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Despite all the headlines, and a bit of hype, in the world of commercial real estate, the number of green buildings is relatively very small and not growing at a significant rate. Only 2% of all new building construction projects receive LEED certification. Lets look at reasons why building sustainability is stalling and what can be done.
by Dale Burket, Esquire. Partner at Lowndes, Drosdick, Doster, Kantor & Reed, P.A in the Real Estate Transactions, Development and Finance Commercial Leasing, and Environmental Law practices.Read his blog, Commercially Green Florida. Connect with him on Linkedin. Follow him on Twitter @daleburket
This article first published as The Practical Side of Sustainability on Technorati.
The reality of the “green” or sustainable building movement, at least in the world of commercial real estate, is that it is relatively very small and not growing at a significant rate. The U.S. Green Building Council estimates that 2% of all new building construction projects receive LEED certification. Existing buildings greatly outnumber newly-constructed ones, especially given the current economic market. There are many good reasons to go green, but in the real world – the one in which we all live – there are significant practical reasons why building sustainability is stalling.
Recently, we met with Scott Renaud, a Principal with CNL Commercial Real Estate in Orlando, to discuss why sustainability has not caught on faster in the world of commercial leasing, particularly office buildings. Scott’s company currently manages more than 2.5 million square feet of leasable space, and they employ some of the absolute best tenant brokers in the business. In short, Scott knows what he is talking about.
When asked the question, “why is it taking so long for ‘green’ to catch on in the commercial office context?”, Renaud offers this answer: “Most building owners do not, for one reason or another, maintain the “sustainability” of their sustainable buildings.”
According to Renaud, most multi-floor buildings have a building automation system (“BAS”) which is designed to manage, control and/or monitor hundreds of details about the building, including energy usage, lighting, air conditioning, heating, and security. These BAS products have been around for more than twenty years. A few example BAS manufacturers include Trane, Siemens and Cisco Systems (and there are many more). Renaud maintains that, when used properly, the BAS creates enormous potential for energy cost savings. But Renaud, himself an experienced building manager, can cite many examples where the potential for substantial savings is left on the table by building owners whose assets are integrated with a BAS. Why?
The reason relates to the evolution of technology in real estate. Over the years, more and more technology has found its way into the commercial real estate environment, and that technology has become incredibly complicated. In fact, Renaud believes that the typical BAS is best operated by someone who has computer programming experience in addition to building management experience. Notwithstanding the increased technology, simple economic pressures prevent owners from hiring higher-paid building managers who have the sophistication and training to properly operate that technology. The result is a huge disconnect between the requirements of the BAS and the qualifications of a typical building manager, who simply doesn’t know how to optimally operate the system. Nevermind that the owner (read “institutional investor”) hasn’t figured out the economic advantage of paying more money for a more qualified building manager, resulting in energy savings that would more than offset the additional salary cost.
Renaud pointed us to a small, wall-mounted sensor in his conference room which measures carbon dioxide levels, and which automatically notifies the BAS to turn on the large air intake fan atop the building and send fresh air directly to the room, when the carbon dioxide level exceeds a predetermined threshold (indicating that people are meeting in the room and have used up significant amounts of oxygen). And the BAS can be programmed to sense, almost to the minute, when occupancy levels are low (such as late on a Friday afternoon or at lunchtime), and to send a signal to the same air intake fan to slow down, thus reducing energy usage.
The BAS understandably runs on a complex piece of software, but it often has a very complicated interface as well. What if one of the manufacturers hired a few ex-Apple designers to redesign the interface to make it simpler to run, without the need for programming language expertise? If the BAS were more intuitive and user friendly (think iPad or iPhone), could it be run more efficiently, and by non-programmers?
Even LEED-certified building owners are not immune to this problem. Renaud told us about an owner of a LEED Gold building who could not operate their new building efficiently, even though many of their employees are engineers who should be knowledgeable in such technical matters. They approached Renaud to ask how his company is able to operate a nearby non-LEED building more efficiently. Scott says that the “commissioning” of a building, that is, the adjustments and fine tuning of the BAS and all building systems for optimal performance, is usually handled by an outside expert, and can be quite expensive. Commissioning is a necessary maintenance operation which must be performed regularly in order to keep the BAS and other systems running efficiently and correctly. Due to the high cost, commissioning is not done on a regular and recurring basis, if ever.
Renaud envisions that enormous cost savings could be realized through the correct use of the BAS and by commissioning “SWAT Team” who would analyze building performance, optimize the BAS on a periodic basis, and recommend retrofit changes that could be cost-recovered in a very short time. But without a source of capital to hire the team, owners would likely be reluctant to front the cost. Still, Renaud remains optimistic that positive change is possible.
To read a different perspective on the adoption of sustainability in commercial real estate, read [Corporate Real Estate and Environment Responsibility – Image, Reality and Transparency]
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© 2011, Dale Burket. All rights reserved. Do not republish.
Author: Dale Burket (2 Articles)
Dale Burket is a partner at Lowndes, Drosdick, Doster, Kantor & Reed, P.A, in the Real Estate Transactions, Development and Finance Commercial Leasing, and Environmental Law practices. With over 29 years of experience, Dale focuses his real estate legal practice on multi-site, multi-jurisdictional real estate acquisitions, dispositions, leasing and financing and large, multi-site and multi-state real estate transactions. His hospitality practice concentrates on restaurant leases and financing arrangements. Dale has also represented Real Estate Investment Trusts (REITs) in connections with mergers, securitizations, purchase of income producing properties, and sales of properties by taxable REIT subsidiaries. Dale is Board Certified in Real Estate Law by the Florida Bar Board of Legal Specialization and Education. Read his blog, Commercially Green Florida. Connect with him on Linkedin. Follow him on Twitter @daleburket