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As corporate America seeks to control real estate costs during a time of economic crisis, are green buildings still relevant? I've just returned from participating in a panel at CoreNet's 2008 Global Summit in Orlando, which examined just that.
The panel was led expertly by Michael Jordan, national practice leader for energy and sustainability consulting at Jones Lang LaSalle, who created a lively dialogue between an audience of corporate real estate executives and Peter Miscovich, managing director for strategic consulting at Jones Lang LaSalle; green real estate consultant, author and thought leader Charles Lockwood; and me.
Our audience put some tough questions to our panel. While our audience was interested in and sympathetic to sustainability, they were equally concerned about dollar and value metrics, especially in a time of economic crisis. Here's what they wanted to know, along with summaries of some of the answers provided by members of our panel:
Q: What do current economic conditions mean for corporate real estate occupants?
A from all panelists: It's a buy-side opportunity for tenants -- the chance to lock in quality, green space at a more favorable price point than was available a year ago. Vacancy rates are increasing. Rents have flattened and are beginning to drop. It's a great time for corporate tenants to get into the market.
Q: How do corporations make sure that their green real estate strategies produce measurable benefits, especially when corporate space executives have to account for every penny?
A from Peter Miscovich: Many companies are discovering that they can reduce the square footage per employee from over 200 square feet to 150 square feet or less, with worker-friendly strategies such as telecommuting. Reduce overall space usage, but make it green. Green features help companies attract and maintain millennial workers, knowledge workers and others. Using less space, but making it green is a cost-effective strategy and a sustainable one.
Q: What can corporations do to be sustainable in their current space?
A from Charles Lockwood: Renovation offers tremendous opportunities, is cost effective, and will be the preferred way to go green during the economic crisis. You need to recarpet? Use a green carpet product. If you have to repave a parking lot, use porous pavement and save on stormwater management costs. Energy efficient lighting offers tremendous cost savings.
Q: How about greening space through LEED Commercial Interiors?
A from Leanne Tobias: Tenants can exert tremendous leverage during an economic downturn when negotiating a new lease or a lease renewal. These are the best times to approach a landlord about greening. The ease of using LEED Commercial Interiors will depend on the condition of the base building and the experience of the ownership or the tenant improvement team. It's easier to undertake LEED CI if the base building is green or if the ownership or design team and contractors have experience in green buildings.
The audience wanted to know whether green certification systems (LEED, Green Globes, BREEAM) added value to corporate real estate, or if they just added cost. The audience consensus: The certification systems might add value in communicating with shareholders on corporate social responsibility, or add value if the building is placed on the market. Absent these concerns, an uncertified green property might be appropriate.
The audience also was interested in incorporating green features into warehouse, distribution and manufacturing space. The message: Green is not only for office tenants. Our panel concurred, noting that global industrial REIT ProLogis has been a leader in green development.
The panel discussion on the final day of the summit provided further dimensions to a CoreNet-Jones Lang LaSalle survey released Monday about commercial real estate executives and their views on sustainability and green buildings.
Leanne Tobias heads Malachite LLC, a green real estate advisory firm serving developers, investors, building owners and lenders.
Phoenix Mortgage
http://www.washingtonmortgageaz.com/
Although we are in tough economic times. It is vital that large companies continue to think green.
Do we really need more buildings and more commuting?
Although I applaud the move to sustainable buildings, it still takes plenty of gasoline to get people to and from these green buildings. Nationally we should be pushing for more companies to offer telecommuting.
Many jobs do not require a "presence" per se in a building - except for the purpose of having their manager watch them The building industry is "biased" towards building - what we probably need is less buildings.
I'll give you an example. I recently spoke with an organization that moved their workers to a new office building. due to an increase in size The move cost a lot of money. Now their considering changing their computer systems to web-based so that they can telecommute more easily.
Had the organization considered telecommuting instead of moving, they could have probably paid for their systems upgrade with the money they saved moving.
In fact, many organizations could probably dump most of their office space if they offered workers a telecommuting option. A telecommuting option would be so attractive to most workers that they would probably work for less money if they could stay home - the savings in gas, time and "work clothes" would easily offset slightly lower pay.
To me, telecommuting is far more environmentally responsible than building yet more office space. Not to say these companies shove people in "cubes" that look like demeaning cattle pens.
So I'm all for new buildings being green - but do we really need more buildings here in America? With more highways and more SUV's transporting people away from the homes and families to these monoliths of power and control? Just so their bosses can watch them?
Already many workers are working from home. Their using email, Skype, VOIP, conferencing software. I regularly hold meetings from my home that span the globe. Most of these people I've never met. Most days I never drive - not even to a green building.