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March 31, 2008
(Dedicated news and analysis from the environmental
front of Washington commercial real estate)


Making the Jump from Silver LEED to Gold

One of the first buildings to achieve Gold certification in the US Green Building Council's Core and Shell program, Bowie Corporate Center is understandably Buchanan Partners' pride and joy. The five-story, 125k SF office building recently landed its primary tenant, MedAssurant, to occupy most of the space -- and its LEED certification had much to do with it.

Ironically, Buchanan Partners did not set out to achieve Gold; it was aiming for Silver instead, but once the process was underway the developer realized it had tallied up enough points to go for Gold, says project manager Wendy Weiss.

"It was counter-intuitive; the conventional wisdom is to aim for more points than you need, because you will lose some during the design and construction process."

Buchanan Partners is not the only developer in the DC area to make the jump from Silver to Gold after the initial design phase. Doug Firstenberg, CEO of StonebridgeCarras, the developer of NOMA's Constitution Square, is designing both office buildings to Gold standards, after initially planning for silver. "Our original design had a bit of a cushion -- it was on the border between Gold and Silver," he says. StonebridgeCarras deliberately decided to push ahead to Gold as it was waiting to hear if it would win the DoJ lease.

"We felt strongly that the government, which wants to be a leader in sustainable development, would prefer a Gold building even if its requirement was Silver. So we decided to upgrade." To win enough points for Gold it added water reuse, or "gray water" to augment the waste water system. "We will be using recycled cooling water in the toilets and for irrigation," Firstenberg explains. "We also made some minor adjustment in the AC system."

Speaking generally, to maximize all of the credits for Gold certification, or Silver for that matter, the planning has to start from day one, says William Hendrix, Design Director in the Washington DC office of Perkins+Will.

That said, he adds, it is not unheard of for a building to morph to Gold at some point along the way. "We are working on a couple right now that might transition into Gold."

Designing to LEED and other such standards is becoming a more common practice; it makes sense that the industry is mastering the learning curve enough to actually surpass initial expectations.

In Buchanan's case, it was a matter of being conservative when it first added up its possible points for Silver certification. "When we started we had our checklist of what we had to do to achieve points in the various categories," Weiss says. "We had a certain number of yeses and nos and maybes. We figured if we could move enough of the maybes to yeses we would end up with Silver."

What pushed Buchanan into the Gold category?

On the regional materials credit, developers get a point if 20 percent of the materials used in a project comes from within a 500 mile radius. Buchanan did more than 20 percent so it got an additional point, Weiss says.

It also received five surprising points for innovation, she reports.  Innovation is an open category, a catch-all of sorts for anything that doesn't fall in specific categories like energy, she explains. It received points for its water efficiency and for its recycled content.

Buchanan's LEED consultant on the project was Sustainable Design Consulting, based in Richmond and Silver Spring.

ROI on green development can be surprisingly hazy to calculate, but Weiss et al at Buchanan are going to give it a try. In particular, she wants to figure out what the ROI was in going from Silver to Gold. "It may be parsing the issue too finely but we are going to try to figure that out."

FACETIME WITH.. Kurt Padavano, COO of Advance Realty Group

Advance Realty, a NJ-based firm that has a significant footprint in the DC area -- some 1.5 million SF, which is largely leased -- is handing over building operations in some of its portfolio to a UK-based company called GSH Group, which specializes in sustainable facilities and energy management.  Emphasis on sustainable.  As Advance's COO Kurt Padavano says, "there are a lot of firms out there to which you can outsource building operations. Very few of those focus on consumption savings."

With GSH at the helm, Advance figures it will save between 5% to 17% in energy consumption in the buildings GSH will be managing. These are One Gateway Center in Newark; a four office building portfolio in Bedminster, N.J. and nine office buildings in the Metro East Business Campus in Landover, Md.

Padavano tells Bisnow how.

Bisnow: Why GSH?

Padavano: We studied a lot of opportunities in reducing energy consumption and when we analyzed the GHS proposal what we really liked that that they would guarantee savings on low end of the 5%-17% range if we just let them manage energy operations. But they would guarantee consumption savings at the higher end of that range if we gave them a contract for managing all of the operations. So we decided to migrate our in house operations staff to GSH. Their contract is also very flexible and owner-friendly.

Bisnow: We understand energy consumption savings is an important goal in of itself but have you figured out an ROI for this investment?

Padavano: Yes. Every dollar that we can increase our net operating income gives us an additional $14 in the building's value. So consider a 640,000 SF office portfolio that has a 7% cap rate. If I can pick up 50 cents per SF in energy consumption savings that translate into $320,000 in NOI increase. I've picked up $4.5 million in value, almost $4.6 million.

Bisnow: What other green initiatives do you have underway?

Padavano: Oh a lot. All of the projects we have in our pipeline we are looking at developing and building in a green way. Sometimes that may be the LEED program. Other times it may mean smart, common sense methods of construction. We don't think LEED is the only route to green in other words. For the last three years, as another example, we have participated in the EPA Energy Star Benchmarking program. And in BOMA's 7-Point Energy Challenge. We do little things too to encourage tenants to conserve energy.

Bisnow: Such as?

Padavano: Handing out fluorescent light bulbs in the lobbies. Putting on demonstrations. In a few of our buildings we have a bike rigged up to show people how much energy you have to expend peddling to power a light bulb.  [See picture above!]


CFOs and other senior finance executives are reporting that environmental sustainability is an increasingly important issue for their companies --  and that "significant" financial benefits can be reached by companies that can implement such strategies.

The newly released study was conducted by CFO Research in collaboration with Jones Lang LaSalle; it surveyed 175 corporate CFOs and senior finance executives. According to the report:

More than half of finance executives believe sustainability initiative will mean their companies are "very likely" or "somewhat likely" to increase revenue, reduce operating costs, improve investor returns and shareholder value, and improve employee retention.

The top priorities in corporate sustainability initiatives are regulatory compliance, improving energy efficiency and reducing greenhouse gas emissions, and reducing the environmental impact of operations.

The biggest barriers to incorporating sustainability into a financial strategy include the inability to measure the effects of sustainability on shareholder value, the inability to document the effects on financial performance and a lack of standard decision-making frameworks that consider environmental factors. The least significant barrier? Organization resistance.


TIAA-CREF says it intends to improve the energy efficiency of its real estate portfolio by 10 percent by 2010. Already the company has vetted the office portion of its portfolio, reducing its collective energy use by 125 million kilo BTUs.

To meet this goal, TIAA-CREF's Global Real Estate group is going through its 43 million SF portfolio to find opportunities to reduce energy consumption. Thus far, the buildings that comprise the office portfolio have reduced energy use by 125 million Kilo BTUs.

Its next target is its 12,000-unit multifamily portfolio. TIAA-CREF will be collecting information on such areas of potential improvement as energy and water consumption and trash production.


Crescent Multifamily Development Group, a Charlotte, NC-based multifamily developer, may be exporting its environmentally friendly designed communities -- a concept it calls Circle -- to the DC area. With projects already under construction in North Carolina and Florida and others planned to start this year in Tennessee and Texas, Crescent is now exploring the Dallas and Washington D.C.


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