When launching any sort of upgrade or retrofit project, financial concerns are always top of mind, and that’s no less true for LEED certification, which can be time-consuming and expensive. While there are clear potential benefits to the certification, both financial — higher occupancy rates, higher rents, lower operating costs — and non-financial — less environmental impact, meeting overall sustainability goals, compliance with local standards — cost is always a concern, even as terms like green, sustainability and LEED become more well known.
“The language of sustainability is more common, but the financial motivators — they’re still the same financial metrics they’ve always been,” says Chrissa Pagitsas, director, property conditions and environmental risk, multifamily risk, Fannie Mae, which is involved in a large-scale project pursuing LEED-EBOM certification in multifamily housing. (See link on page 37.) “It’s still going to come down to a cost-benefit analysis, and (sustainability) doesn’t always win, because sometimes the metrics to measure the benefits aren’t there.”
In the effort to sell LEED-EBOM, it does help that the commercial real estate market is becoming more knowledgeable about sustainability, says Allan Skodowski, managing senior vice president/director of sustainability, Transwestern, and chairman of the board of directors, U.S. Green Building Council. Greater understanding makes it easier to define just how sustainability fits into the overall evaluation of a building, its worth, and what it can offer to both tenants and owners. But, again, cost is often still king.
“In a fair number of cases, it ultimately comes down to marketing: What is my competition doing?” Skodowski says.
Of course, cost is only one side of the financial equation. The other is comparing that cost to the savings and the payback you expect from the project.
As an example, SL Green has invested more than $10 million in various infrastructure projects since 2009. But, according to Black, the company is saving about $3.2 million in reduced energy spending every year, which made the projects no-brainers, even if they weren’t something that could be sold to tenants as solid corporate citizenship.
“The important part for us is saying ‘Look, we’re here to help meet and exceed those expectations'” of sustainability and environmental stewardship, he says. “But at the same time, we see this as a core business tool for us.”
Sheehy points out that when it comes down to it, the ultimate goal for those who own and operate multi-tenant buildings is to keep those buildings full. After all, it’s hard to save money on energy efficiency projects if the building is sitting empty.
“I will never sacrifice performance for sustainability, because at the end of the day, if these tenants are unhappy, LEED, or sustainability, means nothing,” he says. “If the building doesn’t perform, the owners don’t care about LEED.
“I don’t hug the tree coming in. I’m not wearing Birkenstocks through the building. My goal here is to come in, save water, save energy, reduce the waste, and make the indoor air quality better, and that’s what we focus on. We can do that without sacrificing any comfort to the tenants.”
One other way to approach the financial argument is to look for low-cost and no-cost solutions that you can pitch to tenants or owners. Some of Madrid’s tenants, realizing they were never going to remember to turn off the lights, bought inexpensive, 12-hour timers to shut the lights off, thereby saving themselves money while making it easier for Madrid and her team to meet their sustainability goals. A $40 timer, says Madrid, made a “huge” difference.
Article by: Casey Laughman, Managing Editor- http://www.facilitiesnet.com/