Roundtable Debates: A Greener Capital City?
- Feb 08, 2008
Interest in green building is becoming more prevalent everywhere, but even in the U.S. Green Building Council’s home market of Washington, D.C., landlord and developer experience is mixed relative to just how much users will commit, according to a discussion that took place among panelists at the Transwestern-Commercial Property News investor roundtable (pictured) yesterday in the nation’s capital. While a number of participants said they hadn’t even experienced interest in green space in the market yet, Penzance Cos. has encountered some with 455 Massachusetts Ave., where it took some steps toward sustainable design upon development, and is now considering whether to go even further through retrofitting based on feedback from potential tenants. At the same time, “everyone wants it, we all want to be green, but I haven’t seen tenants yet that really want to pay for it,” observed COO Greg Meyer. Opus East, on the other hand, is in talks with three full-building users that have expressed interest in green elements and is also pursuing them with a speculative building. “I think this whole movement has got more momentum than any single thing I’ve seen in the last 10 or 15 years,” said vice president & general manager Scott Brody. “And the buyers want it.” He likened its popularity among buyers to that of high parking ratios several years ago. “Two years ago, this interest was almost exclusively on a multinational level,” put in John Gattuso, senior vice president at Liberty Property Trust. Now “tenants who are more modest size are frankly maybe not even fully appreciating the (benefits) but the reaction to the building is such that it has been very, very positive for us.” He believes, in fact, that the interest is not due strictly to whether or not a building has certification under the U.S. Green Building Council’s Leadership in Energy and Environmental Design program. Instead, he noted, such buildings tend to offer a different environment, to which people often respond favorably. Even so, tenants must be willing to pay a premium to be in green space, and some roundtable participants expressed skepticism about whether they will do so. Gattuso, though, has found through extensive experience that incorporating LEED parameters into planning from the very beginning can result in just a 1 to 1.5 percent cost premium for silver or gold certification requirements and less than 3 percent for platinum. And Liberty Property Trust has been able to make up for those costs through energy savings of 20 to 30 percent and a 15 percent premium over market rents. The roundtable was co-moderated by Transwestern senior vice president David Popp and CPN editor-in-chief Suzann Silverman. Other participants included Jim Hedges, senior vice president of Brookfield Properties; Andew Czekaj, chairman & CEO of Cambridge Holdings; Steve Klein, principal of JOSS Realty Partners; Robin Burke, senior vice president of KBS Realty Advisors; George Wells, senior vice president of asset management for Piedmont Office Realty Trust; Joseph Flanagan, director of asset management for TIAA-CREF; and Thomas Regnell, managing director of acquisitions for WRIT. Look in CPN in April for more of the roundtable discussion, which covered such topics as pricing, competition, the hottest future submarkets, the economic outlook for the Washington, D.C., metropolitan area and the effect on the market of a Democrat versus a Republican winning the presidential election in November.