The Greening of the Real Estate Industry

Nothing demonstrates the disconnect between politicians and the marketplace more than the current debate about climate change and U.S. energy policy.

Before Christmas, Congress passed a measure barring the U.S. Department of Energy from enforcing a ban on incandescent lightbulbs. The original measure, passed in 2007 with bipartisan support and signed into law by President George W. Bush, required a switch to more energy-efficient bulbs beginning in January 2012. Following this directive, the U.S. lighting industry began to produce a wide array of new energy-efficient lightbulbs that save consumers money (almost $90 per year) and have gained market share.

But in late 2011, when Rush Limbaugh and other conservative commentators attacked the ban on incandescent lightbulbs as an infringement on individual rights, the Republican-controlled House of Representatives rushed to overturn the Bush-era measure.

Ironically, the leading opponent of the House action was not the environmental community, but rather the lighting industry, which had spent years shifting its research and production from incandescent bulbs to more efficient halogen, compact fluorescent, and LED bulbs.

“American manufacturers have invested millions of dollars in transitioning to energy-efficient lighting,” says Joseph Higbee, spokesman for the National Electrical Manufacturers Association, an industry group. “Delay in enforcement undermines these investments and creates regulatory uncertainty.”

Another industry that is way ahead of the politicians is the real estate industry. In December, Maine Governor Paul Le Page, a member of the Tea Party, signed an executive order banning the use of Leadership in Energy and Environmental Design (LEED) green building standards in state-owned buildings. LEED is, of course, the most robust third-party rating system for sustainable design and construction. Motivated by energy savings and a commitment to the local economy, many Maine-based companies and institutions have already constructed high-performance buildings utilizing LEED standards. These include L.L. Bean, Hannaford, Poland Spring, Power Pay, Gorham Savings Bank, and Colby and Bowdoin colleges.

Despite the recession, inaction by Congress, and the anti-environmental actions of some elected officials, there is ample evidence to support the conclusion that the transition to green buildings and sustainable development is here to stay. Developers, owners, and investors all realize that investing in available energy- and water-saving technologies can produce low-risk returns, creating more marketable and valuable real estate assets.

For the real estate industry, the time has come to capture the value of the ubiquitous waste of energy throughout the country. Buildings account for approximately 40 percent of worldwide energy consumption and produce 21 percent of all carbon emissions. Recently completed and retrofitted Class A office projects are already securing market-leading rents and high prices, attracting tenants with energy-efficient designs that lower operating costs, enhance work environments, and create a halo for all parties concerned. Thus, it came as welcome news this week that the Urban Land Institute was joining forces with the Greenprint Foundation to create a new Center for Building Performance. Founded in 2009, the Greenprint Foundation is a worldwide alliance of real estate owners, investors, financial institutions, and other industry stakeholders committed to reducing greenhouse gas emissions across the global real estate industry.

With the support and resources of the Urban Land Institute, the ULI/Greenprint Center will lead the global property markets in reducing greenhouse gas emissions in a meaningful and measureable way.

Coincidently, on the same day that ULI announced the creation of the Center for Building Performance, the U.S. Green Building Council (USGBC) released its 2011 list of top ten states for LEED-certified commercial and institutional green buildings per capita. (See table and information below.)

The District of Columbia led the list with more than 31 square feet (2.88 sq m) of LEED-certified space per person in 2011. Colorado was the leading state with 2.74 square feet (0.25 sq m) per person. In absolute numbers, California and Texas had the largest number of green buildings: 71 million square feet (6.59 million sq m) of LEED-certified space in California and over 50 million square feet (4.64 million sq m) of LEED space in Texas.

As the number of LEED-certified buildings has grown, so has the number of LEED-accredited professionals. In the year 2000, there were 563 LEED-accredited professionals in the United States. By the year 2010, there were more than 143,000 accredited professionals. One of the big reasons that the cost of green buildings has come down is because experience has gone up, at the same time as green products and materials have greatly improved.

The U.S. Congress has done virtually nothing to address the growing problems of climate change and energy consumption, but industry is not waiting for the politicians. Whether it is the lighting industry or the real estate industry, successful companies have realized that going green makes both business and environmental sense. In the future, it seems certain that the market will ultimately favor the greenest buildings in the greenest locations in the greenest cities.

List of Top 10 States for LEED Green Buildings Released
U.S. Green Building Council releases list of top U.S. states for LEED-certified projects in 2011

The U.S. Green Building Council (USGBC) yesterday, January 19, 2011, released its 2011 list of top ten states for LEED-certified commercial and institutional green buildings per capita, based on the U.S. 2010 Census information. The District of Columbia leads the nation, with more than 31 square feet (2.8 sq m) of LEED-certified space per person in 2011, with Colorado being the leading state, with 2.74 square feet (0.25 sq m) per person in 2011.

Other top states include Illinois, Virginia, and Washington, with 2.69, 2.42, and 2.18 square feet (0.24, 0.22, and 0.20 sq m) of LEED-certified space per person, respectively. The top LEED states per capita, including the District of Columbia:

“Looking past the bricks and mortar, people are at the heart of what buildings are all about,” says Rick Fedrizzi, president, CEO, and founding chair of the USGBC. “Examining the per-capita value of LEED square footage in these states allows us to focus on what matters most—the human element of green buildings.”

LEED is the internationally recognized mark of green building excellence, with more than 44,000 commercial projects participating, comprising over 8 billion square feet (743 million sq m) of construction space in all 50 states and 120 countries. In addition, more than 16,000 homes have been certified under the LEED for Homes rating system, with more than 67,000 more homes registered.

“Our local green building chapters from around the country have been instrumental in accelerating the adoption of green building policies and initiatives that drive construction locally,” continues Fedrizzi. “These states should be recognized for working to reinvent their local building landscapes with buildings that enliven and bolster the health of our environment, communities, and local economies.”

Notable newly certified projects in 2011 include the Treasury Building in Washington, D.C., which is distinguished as the oldest LEED-certified project in the world; the LEED Platinum Casey Middle School in Boulder, Colorado; the iconic Wrigley Building in Chicago; Frito-Lay in Lynchburg, Virginia, which earned LEED Gold for the operations and maintenance of an existing building; the LEED Silver Hard Rock Café in Seattle, Washington; Anne Arundel Medical Center in Annapolis, Maryland; Yawkey Distribution Center of the Greater Boston Food Bank in Massachusetts; the LEED Gold Austin Convention Center in Texas; SFO’s LEED Gold Terminal 2 in San Francisco; the LEED Platinum Hotel Skylar in Syracuse, New York; and the LEED Platinum Marquette Plaza in Minneapolis, Minnesota.

In December 2011, the USGBC announced that LEED-certified existing buildings outpaced their newly built counterparts by 15 million square feet (1.39 million sq m) on a cumulative basis. A focus on heightened building performance through green operations and maintenance is essential to cost-effectively driving improvements in the economy and the environment.

See USGBC’s press release for additional information.