From an organic supermarket in Malibu, California, to a prosperous bakery in Philadelphia, sustainability continues to be at the forefront of the real estate sector across America.
“Green” is becoming only more entrenched in building, development, and retrofitting as a new generation has grown up with a greater awareness of sustainability and a growing sense of the fragility of the planet. “The realization is that we are all connected and that decisions made today have longer-term consequences,” says Beth Callender, principal at San Diego–based design firm Greenhaus. “Green now permeates many aspects of life and social connections.”
Beyond what is required by government regulations, there is plenty of opportunity for the landscape sector to contribute to more sustainable communities, says Esther Margulies, managing principal at ValleyCrest Design Group, a Calabasas, California–based landscape architecture firm. “We have a long way to go to turn single-purpose infrastructure into multibenefit recreation and infrastructure,” says Margulies, whose firm used pioneering sustainable features at California’s Malibu Whole Foods in the Park development. “There are many incentives and requirements to approach water quality improvements in the landscape through the use of filtration and infiltration. The key is to design these features so that they become elegant project components as opposed to unused space.”
Malibu Lumber Yard, two levels built
around a central courtyard, has become
a popular community living room.
Rather than fading into the background during these difficult economic times, sustainability remains central to real estate entrepreneurs. “More commercial tenants see the benefit of reduced utility expenses and healthier indoor environments,” says David Leopold, community development banking tax credit equity investments executive at Bank of America (BofA) Merrill Lynch in Washington, D.C. “In addition, lenders and investors are beginning to favor more sustainable projects that offer improved marketability and reduce the risk of functional obsolescence. Municipal requirements are increasingly focused on environmental impact. Related to that, we have seen more acceptance of and demand for green construction with affordable housing than with commercial real estate as a whole. In essence, affordable housing often serves as a testing ground for green projects.”
BofA regularly finances projects that are designed to earn Leadership in Energy and Environmental Design (LEED) Silver or Gold certification, Leopold continues, including Dumont Green in Brooklyn, New York, with 176 units of affordable apartment housing. “One of the first green buildings constructed in New York City’s outer boroughs, Dumont Green also was one of the first affordable housing developments to use solar panel technology in construction and energy use,” he adds.
Boston’s Levedo Building, a four-story, energy-efficient 24-unit multifamily structure, is another BofA green-financed project. Designed to meet U.S. Department of Housing and Urban Development (HUD) Healthy Home standards and be LEED certified, the Levedo Building includes Energy Star appliances, high-efficiency energy systems, and low-volatile-organic-compound building materials. “Green design remains on track to become part of design in general,” Leopold emphasizes. “This is driven by consumer and investor demand together with improved technology, material availability, and construction practices. The premium is coming down and the benefits are increasing.”
Discussions about designing and building more sustainably have become a standard in the industry, says Branko Prebanda, senior principal at Long Beach, California–based Perkowitz+Ruth Architects. “Nearly every project we have recently engaged in has addressed sustainability, regardless of whether or not the developer is pursuing LEED certification,” Prebanda continues. “The rising demand has also been fueled by the adoption of progressive state codes such as CalGreen in the Golden State and the development of the International Green Construction Code that is set to be published in 2012.”
Not only are states mandating the change to green, but organizations are also realizing the benefits more than ever before. “We have been closely engaged with several national retailers that have been testing the return on investment of green development for a number of years,” says Prebanda. “They have analyzed what works, and are greening their stores because they see the ultimate benefits. We are currently working with national grocery store chains that are placing a high priority on energy efficiency and water conservation. We have also had the benefit of working with private commercial developers who have made a commitment to build sustainably. Last year, we completed Plaza Pacoima in Pacoima, California, a 343,000-square-foot [32,000-sq-m] neighborhood retail development for Primestor Development. The development earned LEED Gold certification by turning a former brownfield site into a vibrant, community-serving shopping center.”
Long Beach, California–based Perkowitz+
Ruth Architects is working with Fry’s Food
& Drug Stores to achieve Designed to
Earn the Energy Star certification for
Torti Gallas and Partners of Silver Spring, Maryland, is seeing increased demand for sustainable design in all sectors of the firm’s work, says associate Jeremy R. Lake. “First, the long-term savings due to more efficient performance and higher levels of durability have been proven,” he says. “Second, green development is at the forefront of public discourse and the issues at hand are no longer understood by only a small number of residents and users. Third, the industry overall has made great strides and the knowledge and available strategies toward achieving sustainable goals have become mainstream. Finally, developers have found that green buildings more than pay for themselves in their marketability.”
Lake adds that a strong sustainability focus in multifamily infill developments has become the expected norm in the design and construction process. “One example that has recently started construction is the Westlawn Redevelopment, where we are working with the Housing Authority of the City of Milwaukee [HACM],” he continues. “The overall community is seeking LEED ND [LEED for Neighborhood Development] certification, with all units designed with LEED for Homes and Energy Star as a basis. Such certifications are not required, but have been given priority by HACM. Other examples include the Nannie Helen, a 70-unit affordable mixed-use multifamily and retail building in Washington, D.C., that is expected to be a certified Green Communities project, and a 191-unit market-rate multifamily building in Arlington, Virginia, that is expected to be LEED-Homes certified.”
Sustainable development today not only incorporates the typical aspects of renewable energy, recycling, and LEED or LEED-type standards, but also creates better, healthier, and more efficient workplaces, explains Chip Fedalen, head of the Real Estate Banking Group at San Francisco–based Wells Fargo. “In today’s environment, where recruitment and retention of talent [are] extremely important, most large employers put buildings with some aspects of sustainable development high up on their list of requirements,” Fedalen continues. “As the largest commercial real estate lender in the country, Wells Fargo’s Real Estate Banking Group clearly sees that green projects have become the norm as opposed to the exception in today’s marketplace. Most institutional investors are now requiring this in all new developments. There is an increasing belief that if you are not building green, you are building an obsolete project.”
Wells Fargo has been involved in countless projects that feature sustainable development. “A large percentage of the office properties we finance are either LEED certified or working on LEED certification,” says Fedalen. “We are currently financing a student housing project for a very experienced multifamily developer on a university campus that features cutting-edge technology in renewable energy and sustainable design.”
Designers who have crossed the threshold of sustainable design and implement sound practices as part of their holistic design sensibility are bringing value to projects that exceed traditional real estate measure, says Margulies of ValleyCrest. “In the field of landscape architecture, beauty has always raised the value of projects,” she continues. “Practicing sustainable design adds the incremental value of preserving or enhancing natural systems and increasing biodiversity, which will produce a healthier environment. Simple things like planting more trees will provide shade to reduce ambient temperatures, reduce energy used for interior cooling, and provide contact with nature, which results in incalculable inspiration and educational benefits. Providing better access to parks and recreation; encouraging walking, cycling, and [use of] transit; reducing chemical use in the landscape; and improving water quality in our rivers and oceans will improve public health at a fraction of the cost of medical care for obesity and chronic disease.”
There’s much work to be done, Margulies adds, noting that urban forests and use of green roofs are far from being fully implemented. “For landscape architects and planners, this means that we will continue to see more urban mixed-use projects that deliver the highest return on improved air quality and energy conservation,” she says. “Creating parks, gathering spaces, and better pedestrian, transit, and bicycling environments is essential to urban living. Landscape architects are uniquely prepared to design these environments because we focus on the quality of open space and the human experience as opposed to others whose primary concern may be the vehicle or buildings as objects in space.”
Kerry Blind, vice president and principal at Atlanta’s Pond Ecos, notes that at first, institutional projects were interested in sustainability, “but more and more municipalities are adopting green building ordinances and/or codes, so the development community is following. Generally, though, it is the developers who are also going to own and operate the building or facilities that see the real, longer-term value in building green.”
LandDesign designed the site for the Energy
Production Infrastructure Center (EPIC)
building at the University of North
Carolina at Charlotte.
At present, Pond Ecos is working on an urban apartment project that is seeking LEED certification, as well as other projects. “We just completed the first new 3,000-acre [1,200-ha] state park project in Georgia that contains several LEED-applied-for buildings and many other low-impact and sustainable features,” he explains. “We also finished one of the first sustainable parks in Atlanta that incorporates many sustainable features such as photovoltaic panels that sell power to the grid during the day and buy it back cheaper at night. Our firm has been leading the charge toward sustainable planning and design since the early 1990s, well before LEED was a common acronym. We are very pleased to continue to see our many years of efforts bearing fruit.”
While some developers and builders may shy away from sustainability features because there are added costs, says Meg Nealon, partner in Charlotte, North Carolina–based LandDesign, “if they can change their product slightly to offer something that is greener than conventional without affecting price, they’ll do it. Housing prices are too sensitive these days to incorporate too many green features, as [doing so] might price them out of the market. Similarly, in reality most homebuyers will be green if their household budgets will allow. After a point, financial responsibility outweighs environmental responsibility.”
While design professionals, developers, builders, and others associated with the real estate industry have been delivering more sustainable solutions, the average consumer is now demanding the same, Nealon continues. “The awareness of the green alternatives to traditional building practices has increased such that the average consumer today expects the range of choices in the marketplace to include sustainable options in housing and office space,” she says. “The average consumer is more informed, and more concerned with being a good steward of the earth and finding ways to contribute to the creation of a more sustainable future. We are seeing a very deliberate shift away from conventional development practices as several developers are able to articulate their vision for a sustainable development prior to engaging LandDesign. Working with these clients has presented new and exciting challenges, and has inspired many of our design professionals to become LEED certified. Institutions and corporations are still taking the lead. Among the projects we believe are most interesting [are] our Lowe’s Corporate Campus in Mooresville, North Carolina; the North Carolina Research Campus in Kannapolis, North Carolina; and the Station at Potomac Yard in Alexandria, Virginia.”
Today’s challenge with marketing green development is that it does not necessarily look different, says Greenhaus’s Callender, so there is no immediate sensory gratification or even bragging rights. She notes that Pardee Homes’ LivingSmart program in southern California and Nevada reaches across the price spectrum from million-dollar-plus properties to starter homes in the Golden State’s Inland Empire and in Las Vegas. “In their new LivingSmart Homes, Pardee offers a fresh, new design at a time when consumers are looking for something new, and includes many green features that optimize the homes’ performance,” she adds.
“They have a comprehensive and well-thought-out approach to sustainable building/development in their LivingSmart program. As the market continued to struggle, and Pardee considered how to retool their existing home designs, they interviewed homeowners to better understand what they valued in a new home, including what they value in terms of green and sustainable features. The result is their LivingSmart Home, which has done exceptionally well, and they have been rolling it out throughout their regions.”
In the affordable housing sector, where the benefits of green development are being proved through lower construction and operations costs, developers are being encouraged to find more ways to integrate cost-effective green methods and materials into their projects, says Dana Bourland, vice president, green initiatives, at Enterprise Community Partners. “Developers may decide not to repeat a certain feature, but in large part they are finding that in order to meet the energy-efficiency measures included in green building programs, they must pay closer attention to the building envelope and to right-sizing the mechanical equipment, which often results in smaller, less-expensive systems than [those] routinely installed. This also results in fewer callbacks as tenants are more comfortable in their work and living spaces.” ??
Located on the University of California at
Davis campus, West Village is an innovative
Community Preservation Development Corporation’s (CPDC) Wheeler Terrace in Washington, D.C., is an example of this type of green development, Bourland says. “In Wheeler Terrace, CPDC looked for ways to drive deeper energy efficiency, provide the healthiest living environment possible, and engage residents in the process,” she continues. “Wheeler Terrace installed a geothermal heat pump [and] an energy-efficient white roof that will also benefit the neighborhood by lowering the overall heat island in D.C.; provided a green roof; and included extensive interior renovations, including upgraded bathrooms and kitchens with energy-efficient appliances. Lately we are involved in more of these types of projects where we are helping development partners exceed even our own Enterprise Green Communities Criteria by exploring methods to get to net-zero energy, harvest enough rainwater to be water independent, and provide constant oversight to the construction process to verify that all ducts are sealed, insulation is installed properly, and property management staff and residents know how to operate and maintain the systems as designed.”?
Jim Lutz, senior vice president of development at Liberty Property Trust, a real estate investment trust based in Malvern, Pennsylvania, emphasizes that sustainable development will continue to be an important factor in commercial real estate decisions. But while development is expected to start to pick up soon, the vast majority of attention will be paid to existing buildings and increased focus will be directed toward energy efficiency.
“This is driven by two things. First is the issuance of LEED 2009 version 3, which requires a 10 percent minimum improvement above the latest American Society of Heating, Refrigerating & Air Conditioning Engineers [ASHRAE] standards. This means that certification will be much more focused on measurable energy savings,” says Lutz. “And, second is the ability to offer meaningful savings on energy costs to tenants, which will make some properties much more attractive than others and is a terrific and effective marketing tool.”
Some of the steps Liberty has taken in the past year have saved tenants millions of dollars in expense costs, Lutz claims.
“Liberty has been employing energy audits and executing lighting retrofits to both office and industrial buildings; making HVAC improvements and adding increased insulation; and applying innovative solutions, such as buildingwide area networks [BWANs] that allow Liberty property managers to track energy use and spikes in a given building in real time from a laptop, desktop, or PDA. The BWAN program alone has saved Liberty and our tenants more than $3 million since mid-2010,” he adds.
Liberty started the year by announcing the development of three more sustainable buildings in the Philadelphia Navy Yard: the new GlaxoSmithKline open-platform office building at Five Crescent Drive in the Navy Yard Corporate Center and two flex buildings in the Navy Yard Commerce Center, all designed to achieve LEED/Energy Star certification, Lutz adds. Also in Philadelphia, Liberty is developing a sustainable medical office building at Eighth and Walnut streets for the University of Pennsylvania Health System.
Green development and design is not a passing trend. It is here to stay, say those in the industry, with new—and older—buildings becoming even greener in the years ahead.