FEATURE ARTICLE, OCTOBER 2007

THE GREEN EFFECT
Environmentally friendly construction can save money, but for whom?
Mark Fairbrother and Donna Becco

Going green means saving green — contrary to what many real estate professionals have historically believed. When implemented properly, many features that make up a “green building” can deliver significant savings in the areas of reduced operating costs and reduced up-front cost while over time directly improving cash flow by becoming a significant factor in tenant attraction and retention. Sound counter-intuitive?  It should – but it won’t for long. Historically, commercial real estate decision-makers have frequently commented on what a great idea ‘going green’ was – but who in the world was going to pay for it?  As it turns out, they were asking the wrong question. The right question is, who is going to profit from all the savings — and how can that be me? Green (issues of sustainability) design goals for thermal comfort, indoor air quality, access to daylight, long-term durability, and more, can be improved upon and provide an alternative vision for the built environment, as long as we better understand the value related to short term expenditure.

Green design features can contribute to cost savings on both a short- and long-term basis.  In the short-run, the reduction of operating costs can benefit the owner of the building (and thus the tenants) from the day the property opens its doors. Long-term profitability can be enhanced by green features having a positive effect on tenant attraction and retention — as well as playing a role in keeping operating costs reasonable as the building ages, and reducing the cost of tenant turnover. Because there is a historical perception that building green is more expensive than constructing a property with no regard to environmental responsibility, many people are pleasantly surprised to find out that even small green design choices can lower up-front construction costs. When you aggregate certain up-front cost reductions with ongoing operating efficiencies and a positive tenant attraction and retention factor – the savings add up to make a significant impact on the profitability of a property.

Operating costs are perhaps the most intuitive aspect of environmentally responsible design that impact profitability. In a green building, the architect and interior designers are encouraged to take a strategic, systems-based approach as they create the building’s plans.  The design team must ask itself, what systems could be made more efficient or environmentally friendly? Beyond that, the owner should ask the architect if he has considered all the ways the buildings systems can use new technologies (many coming to real estate from the aerospace industry) to lower operating costs. Typically, these efficiencies will be found by installing specialized lighting systems, HVAC controls and electrical systems. By reducing the amount of power that is necessary to operate the building, the building’s owner not only earns points toward LEED certification, but also realizes direct savings on the utility bills. Water systems are also a clear area of opportunity for saving money and becoming more efficient in the use of natural resources. Features such as green roofs and specialized storm water runoff systems that use rainwater for the operation of the building’s plumbing (toilets, in particular) can significantly impact the water bill.

Base building construction material choices specifically can have a direct impact on heating and cooling bills. By assessing the overall systemic thermal envelope of the building, the architect can help the developer and future owners to inherently lower these bills from day one. The decision to install high performance glass systems has the most immediate material impact on a property’s utility bills. The insulation value of the glass is important, as well as its ability to block ultraviolet radiation.  By implementing various methods of solar protection, overheating is prevented, and glare is controlled. Reducing the amount of direct sunlight hitting the glass also helps; if the glass has less ultraviolet radiation to block to begin with, it will certainly help the cooling bills to remain low. Developers and architects can impact this most significantly by considering the building’s orientation on its site, and optimizing the building façade. Whenever possible, the building should be elongated east-to-west, so the sunlight that reaches the windows is as indirect as possible. While some sites allow for this and others do not, if possible, it’s a simple way to kill two birds with one stone, earning LEED points and reducing operating costs at the same time.

Tenant attraction and retention is less quantifiable than operating costs at the outset, but many real estate professionals expect that to change as tenant demand for LEED-certified buildings increases. As corporations include LEED certification as a direct factor in their site selection criteria, the advantage that those buildings carry over non-certified buildings will become more tangible with each competition. Foram Group, the developers of Brickell Financial Centre in Miami, are among today’s developers who recognize the advantage that LEED-certified buildings will have in the not-so-distant future. The RTKL-designed 601,000-square-foot office tower, currently under construction, was designed for tenant demands of ten years from now – including silver level LEED pre-certification.  When completed, it will be one of Florida’s largest LEED-certified office buildings.  According to Loretta H. Cockrum, Chairman and CEO of Foram Group, ‘’I wish it was a noble cause, but building green was really a business decision. We didn’t want to find ourselves 10 years from now with a building that was competing with all new buildings that would all be LEED-certified.’’

Beyond LEED certification, there are other “green” factors that impact tenant attraction and retention. Many of them fall into the “little things that make a big difference” category. For example, designing the site with an on-site recycling center provides a convenient service to office workers, earns the building LEED points, and can be considered one of the perks that keeps tenants happy. 

When designing with an eye on tenant satisfaction, it is important to maintain a strong commitment to sustainability using passive means. That is, by considering interior and building form and how it can influence and modify the environment within. The building should provide a stimulating physical environment for their users. To achieve this, several factors should be considered. First, systems should be designed and constructed to ensure maximum ventilation and air freshness, and plenty of natural light should be utilized, balanced with artificial lighting where and when necessary. Natural light makes an important contribution to the building’s environment, not only by replacing electrical energy, but also by increasing the well-being of the users and the aesthetics and feeling of the building. It is therefore important that we maximize its use. For around 80 percent of working hours, available diffuse daylight is at least 7,000 lux. If you aim for a daylight factor of 5 percent, then lights could be off for 80 percent of the time.

The ultimate goal is to improve the building envelope while developing passive solar strategies to improve comfort and reduce energy demands; then optimize the energy efficiency of HVAC systems. The key to understanding building performance as a whole is to understand and maximize integration among the various building systems. This way, by reducing overall building loads, you can reduce not only the operational costs but also the first capital costs.

Other features of green design that can directly impact tenant satisfaction include an increased amount of user control of systems (tenant ability to set temperature, lighting and other systems), as well as the design of good acoustic conditions.

The U.S. Green Building Council offers hundreds of suggestions regarding how to make a building environmentally friendly, and many of these features and actions can positively impact property profitability. We have tried to cover some of the large-ticket items, but please note that the features discussed here are the tip of the iceberg. For more detailed consideration of how your organization can increase profits by implementing green design, talk to your architect and consult the U.S. Green Building Council.

We leave you with a warning: once you begin to consider the profitability potential lying beneath environmentally responsible architecture, you may never look at a pro-forma the same again. But your bottom line may begin to look significantly more attractive, to your shareholders as well as your local environmentalist.

Marc Fairbrother, a base building architect, and Donna Becco Schroeder, an interiors architect, are both principals of RTKL International. RTKL is the lead architect of Brickell Financial Centre, an office/mixed-use complex under construction in downtown Miami that will include Florida’s largest LEED-certified office building when completed.


©2007 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.