Archive for Costs
Video: Empire State Building to Seek LEED Gold
Posted by: | CommentsNew York’s famous Empire State Building is pursing LEED Gold certification with a goal of reducing annual energy consumption by an impressive 38%.
Planned improvements include an ambitious replacement of the building’s entire window system, an upgrade of heating and cooling plants and the integration of a smart lighting system. The $13.2MM project will provide an estimated annual energy savings of $4.4MM, yielding a three-year payback on investment.
The following video summarizes the project and includes interviews with the building’s owner, Anthony E. Malkin, and Scott Horst, EVP of LEED with the USGBC.
Special thanks to Brandon Bloch with the US Department of State and America.gov for providing this video.
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Video Tour of New Biomass Plant at Middlebury College
Posted by: | CommentsThe following video is a brief tour of Middlebury College’s new biomass gasification plant, which opened in January of 2009, and provides a great look into how the operation works.
Constructed as part of Middlebury’s commitment to being carbon neutral by 2016, this $12MM facility will generate roughly 50% of the energy needed for the institution’s heating needs and meet about 20% of its electrical demand.
Officials estimate the payback for this project is 11 years.
Founded in 1800, Middlebury College is located in Middlebury, Vermont and has approximately 2,350 undergraduate students.
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LEED Certification and Appraisal Challenges
Posted by: | CommentsAs 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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Green Paks Green Roof: Quick Install, Easy Roof Repairs
Posted by: | CommentsWe recently toured the Fountain View mixed-use development in Chicago, which is targeting LEED Silver certification, and came across a modular green roofing solution worthy of mention. Green Paks, produced by Green Roof Blocks, are a low-cost solution with one of the quickest installs we’ve seen yet.
What’s great is the simplicity of the system. There’s 4″ of growth medium in each 20″ X 32″ high-density polyethlyne fabric module, which are then cut and planted on-site.
The photo below shows the product immediately following installation. The video right after it is a real, time-lapse depiction of the same roof system relocated for roof repairs, then reinstalled. The modular nature of the system makes the process incredibly simple.
We’re told that the cost/SF of this system starts at $7, which places it a the low end of the cost spectrum. If you have had any experiences with Green Paks, please tell us about them.
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Survey Confirms Broad Acceptance of Sustainability, Highlights Challenges for LEED
Posted by: | CommentsA 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.
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LEED Consulting: How Much Does It Cost?
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A universal question when assessing LEED certification is documentation cost. That is to say, how much does it cost to hire a LEED consultant? Unfortunately, there’s not really a one size fits all answer.
LEED documentation costs are subject to a wide variety of variables such as the level of certification, which credits are being pursued and the complexity of building design and systems. This makes it nearly impossible to quantify the cost based on a percentage of construction cost or a dollar amount by square footage.
Based on our experience, the best rule of thumb is to use a cost of $600 to $2000 per point, with the higher end for credits that require more documentation effort or calculations, and for larger or more complex buildings. The documentation cost is largely fixed with a slight variable cost component for those credits requiring advanced modeling and significant hours of analysis.
While this might not give an exact number to insert into a financial model this rule should at least give you an understanding of the rationale behind consulting costs.
Please share with the rest of us any formulas you use in your own practice.
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