Sustainable Strategies for Market Advantage and Community Benefit
An interview with real estate developer Hamilton Hazlehurst.
BetterBricks asked developer Hamilton Hazlehurst, real estate development manager for Vulcan in Seattle, to share his opinions on the state of commercial development and sustainability. An architect by training, he has spent the last 20 years in commercial development and for a long time has been interested in buildings that maximize resource conservation. He is the developer of Vulcan’s complex commercial projects in South Lake Union.
BetterBricks: What helped you to become a believer in sustainable high performance buildings?
Hamilton: When I first heard about the USGBC LEED™ program about five years ago while working as a Development Manager at Wright Runstad & Co., I was impressed with the way LEED provided a framework for a broad approach to sustainable design and a means of measuring success. I explored the possibility of getting a LEED certification in 2000 on a large campus type office development in an urban redevelopment in Seattle. This project was shelved due to a dramatic downturn in the office market.
When I arrived at Vulcan in 2001, my interest in sustainability peaked because the company held it as a core value. Vulcan’s development philosophy is based on a “Triple Bottom Line” model and success is measured by three principles:
The guide was intended to both inform Vulcan as to how to do sustainable development and to promote cost-effective and repeatable, environmentally sensitive urban development. It was a goal that the guide be used by the speculative development sector to inform their work because sustainability can be shown to be good business. For this reason, solutions proposed in the guide had to be not only repeatable but also make market sense.
BetterBricks: What holds you and Vulcan back from doing all that you would like, in terms of sustainable buildings?
Hamilton: Using LEED as a framework, Vulcan is committed to exploring and implementing a sustainable plan for each of our future developments. We also encourage our tenants to pursue sustainable practices.
Like other developers, Vulcan is sometimes constrained in what strategies we are able to include in our sustainable plans by the relatively high first cost and long payback periods which may be associated with them. However, some strategies, such as intensive vegetative roofs and the use of certified wood, have no conventional payback but may have strong environmental, qualitative or marketing benefits that are attractive to us.
Where no conventional payback exists, strategies that have general environmental benefits may need local government or utility support (in the form of entitlement bonuses or direct incentives) to encourage implementation.
We believe many sustainable strategies will in fact distinguish us in our market and make us more competitive. For instance, we believe strategies that conserve energy and reduce water consumption will be attractive either to tenants in a competitive triple-net market (where tenants pay for these costs directly as pass-through expenses), or to landlords in gross markets where operating costs are factored into the base rent and their bottom lines can benefit directly from savings.
On the other hand, landlords in a triple-net market who pursue these strategies must be convinced that they will get a rent premium, experience an earlier lease-up or achieve sufficient long-term value for their investment.
BetterBricks: What do you consider to be the primary benefits of sustainable buildings from a business perspective?
Hamilton: The primary driver in the development market is achieving an acceptable return on investment commensurate with the risk. A case can be made that sustainable buildings will not only support but enhance those returns.
Development of sustainable buildings is good business because:
Hamilton: There is no good reason not to pursue development of these types of buildings, particularly in light of the benefits outlined above. These types of buildings are no longer “bleeding edge.” In fact, in the Cascadia Region they are rapidly becoming a market expectation.
Since sustainable buildings and practices are becoming more main-stream, the design community is becoming far more knowledgeable about strategies and technologies. Plus, sustainability is becoming more integral to the design process.
Similarly, there is a rapidly growing source of building materials that meet sustainable criteria and which have high levels of recycled content or are comprised of components that are more recyclable.
Contractors are also becoming more knowledgeable about sustainable construction practices and welcome it. For instance, because of the high level of recycling that occurs in the Seattle area, it is more costly in most cases to not recycle construction waste.
BetterBricks: Which of your projects do you consider the most advanced in terms of sustainability?
Hamilton: We have completed two buildings which will become LEED certified, and are about to start construction on our third LEED building. Our two completed projects include the SBRI Building, a 113,000 SF life sciences laboratory facility which is expected to achieve a LEED Silver rating for its Core and Shell, and the Alcyone, a 160-unit apartment project that will be LEED Certified and may achieve a Silver rating.
Both projects incorporate a variety of sustainable strategies that include conservation of potable water and energy, recycling construction waste, improved indoor air quality both during construction and operation of the facility, rainwater retention and re-use, reflective roofing materials, recyclable products, low toxicity interior finishes, provisions for Flexcar parking, and building systems which are expected to reduce energy use by 20 percent to 30 percent more than ASHRAE standards
Our most advanced sustainable building is 223 Yale, a 360,000 SF mixed-use development of which 85,000 SF is pre-leased to NBBJ for their world headquarters. The project also includes some additional office, retail, and about 180 units of housing.
Vulcan and PEMCO (the development partners) and the major tenant, NBBJ, are committed to fully integrate sustainable attributes. These will likely include increased daylighting, significant reliance on fresh air through operable windows, a number of green rooftops, re-use of rainwater as both a heat-sink and irrigation at the rooftops, low energy and water consumption fixtures and appliances, and environmentally sensitive building materials.
We believe that mixed-use projects such as 223 Yale inherently have a higher level of sustainability potential because they provide places where people can both live and work, thus providing an option for people to use their cars less.
BetterBricks: What is your perception of green building in Europe?
Hamilton: Several area developers, including Vulcan, recently attended a week long trip to Malmo, Sweden and Copenhagen, Denmark to look at sustainable practices in these areas. The group was inspired by what it observed and I expect that those developers new to sustainability will include it in future projects.
My perception is that Europe is well ahead of the U.S. in the implementation of green building strategies. Many European countries have recognized the important benefits to worker health and comfort of access to controlled daylight and natural ventilation. They have developed strict minimum standards for new buildings to provide access to both.
Europe has a long history of constructing buildings for use over periods of hundreds of years as compared to 30-50 year life-spans for most buildings in the US. Europeans have traditionally built buildings that are intended to be passed down from generation to generation. For centuries, Europeans have experienced scarcities in resources and have responded with great attention to conservation. An excellent example of a response to scarcity of resources is Denmark’s development over the years of a comprehensive, highly efficient distributed energy network which enables them to retrieve energy and heat from straw, waste materials and geothermal resources, as well as natural gas. Many of these fuels are consumed in high efficiency combined heat and power (CHP) plants.
My trip to Sweden/Denmark this past spring was a particularly valuable opportunity to see how other people are doing sustainable development. This trip was very inspirational for all of its attendees which included architects, engineers, general contractors and developers from our region, and has provided the opportunity to get others in our community excited about sustainable building and the reasons for pursuing it.
BetterBricks: What will it take for the mainstream in the US to deliver sustainable buildings?
Hamilton: A primary driver of the commercial development market is the demands of tenants. While interest in sustainability in buildings appears to be growing, its benefits are still not widely understood. Developing measurable proof that the productivity of occupants of sustainable buildings is enhanced as compared to conventional buildings has sometimes been referred to as the “Holy Grail” of the sustainability movement. There is a growing body of evidence being developed which suggests that this is indeed the case.
Productivity increases can be easily quantified to demonstrate cost benefits which far exceed the cost of including sustainable strategies in a building. This productivity benefit, once demonstrated, will become the primary driver of market demand for sustainable buildings.
The rising cost of energy and shortage in building materials that we are even now experiencing as a result of development and material consumption in China and elsewhere in Asia, will force us to become more aware of the need for conservation of scarce natural resources.
BetterBricks: What (or whom) do you look to for guidance, inspiration, examples?
Hamilton: We look for good ideas any place that we can find them! As leaders in sustainable development, we are exposed to a lot of innovative ideas and we are very receptive to them. People are doing inspiring work on sustainable building up and down the Cascadia Region, from Vancouver, B.C. to Portland.
There remains a great need for education about the benefits and technologies associated with designing and constructing sustainable buildings. Vulcan supports development of the Puget Sound Sustainable Development Center to fill this need. For inspiration one only needs to look to the remarkable qualities of our regional environment and consider how to conserve and even improve the availability of these assets for future generations.
---------
This article has been reprinted courtesy of BetterBricks, a project of the Northwest Energy Efficiency Alliance. It was first published in June 2004.
BetterBricks: What helped you to become a believer in sustainable high performance buildings?
Hamilton: When I first heard about the USGBC LEED™ program about five years ago while working as a Development Manager at Wright Runstad & Co., I was impressed with the way LEED provided a framework for a broad approach to sustainable design and a means of measuring success. I explored the possibility of getting a LEED certification in 2000 on a large campus type office development in an urban redevelopment in Seattle. This project was shelved due to a dramatic downturn in the office market.
When I arrived at Vulcan in 2001, my interest in sustainability peaked because the company held it as a core value. Vulcan’s development philosophy is based on a “Triple Bottom Line” model and success is measured by three principles:
- Generating a market return on our capital investments.
- Making a positive impact on the community through quality development and design.
- Respecting the environment through sustainable development that conserves natural resources and creates healthy places to live and work.
The guide was intended to both inform Vulcan as to how to do sustainable development and to promote cost-effective and repeatable, environmentally sensitive urban development. It was a goal that the guide be used by the speculative development sector to inform their work because sustainability can be shown to be good business. For this reason, solutions proposed in the guide had to be not only repeatable but also make market sense.
BetterBricks: What holds you and Vulcan back from doing all that you would like, in terms of sustainable buildings?
Hamilton: Using LEED as a framework, Vulcan is committed to exploring and implementing a sustainable plan for each of our future developments. We also encourage our tenants to pursue sustainable practices.
Like other developers, Vulcan is sometimes constrained in what strategies we are able to include in our sustainable plans by the relatively high first cost and long payback periods which may be associated with them. However, some strategies, such as intensive vegetative roofs and the use of certified wood, have no conventional payback but may have strong environmental, qualitative or marketing benefits that are attractive to us.
Where no conventional payback exists, strategies that have general environmental benefits may need local government or utility support (in the form of entitlement bonuses or direct incentives) to encourage implementation.
We believe many sustainable strategies will in fact distinguish us in our market and make us more competitive. For instance, we believe strategies that conserve energy and reduce water consumption will be attractive either to tenants in a competitive triple-net market (where tenants pay for these costs directly as pass-through expenses), or to landlords in gross markets where operating costs are factored into the base rent and their bottom lines can benefit directly from savings.
On the other hand, landlords in a triple-net market who pursue these strategies must be convinced that they will get a rent premium, experience an earlier lease-up or achieve sufficient long-term value for their investment.
BetterBricks: What do you consider to be the primary benefits of sustainable buildings from a business perspective?
Hamilton: The primary driver in the development market is achieving an acceptable return on investment commensurate with the risk. A case can be made that sustainable buildings will not only support but enhance those returns.
Development of sustainable buildings is good business because:
- These buildings typically include efficient mechanical and electrical systems that cost less to operate.
- They provide a healthy and more comfortable environment where people can perform more productively than in conventional buildings.
- Businesses occupying these types of buildings are finding them to be a significant tool for recruiting and retaining employees.
- Healthy buildings reduce liability and legal claims.
- Property values may increase because sustainable buildings will have above average occupancy rates and are easier to maintain.
- Sustainable buildings may command premium pricing and present a more competitive property.
- A sustainable building tends to align with community values. It is one of the most tangible expressions by a company of its commitment to the environment and community.
- A sustainable building can serve as an effective tool to educate tenants, employees and shareholders about corporate values and sustainability.
- Inherent to designing a sustainable building is using best practices. This yields more predictable results. Design also involves a more disciplined and integrated approach and enhances the quality of the final product.
Hamilton: There is no good reason not to pursue development of these types of buildings, particularly in light of the benefits outlined above. These types of buildings are no longer “bleeding edge.” In fact, in the Cascadia Region they are rapidly becoming a market expectation.
Since sustainable buildings and practices are becoming more main-stream, the design community is becoming far more knowledgeable about strategies and technologies. Plus, sustainability is becoming more integral to the design process.
Similarly, there is a rapidly growing source of building materials that meet sustainable criteria and which have high levels of recycled content or are comprised of components that are more recyclable.
Contractors are also becoming more knowledgeable about sustainable construction practices and welcome it. For instance, because of the high level of recycling that occurs in the Seattle area, it is more costly in most cases to not recycle construction waste.
BetterBricks: Which of your projects do you consider the most advanced in terms of sustainability?
Hamilton: We have completed two buildings which will become LEED certified, and are about to start construction on our third LEED building. Our two completed projects include the SBRI Building, a 113,000 SF life sciences laboratory facility which is expected to achieve a LEED Silver rating for its Core and Shell, and the Alcyone, a 160-unit apartment project that will be LEED Certified and may achieve a Silver rating.
Both projects incorporate a variety of sustainable strategies that include conservation of potable water and energy, recycling construction waste, improved indoor air quality both during construction and operation of the facility, rainwater retention and re-use, reflective roofing materials, recyclable products, low toxicity interior finishes, provisions for Flexcar parking, and building systems which are expected to reduce energy use by 20 percent to 30 percent more than ASHRAE standards
Our most advanced sustainable building is 223 Yale, a 360,000 SF mixed-use development of which 85,000 SF is pre-leased to NBBJ for their world headquarters. The project also includes some additional office, retail, and about 180 units of housing.
Vulcan and PEMCO (the development partners) and the major tenant, NBBJ, are committed to fully integrate sustainable attributes. These will likely include increased daylighting, significant reliance on fresh air through operable windows, a number of green rooftops, re-use of rainwater as both a heat-sink and irrigation at the rooftops, low energy and water consumption fixtures and appliances, and environmentally sensitive building materials.
We believe that mixed-use projects such as 223 Yale inherently have a higher level of sustainability potential because they provide places where people can both live and work, thus providing an option for people to use their cars less.
BetterBricks: What is your perception of green building in Europe?
Hamilton: Several area developers, including Vulcan, recently attended a week long trip to Malmo, Sweden and Copenhagen, Denmark to look at sustainable practices in these areas. The group was inspired by what it observed and I expect that those developers new to sustainability will include it in future projects.
My perception is that Europe is well ahead of the U.S. in the implementation of green building strategies. Many European countries have recognized the important benefits to worker health and comfort of access to controlled daylight and natural ventilation. They have developed strict minimum standards for new buildings to provide access to both.
Europe has a long history of constructing buildings for use over periods of hundreds of years as compared to 30-50 year life-spans for most buildings in the US. Europeans have traditionally built buildings that are intended to be passed down from generation to generation. For centuries, Europeans have experienced scarcities in resources and have responded with great attention to conservation. An excellent example of a response to scarcity of resources is Denmark’s development over the years of a comprehensive, highly efficient distributed energy network which enables them to retrieve energy and heat from straw, waste materials and geothermal resources, as well as natural gas. Many of these fuels are consumed in high efficiency combined heat and power (CHP) plants.
My trip to Sweden/Denmark this past spring was a particularly valuable opportunity to see how other people are doing sustainable development. This trip was very inspirational for all of its attendees which included architects, engineers, general contractors and developers from our region, and has provided the opportunity to get others in our community excited about sustainable building and the reasons for pursuing it.
BetterBricks: What will it take for the mainstream in the US to deliver sustainable buildings?
Hamilton: A primary driver of the commercial development market is the demands of tenants. While interest in sustainability in buildings appears to be growing, its benefits are still not widely understood. Developing measurable proof that the productivity of occupants of sustainable buildings is enhanced as compared to conventional buildings has sometimes been referred to as the “Holy Grail” of the sustainability movement. There is a growing body of evidence being developed which suggests that this is indeed the case.
Productivity increases can be easily quantified to demonstrate cost benefits which far exceed the cost of including sustainable strategies in a building. This productivity benefit, once demonstrated, will become the primary driver of market demand for sustainable buildings.
The rising cost of energy and shortage in building materials that we are even now experiencing as a result of development and material consumption in China and elsewhere in Asia, will force us to become more aware of the need for conservation of scarce natural resources.
BetterBricks: What (or whom) do you look to for guidance, inspiration, examples?
Hamilton: We look for good ideas any place that we can find them! As leaders in sustainable development, we are exposed to a lot of innovative ideas and we are very receptive to them. People are doing inspiring work on sustainable building up and down the Cascadia Region, from Vancouver, B.C. to Portland.
There remains a great need for education about the benefits and technologies associated with designing and constructing sustainable buildings. Vulcan supports development of the Puget Sound Sustainable Development Center to fill this need. For inspiration one only needs to look to the remarkable qualities of our regional environment and consider how to conserve and even improve the availability of these assets for future generations.
---------
This article has been reprinted courtesy of BetterBricks, a project of the Northwest Energy Efficiency Alliance. It was first published in June 2004.