The Russo Report: Sustainable Building Beats Recession
Green building is not recession-proof, but its roots appear to run deeper than the current economic downturn can reach.
Green building is not recession-proof, but its roots appear to run deeper than the current economic downturn can reach.
For contractors and developers who have adopted sustainability as a core value, LEED level construction remains mission critical, particularly in Class A work. Even for companies who are less committed, green building has simply become too pervasive to ignore.
“Any developer today building at less than the LEED Silver level is installing products that are already obsolete,” says Marnie Abramson, principal of The Tower Companies. “In many jurisdictions, it’s almost impossible to develop commercial or residential space that doesn’t meet the minimum requirements of LEED.”
A three-generation family-owned business, The Tower Companies is based in Rockville, Md., and was an early proponent of green building, pioneering new concepts such as wind power. The Tower Companies built The Blairs, America's first LEED-certified apartments in Silver Spring, Md.
While Abramson is not advocating that all buildings should be LEED certified, she worries about the financial viability of Class A properties that don’t meet minimum LEED requirements.
“I've been hearing very similar stories from other developers,” says Dr. James L. Hoff, DBA, president of TEGNOS Research Inc. Carmel, Ind. “The motivations are more one of fear: If you don't build Class A space ‘green,’ it will quickly become a Class B or C space.”
The biggest challenge for developers right now is determining the best way to generate on-site energy for new developments. The Blairs project was unique in that it used energy produced at a wind farm, but these facilities are rarely co-located with the development.
Recently, the company considered building a structured parking lot featuring two acres of photovoltaic (PV) solar panels on an upcoming LEED Platinum level office building. However, in the development’s mid-Atlantic location, the solar system would only have generated 10 percent of the complex’s power needs, with a lengthy 99-year payback.
“What we really need to see is larger tax incentives for the private sector,” says Abramson. “There is a huge opportunity here. But these write-offs need to be made more available to help developers with the larger infrastructure investments we need to make.”
With the advent of investment funds funded on green buildings, green mortgage backed securities and the new Dow Jones Sustainability Index, developers are taking sustainability seriously - even in a down economy.
“There is now quantitative evidence that green buildings are more valuable, while conventional buildings are at risk of accelerated obsolescence and devaluation,” says Leanne Tobias, founder and principal of Malachite LLC in Bethesda, Md.
For Cushman & Wakefield, a recent initiative to retrofit 64 buildings to LEED Platinum standards actually made the company money. According to the Green Building Council, the company spent an average of $1.64 million on each retrofit and received almost $400,000 in rebates. Each building yielded an average of $1.2 million in annual energy and maintenance savings, all on a 10-month payback cycle with a ROI of 121 percent.
“This is not a new conversation, and there are no more excuses for anyone to ignore sustainable design,” says Abramson. “If they do, their properties will be ‘dinged’ down the line. You just can’t compete anymore without a green and sustainable strategy.”
Green building is not recession-proof, but its roots appear to run deeper than the current economic downturn can reach.
For contractors and developers who have adopted sustainability as a core value, LEED level construction remains mission critical, particularly in Class A work. Even for companies who are less committed, green building has simply become too pervasive to ignore.
“Any developer today building at less than the LEED Silver level is installing products that are already obsolete,” says Marnie Abramson, principal of The Tower Companies. “In many jurisdictions, it’s almost impossible to develop commercial or residential space that doesn’t meet the minimum requirements of LEED.”
A three-generation family-owned business, The Tower Companies is based in Rockville, Md., and was an early proponent of green building, pioneering new concepts such as wind power. The Tower Companies built The Blairs, America's first LEED-certified apartments in Silver Spring, Md.
While Abramson is not advocating that all buildings should be LEED certified, she worries about the financial viability of Class A properties that don’t meet minimum LEED requirements.
“I've been hearing very similar stories from other developers,” says Dr. James L. Hoff, DBA, president of TEGNOS Research Inc. Carmel, Ind. “The motivations are more one of fear: If you don't build Class A space ‘green,’ it will quickly become a Class B or C space.”
The biggest challenge for developers right now is determining the best way to generate on-site energy for new developments. The Blairs project was unique in that it used energy produced at a wind farm, but these facilities are rarely co-located with the development.
Recently, the company considered building a structured parking lot featuring two acres of photovoltaic (PV) solar panels on an upcoming LEED Platinum level office building. However, in the development’s mid-Atlantic location, the solar system would only have generated 10 percent of the complex’s power needs, with a lengthy 99-year payback.
“What we really need to see is larger tax incentives for the private sector,” says Abramson. “There is a huge opportunity here. But these write-offs need to be made more available to help developers with the larger infrastructure investments we need to make.”
With the advent of investment funds funded on green buildings, green mortgage backed securities and the new Dow Jones Sustainability Index, developers are taking sustainability seriously - even in a down economy.
“There is now quantitative evidence that green buildings are more valuable, while conventional buildings are at risk of accelerated obsolescence and devaluation,” says Leanne Tobias, founder and principal of Malachite LLC in Bethesda, Md.
For Cushman & Wakefield, a recent initiative to retrofit 64 buildings to LEED Platinum standards actually made the company money. According to the Green Building Council, the company spent an average of $1.64 million on each retrofit and received almost $400,000 in rebates. Each building yielded an average of $1.2 million in annual energy and maintenance savings, all on a 10-month payback cycle with a ROI of 121 percent.
“This is not a new conversation, and there are no more excuses for anyone to ignore sustainable design,” says Abramson. “If they do, their properties will be ‘dinged’ down the line. You just can’t compete anymore without a green and sustainable strategy.”