'IT'S JUST GOOD BUSINESS'
Green is the next big thing in commercial real estate, experts say, and it’s only a matter of time before even the most recalcitrant builders hop on the bandwagon.
According to National Real Estate Investor, an industry publication, 77 percent of developers surveyed in 2007 said they expect to own, lease, or manage green properties by 2012. The Building Owners and Managers Association has guidelines in place to facilitate “green leasing,” a deal worked out between a building’s owner and tenant to jointly meet sustainability standards. And many companies across the country have begun allowing employees to telecommute, or have implemented a four-day work week, in order to save on energy costs.
“Most users and owners are going to try to do things that benefit the costs of operations on buildings without the city telling them to,” says Greg Wilkinson, CEO of Hill & Wilkinson Ltd., a Plano-based commercial construction company that has built schools, health care facilities, and even a car dealership with a focus on LEED certification. “It’s stuff that we’re already doing anyway. It’s just good business.”
Wilkinson, a former president of the North Texas chapter of the Associated Builders and Contractors group, says the local industry is abuzz with news of the Dallas ordinance.
IT'S EASY BEING GREEN
Jessica Warrior, one of Jones Lang LaSalle’s LEED experts, says a shift toward greener building practices has just begun. city’s stance so far is that they’re going to ask for the lowest level of certification that LEED has. We think that that is not going to be that difficult to achieve, if the owners and the architects understand [the process].”
Perhaps the biggest concern stems from the possibility that companies from outside Dallas that plan to relocate or build offices here will not be aware of the new ordinance. Once they discover the new rules, plans may need to be redrawn and OK’d by the city, which could delay construction and increase costs.
While the process of following the green building ordinance may not be terribly complicated, there are loop- holes that allow some construction to appear greener that it really is.
“It has been very interesting going through the process of getting to a LEED-certified position,” Paris Ruther- ford, president and COO of Dallas-based ICON Partners, said during a recent panel discussion on sustainability. “What we’ve noticed is that you can go through and click a lot of things that don’t really matter. You can get right over that threshold.
“I didn’t realize you could do that with LEED, but there are certainly some tricks you can play with it,” Rutherford said.
Dallas officials realize the system could be “gamed.” So they’re trying to keep builders from skipping important points by requiring credits for energy reduction and responsible water use, among other things.
“Greenwashing is something that we cannot prevent, but [knowledge of] it only helps to put people in the right direction,” says Basora, who will be one of a handful of people responsible for enforcing the new code once it takes effect next year.
When it comes to greenwashing—presenting your building or company as more environmentally friendly than it really is—Architects are sometimes the culprits. Kirk Johnson, a project manager in the Dallas office of the Corgan Associates, Inc. architectural firm, says he’s seen instances of greenwashing among the competition, though he declines to name names.
“In general, across America, there’s a lot of greenwashing,” he says. “People don’t know what green really means.” Corgan is involved in 24 LEED projects, including the performing arts center in downtown Dallas, which is expected to qualify for LEED silver status. But the company’s most notable green effort is its own headquarters in the West End, which was designed by Corgan architects to meet LEED silver standards. The upfront cost of using environmentally friendly products and services there, Johnson says, was minimal.
“Before it hit the mainstream, the perception was that it was going to cost a lot,” he says. “That’s changing, and a lot of it is government. Dallas is at the forefront of that, and I applaud them. It’s the right thing to do.”
According to the October 2008 Jones Lang LaSalle Energy and Sustainability Reference Guide, the cost of a green building is 1 percent to 7 percent higher than a typical “non-green” building, with returns on that investment expected within the first 10 years. Dallas’ new ordinance is “going to change a lot of things in Dallas with the construction industry,” Johnson says. “The industry as a whole has kind of grappled with what is sustainable, and that’s going to change as they get more aware.”
While the construction industry may sometimes be slow to embrace the green phenomenon, the corporate world has reacted much differently, experts say. “Companies want to be in green buildings, and they’re willing to pay a little more,” says Jim Yoder, a managing director of Jones Lang LaSalle in Dallas. “If there’s a tiebreaker situation and one is green and one is not, the green is going to win.” Yoder’s coworker, LEED-accredited building manager Jessica Warrior, sees it as a numbers game. “When you heat and cool an entire building with dated equipment, it’s just gobbling up energy,” Warrior says. As green energy sources and supplies become cheaper, more people will gravitate toward them, she contends.
Warrior says this is the beginning of a major shift in the commercial real estate market. “Over the next five to 10 years, it’s going to become a way of life. To have to meet these energy benchmarks with the city of Dallas, it’s huge.”
Like Warrior, Yoder is optimistic about the success of Dallas’ green building ordinance, given the positive response from the commercial buying and leasing sector so far. “I think it’s great that Dallas is taking on green building, especially given Texas’ energy reputation,” he says. “That’ll be a feather in our cap.”
If members of the Dallas business community embrace the city’s new, environmentally friendly image, Basora and her team may have a relatively easy time enforcing the green building ordinance. But it’s unclear what the response will be next year.
People at the city expect things to go smoothly—so long as word of the ordinance is disseminated effectively. “We want to make sure that there is information out there,” Basora says. “We’re developing tools for the build- ers so that they know what to expect when they come for a permit next October.”
Among those tools are training and other types of partnerships with The Real Estate Council, the American Institute of Architects, and the U.S. Green Building Council.
But, Dallas’ green revolution isn’t going to end there, by any means. After phase one goes into effect next fall, the city plans to roll out an even stiffer version of the green building ordinance in October 2011.
This article originally appeared in D CEO Magazine
December 2008 BY KRISTIANA HEAP / D CEO