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Forum Focuses on Green Construction

Green building no doubt continues to gain traction in the construction industry thanks to client demand, new gov­ernment regulations and other pressures to leave a smaller carbon footprint.

Some industry workers are thrilled about this new move­ment, some are not and some are, well, just plain confused about it.

A special forum last week tried to sort out some of the latest “dilemmas, solutions and approaches in the trenches.” Sponsored by Blank Rome LLP, the event brought together a variety of real estate profes­sionals from Grubb & Ellis Company, Liberty Property Trust, Kohn Pedersen Fox Ar­chitects and Viridian Energy and Environmental LLC.

Moderator Stuart Kaplan, a partner and Real Estate Prac­tice Group Leader at Blank Rome, said today’s companies are being held accountable for how their operations, products or services affect the Earth. A negative image can hurt a bot­tom line.

“Reducing environmental impact has become an integral part of the mission statements of many of our most forward-thinking clients,” he said.

Participants first tackled the very definition of going green.

“Green, sustainable can mean a lot of different things and has meant a lot of things,” said Brian Cohen, vice presi­dent, development and leasing at Liberty Property Trust. “Ten years ago it meant com­posting and it meant the guy who built his house out of used tires Now, it means high-performance buildings.”

Liberty, which says it is the country’s largest com­mercial developer of green buildings, is an avid seeker of the LEED (Leadership in Energy and Environ­mental Design) designa­tion.

Cohen said it helps their “triple bottom line: people, profits and planet.”

“It gives us a way to differentiate our product,” he added, saying it results in higher occupancy and higher rents. “We want to get away from real estate as a commodity.”

While buildings can be green without actually seeking out a LEED des­ignation, most agreed it is worth the effort because a designation proves that the building owner has met a number of standardized measures.

“It gives you third-party certification,” said James Freeman, an attorney with Blank Rome.

Still, stories were traded of small and large build­ers who have created new space or retrofitted old spaces without LEED des­ignations.

The majority also agreed that it was wisest to make sure everyone is on the same page as early as possible when taking on a sustainable project – not only to save time but ag­gravation, too.

While there is a great amount of pressure for the industry to go green, not everyone is on board for financial reasons. Some feel their ultimate tenants or residents will not be willing to pay a premium for certain green amenities while others are adverse because they may only hold onto a property for a year or two, believing they will not fully recoup the energy savings that green design brings in that short time.

Of course, it’s not an easy endeavor determining the costs of building green. Ask five different develop­ers how much it costs and you’re likely to get five different answers.

Cohen said there have been reports of govern­ment projects facing a 15-20% premium by choosing green materials. But Co­hen added project leaders might use every bell and whistle because they are considering a 100-plus-year lifespan for such a building rather than own­ers who may flip.

“Based on our product type it doesn’t cost more for LEED Silver,” Cohen said, comparing that with an estimated 3% premi­um for its LEED Platinum buildings.

It’s often a case of smart picking and choosing. “So­lar and geothermal, for ex­ample, are premiums ten­ants won’t pay for,” Cohen said. “But they will pay for more natural light.”

Either way, most experts believe that the real estate industry will have less and less of a choice.

“My opinion is it will be built into building codes,” Kaplan said. “It will be­come more of a building mandate.”

Laurie Butler of Kohn Pedersen Fox Architects said sustainable design is the right things to do from an economic, social and environmental standpoint.

“That’s the direction the industry needs to go in,” she said.

"Forum Focuses on Green Construction" by John Maljeski appeared in Real Estate Weekly on November 26, 2008.

Reprinted with permission from Real Estate Weekly.