LEEDing the Way: The Green Movement and Sustainability

I had the pleasure of attending an event put on by The George Washington University’s Luther Rice Society’s Real Estate Alliance on the subject of sustainability. The panelists included Mitchell Schear, President of Vornado and Meghan Chapple-Brown, Director of GW’s Office of Sustainability. The discussion was moderated by Jonathan Schein of Schein Media. Mitchell and Jonathan are GW alum.

I attended the event for a few reasons. First, having earned my B.B.A. and M.B.A. from GW, I find enjoyment in attending University sponsored events. These events allow me to remain tied to the school and to meet new and interesting people. Second, there are two hot topics of conversation these days – the economy and the green movement. Since I work in a profession that deals with the economy, I thought it would be a great learning experience to find out what it means to be “green” by experts in the field.

Let me start by saying I’m for doing good for the environment, after all, I like breathing clean air and all of that stuff, but I realize there is a big financial cost related to sustainability issues. I can hear my readers telling me that everything that can be counted doesn’t always count and what counts can’t always be counted. However, you try and build a project and get a return on investment with the added cost of obtaining LEED status.

Meghan was extremely enthusiastic and knowledgeable about this field, having worked on similar matters for the last 15 years. Mitchell indicated this subject matter has really become a business issue from his perspective during the last two years.

Some takeaways:

 Some tenants will begin requiring LEED certification in buildings when renewing leases or moving to new locations. Therefore, if your building isn’t LEED certified, it may be obsolete. We’re not at this point yet.
 Some tenants do not care about LEED certification at all. A number of law firms have clients that increase the carbon footprint; therefore, being able to say you work in a LEED building will not be a selling point. Recognize, rent per square foot for a LEED building will be more than just a plain old building. Will tenants pay this cost?
 As years ago landlords didn’t want to pay for sprinkler systems in buildings due to the cost, it is now a requirement and no one would consider a building without a sprinkler system. It was predicted that years from now the same will be said about LEED certification.
 Young people think more about sustainability than older people. They are the group who are learning the most about these issues. Whereas years ago people had to be trained to think about diversity in the workforce, it is now a common occurrence and part of the fabric of doing business and being an upstanding person. The tides are changing towards LEED certification and sustainability, but we’re not 100% there yet.

This issue is big and growing. Will sustainability be the norm one day and the costs associated with it merely be part of the budget, with commensurate returns shown on the rent per square foot side, or will I still walk into meetings and have the CEO demand to know how much this extra cost will be and how it will affect returns? Maximizing stockholder wealth is the objective of a public company. It will be interesting to see how this issue plays out over the next 5, 10 and 20 years.

Thoughts and comments are welcome.

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2 Responses to “LEEDing the Way: The Green Movement and Sustainability”

  1. q Says:

    i have heard (i have not investigated this in detail) that LEED certified buildings are not any more energy efficient than their peers and in fact may use more energy.

    energy efficiency is a good goal to have, but is there proof that LEED is a good standard to follow?

    http://www.seattlepi.com/local/231282_energyuse05.html

    http://www.energysavingscience.com/articles/henrysarticles/BuildingRatingSystems.pdf?attredirects=0

    http://www.marginalrevolution.com/marginalrevolution/2008/12/obamas-fiscal-s/comments/page/2/ (see comments)

  2. Pablo Serna, LEED AP Says:

    Hello,

    Came across this blog while researching some small business loans. I read through some of the links provided by the previous poster and have just a few comments to add to the discussion:

    1. I actually assist architects and engineers with LEED certification and I can say that the projects which I have been a part of were indeed more energy efficient than the baseline models we used for comparison calculations. A baseline model would typically be a standard construction type equivalent in size and scope. For instance window openings (baseline calls for double pane glazing, LEED calls for insulated glazing in complete shade). Big difference there, certainly some costs, but if combined with other aspects of the project, exterior egress, rainwater collection system, the cost are not as significant and the payback is better.

    2. LEED has its warts, for instance, up until the most recent changes, a bike rack was worth as much as certified wood credits. Obviously the bike rack cost less, so most owners skipped the more environmentally important credits. With the latest changes to LEED (version 3) regional credits will be rewarded at a higher rate. For instance, living in the south (as I do) water is a premium and water efficiency strategies will yield a higher amount than in the Northern climates where previous ratings systems had them equal for all climate zones.

    3. LEED will likely be the standard for the future. It took awhile for us to have nutrition labels to assist parents in comparing healthy foods from not so healthy foods. What drove that eventual process was health costs and a growing waistline in the USA. What I believe will drive a “energy label” for buildings will be the soaring cost of energy and the limited natural resources (water in particular). Put all that together and a growing, loger-life expectancy population and we WILL have to do something about saving energy in every facet of life (cars, mass transit and buildings).

    I saw the writing on the wall 10 years ago and have been positioning myself to become a green building professional (LEED is one of several rating systems in Texas). If I had to leave you with a pearl of wisdom, it is this: if you want to see the latest example of future renewable/green energy technologies, look to third world countries. They seem to do more with less. We (me included) have gotten spoiled with the abundance of our lifestyles.

    +pablo

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