s other modern usage in beauty products, it has been used as an ingested folk remedy for at least 4,000 years.  Yes, 4,000 years - castor beans found in Egyptian tombs have been carbon dated.

An example of the Icynene product in action is the LEED Platinum Fifth Town Artisan Cheese factory (seen above) in Prince Edward County, Ontario.  Given the factory’s unique interior environmental conditions required to cultivate cheese, it was critically important to create a high R-value building envelope that maintains conditions in all seasons and prevents condensation and mold growth.   The Icynene product was additionally used in the interior walls to create a thermal and vapor barrier between the administrative/retail areas and the production areas.

Other features of owner, chef, and eco-entrepreneur Petra Cooper’s factory are a subterranean, earth-cooled cheese cave, a geothermal heating system and solar PV.  They targeted, but I couldn’t confirm, 13 out of 13 for SS (the 20 acre site is a natural habitat for deer, beaver and native bird) and achieved a large number of MR points with local materials, recycled content and landfill diversion.

And, it’s a pretty good looking cheese factory, right?

A recent survey conducted by California law firm Allen Matkins showed strong, broad support for green building in general, but also indicated less enthusiastic support for the USGBC’s LEED certification program as the primary benchmark of the movement.  Specifically, the survey found that respondents’ willingness to obtain LEED certification had slipped from 76% in the previous year’s survey, to 66% in this year’s results.  What gives?

The survey included responses from 900 design professionals, contractors, subcontractors, construction planners, building owners and others in the industry.  According to Bryan Jackson, one of the survey’s authors, the primary reasons for the decline in willingness to obtain LEED certification have to do with competition from other certification agencies, newly enacted green building regulations and concerns over carbon footprints.  While some of these new or emerging regulations require LEED certification, the majority do not favor a specific rating system.

It’s worth pointing out that although greenhouse gases and carbon impacts – likely to be highly regulated in the future, sooner rather than later – are issues that LEED has only indirectly addressed.  At least until recently.  New LEED requirements being introduced this year include a “carbon overlay” that tries to account for greenhouse gas emissions And another notable change coming down the pipe from LEED in 2009 is the ability to weight regional differences, which impact SS credits in particular.  For example, a school, hospital or other institution being constructed in a rural or less-dense suburban area may be challenged to gain SS credits and thus put at an immediate disadvantage to an infill location.

Notably, the survey also highlighted the lack of consensus in the development and construction community regarding the risks and costs involved with building green.  Survey respondents “felt that construction risks increased for green projects compared with traditional projects” and the authors (Allen Matkin evidently specializes in construction law) are focused on addressing green building and sustainability implications in construction contracts, leases, design agreements other legal documents.  Says the survey author Jackson, “When people draft contracts without addressing these issues, you have fights about who is responsible.  We want everyone involved to be as educated as possible so that we can write contracts in a way that will avoid litigation down the road.”  Clearly a good practice to follow.

The survey also heralds the growing use of Building Information Modeling (BIM), which employs computer-aided design to produce three-dimensional models of projects for incorporating green design elements from the very start of and throughout a project.  Although many of those surveyed estimate that green construction adds between 1% and 4% to the cost of a project, those who use BIM “say that if you design for green and sustainable elements from the very beginning, you will be able to come out with a project in that could certify to Green, LEED, Gold or Silver without spending any more than conventional construction, which is pretty amazing” according to survey results.

At our firm, we have seen this to be the case as well.  Integrated design-build efforts, aided by thorough understanding of high-performance and sustainable construction principles – and further streamlined through BIM technologies – usually mean that our clients can “go green” and achieve LEED certification at little or no cost.  In fact, the combination of time savings, tax credits, higher operating margins and project differentiation often mean that a LEED project is in fact more lucrative than a traditional project.

Categories : Business Practices, Costs, SS
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