How sustainable real estate and green practices give businesses a competitive advantage Featured

8:01pm EDT November 30, 2011
How sustainable real estate and green practices give businesses a competitive advantage

When CBRE decided to “green” its worldwide operations in 2008, the benefits were clear: reduced utility costs and water usage, happier employees, a major boost to company reputation. It experienced an added bonus just three years later when it was named by Newsweek as the 128th greenest U.S. company — the only real estate services firm to make the top 500.

“Our chairman got behind the sustainability practice group and set the goal that we were going to be carbon neutral by the end of 2010, and we met that goal,” says Tim Gascoigne, associate with the CBRE Sustainability Practice Group. “CBRE is now an experienced sustainability and LEED consultant with all the tools and resources to guide building owners and tenants through a successful ‘greening’ process of their full building or suite.”

Smart Business spoke to Gascoigne about what it takes to have a “green” building and why the advantages it creates are too great to ignore.

Why is it beneficial for companies to make efforts to be green?

The main drivers of the sustainable movement are large public corporations and the government. Both groups view ‘green’ as a way to reduce their costs, reduce their environmental impact and gain a heightened impression of social responsibility. More and more companies are putting out a corporate social responsibility reports. If you look at all the public corporations out there, many of them are starting to publish this to show how green and responsible their corporation is, which is becoming a wonderful marketing tool. As for the government’s commitment, they are looking to achieve LEED (Leadership in Energy and Environmental Design) certification in all the buildings they build, and will only lease certain buildings that have these characteristics.

Although tenants are definitely driving this movement more so than the building owners right now, a building owner will look at LEED as a competitive advantage to capture these quality tenants that want these LEED-certified spaces. They do get overall savings with energy reductions, but they also have to spend the money to get the tenants. It’s been shown that LEED-certified buildings far exceeded all the other buildings in terms of rent per square foot.

I think the ‘green’ trend will start moving to smaller companies who will also use a sustainable reputation as a marketing advantage.

What are the cost implications?

With larger multi-tenant office buildings in the 500,000-square-foot range, it’s running about 25-50 cents per square foot to make the building LEED certified. So there’s a cost, but then there’s a payback in how much you are able to reduce energy consumption and how much more you are able to increase rental rates.  In the most recent CBRE Green Building Survey, the average utility spend for the subjects’ multi-tenant office buildings was around $2.50 per square foot per year. It quickly adds up, as some building owners have been able to achieve a 50 percent reduction in this cost. Furthermore, this study found that the LEED-certified building were able to capture $4 to $7 per square foot more in rents. This is a great achievement that adds significant value to these buildings.

Oftentimes, there is intervention that improves the payback, whether it is a utility company offering a rebate or a state program that provides financial incentives to encourage lighting retrofit. That’s a pre-tax benefit; there are also after-tax benefits that come through cost segregation studies, which break properties down into component parts to accelerate depreciation.

Where should a business begin?

The first and simplest step toward being green is to look at the energy and the commodities that you consume — water and energy — and come up with a plan to reduce your consumption.  Next, focus on recycling. Simply recycling traditional items like cans and paper make a difference, or, if you want to get more advanced, you can look into commercial composting.

The No. 1 place to start if you’re a building owner is with regard to your lights. And it’s usually one of the easier places to achieve savings with how fast technology is moving in that category. You can put motion sensors in certain parts of the building so that lights automatically go off when no one is in the room. It’s tough to calculate the exact savings on sensors, but upgrading a lighting system has direct savings that are easily calculable. Typically, in older office buildings that have 4-lamp T-12 fixtures, you can upgrade to 2-lamp T-8 fixtures and achieve a 70 percent reduction in cost. If you look at the fixture wattage, you’re going from 188 watts in the older lamps down to 56 watts with the new lamps.

HVAC is also a great category to focus on for tenants. With improved indoor air quality your employees take less sick days, which improves your productivity. Most HVAC systems just need small adjustments to achieve significant increases in comfort levels and cost savings. We had a client in an office building that we managed that had a large central air conditioning system and, when the fan turned on, it would spike the utility usage. We were able to come in and put variable drive motors on that air conditioning system, which reduced the spike of electrical usage and made it run more efficiently.

So you’ve got to look at all of those components as a way to control and reduce. There are new systems that are much more energy efficient and there are ways that current systems can be modified to improve them.

What other things can businesses consider?

Everyone is trying to reduce the amount of storm water runoff — rain water that picks up waste and pollutes nearby water supplies. Parking lots are being developed with porous surfaces so the water runs through the pavement and reduces runoff. The new approach to landscape architecture involves more green space, which not only makes a property look better, but also reduces the storm water runoff.

Tim Gascoigne is an associate with CBRE’s Sustainability Practice Group. Reach him at (216) 658-6115 or tim.gascoigne@cbre.com.