While the real estate economy faltered between late 2008 and early 2009, I was writing a book about building retrofits, the sector of the property market that will likely bring us through and out of the downturn. The result, "Retrofitting Office Buildings to be Green and Energy-Efficient," was published recently by the Urban Land Institute.
My friend Jim Boyle, CEO of the Sustainability Roundtable, asked me a great question upon the book's completion: "What surprised you?" Here are the lessons that surprised me -- many of which will be explored in depth at the Commercial Building Retrofit conference that ULI and I are hosting on Thursday, January 21, in San Francisco:
1. Green building retrofits are truly global. My book tracks retrofit case studies from the U.S., Canada, the European Union, Asia and Australia. Green certification protocols are going global, too. BREEAM and LEED are used worldwide, and green certification systems are popping up everywhere from the Middle East to South Africa, to Mexico. to Asia Pacific. A common international language on sustainable properties and protocols is being forged. Our look at office retrofits around the globe showed that similar approaches can be used in diverse locations.
2. Energy efficient and sustainable retrofits can be remarkably cost-effective. A number of the case studies profiled in the book achieved payback in a year or less, and an early sample of U.S. LEED-certified retrofits showed average paybacks of approximately 17 months, with an average cost per square foot of just $.21. This sample is small, but I'm hearing that other portfolio owners are attaining similar results-at least as long as the lowest-hanging fruit is still available for harvest. (As Scott Muldavin of the Green Building Finance Consortium notes, subsequent-more difficult- retrofit projects may have somewhat lower returns.)
3. Many of the retrofit approaches with the best paybacks are the simplest. A few of the readily implemented, low-cost ways to reduce building energy use include such approaches as operational changes, lighting retrofits, and replacing constant speed drives with variable speed drives on major mechanical equipment. These types of changes are not technologically advanced, but they are extremely cost-effective. The key point: energy-efficiency can be simple (although it does require careful attention to planning and maintenance). The January 21 conference will take a look at several office and multi-family retrofit case studies, including the LEED retrofit of the famed Transamerica Building, and pinpoint which approaches were the most fruitful.
4. There are also some fascinating technological advances being introduced to the building energy-efficiency market. Among them: smart meters and smart grid systems, which use wireless technology to monitor and optimize energy use in real time; heat management paints that shield exteriors from heat absorption; and the use of nanotechnology to produce next-generation insulating materials. We'll explore this topic further will a panel at the January 21 San Francisco event.
5. One of the most intriguing trends is the extensive use of passive heating and cooling to minimize reliance on mechanical systems. Passive heating and cooling approaches include the use of natural ventilation, the uncovering of thermal mass (exposing walls and underfloor slabs), and the use of vents or chimneys to regulate interior temperatures. "Retrofitting Office Buildings to be Green and Energy-Efficient" documents the use of passive heating and cooling in diverse locations, including Michigan, Seattle, Frankfurt, Singapore, Canberra, Australia and Zimbabwe. Historic structures are often particularly well-suited to the use of passive heating and cooling.
6. Next on the horizon? Net-zero energy buildings-structures that consume no more energy than they produce on an annual basis. The first net-zero retrofits are being completed. One of the earliest, the Integrated Design Associates (IDeAs) headquarters in San Jose, will be highlighted at our January 21 conference.
Leanne Tobias is founder and managing principal of Malachite LLC, an advisory firm that specializes in the development, leasing, management, financing and certification of sustainable or green real estate on a global basis. Write to Leanne about your thoughts on trends for 2010 or ways to jumpstart the economy at greenstimulus@malachitellc.com. She'll share the best ideas in future posts.
