Which Way Is Green?

In real estate, as much as in any business, the early spoils tend to go to outfits that first recognize paradigm-shifting trends and then position themselves to capitalize as momentum builds. But the organizations also cannot forever rest on their laurels, for competitors are never far behind.Though competition is less

In real estate, as much as in any business, the early spoils tend to go to outfits that first recognize paradigm-shifting trends and then position themselves to capitalize as momentum builds. But the organizations also cannot forever rest on their laurels, for competitors are never far behind.Though competition is less cutthroat among non-profit trade associations, a parallel history appears to be playing out as varying interests vie to supply ratings systems for the industry-transforming green building movement.A powerful early leader has clearly emerged in the U.S. Green Building Council and its signature Leadership in Energy and Environmental Design certification programs, now used widely for office and institutional facilities. Almost a decade after the council developed the system, “LEED is the Microsoft of the green building-certification space,” stated sustainability expert Dan Winters, who serves as managing principal for Evolution Partners Real Estate Advisors, based in Washington, D.C.But Microsoft is not the wired world’s only option, and alternatives to LEED are likewise emerging. Two ratings systems now pursuing nationwide acceptance seem to reflect the most persistent criticisms of LEED: that compliance—and even registration—can be complicated and costly and that LEED does not always translate smoothly to the residential arena.In the commercial real estate realm, the Portland, Ore.-based Green Building Initiative administers the U.S. version of the United States-Canada Green Globes ratings system, which the institute bills as a less-costly, Web-based alternative to LEED. Meanwhile, the home building industry’s primary trade group, the Washington, D.C.-based National Association of Home Builders, is rolling out its preferred residential ratings system, dubbed National Green Building Standards.The new programs do not seem to daunt LEED advocates, who stress that the Green Building Council is continually broadening its roster of ratings categories and tweaking processes to reflect advances in sustainability practices and technologies.Furthermore, even as people across the country are kicking the tires of the new LEED for Homes, or LEED-H, ratings system, the Green Building Council has helped the National Association of Home Builders develop its new program, noted Michelle Moore, senior vice president overseeing residential programs for the Green Building Council. “We are trying to advance the best sustainable strategies in an environment that’s changing constantly, and all the industry associations and third-party (analysis) groups have a role to play.” Ultimately, it is up to builders, and in some cases occupants, to determine which ratings systems best meet their needs, she stated.One Right Way?No consensus has formed on the fundamental question of whether industry and society benefit more from the clarity of a single certification system or the flexibility of multiple ratings bodies. But Green Globes advocates lean toward the latter.Mark Rossolo, director of state and local outreach for the Green Building Initiative, stressed that competition among systems should accelerate the much-needed adoption of sustainable practices. “It’s just not practical to think that any one body, whether it’s GBI or NAHB or USGBC, is going to get everything right,” he said, pointing out that both LEED and Green Globes flourish in Canada, where both have operated for years and certification has penetrated the commercial building industry on a per-capita basis to a far greater extent than in the United States. “It’s a great example of how having multiple systems increases ratings activity. What we don’t want is for someone to decide not to go green because the one (dominant) system doesn’t work well for them.”Though the Green Building Council did not develop its LEED ratings systems as formal standards, the National Association of Home Builders is concerned that certain Green Building Council activities do smack of exclusivity. For instance, the council is collaborating with the American Society of Heating, Refrigerating and Air-Conditioning Engineers; the Illuminating Engineering Society of North America; and the American Institute of Architects to design Standard 189-P, a commercial green building standard for municipal building codes. “USGBC is actively promoting mandates of their ratings systems,” said Carlos Martin, assistant staff vice president for the National Association of Home Builders’ construction codes and standards staff. “NAHB thinks that’s unreasonable.”Winters, however, believes that the certainty of a widely accepted system outweighs the flexibility of multiple options. “The whole notion of multiple standards creates confusion in the marketplace,” he said. After almost a decade of intense development, he said, LEED has penetrated the U.S. commercial market to the extent that no other standard is likely to usurp its position. “It’s transforming important components of the built environment and over the long term will lead to better building practices.”Affordable housing developer Jeff Oberdorfer, executive director for sustainability pioneer First Community Housing, based in San Jose, agreed: “There is no question in my mind that LEED is the superior (system), particularly for non-residential projects.” He also cited “great progress” with the new LEED-H ratings and the Green Building Council’s push for greater flexibility, such as region-based options.How Much to Get There?Critics also suggest that compliance with the Green Building Council ratings systems can prove prohibitively expensive for small commercial projects and low-price-point residential projects. The costs of application and certification have occasionally prompted developers to go green without formal endorsements.According to Martin, the National Green Building Standards aim to encourage sustainable practices across the entire residential price-point spectrum without prohibitively increasing construction costs, particularly of modestly priced homes. LEED-H, he said, focuses to a great extent on the highest-priced quartile of the home market. According to preliminary studies, he said, additional costs of features earning the National Green Building Standards lowest-tier rating—bronze—amount to half of those for LEED-H’s lowest rating—certified. Consider that estimate in light of studies that indicate that for every $1,000 increase in the average cost of a home, 217,000 U.S. residents drop out of the buyer pool due to financial limitations.Moore countered that perceptions of the Green Building Council’s emphasis on upscale properties are unwarranted and likely reflect efforts to encourage leading builders to demonstrate sustainability potential at the most stringent LEED ratings levels. “LEED-H is for any home at any price point,” she said, adding that affordable housing organizations like Habitat For Humanity have embraced LEED. “Society can’t afford to have green homes as a premium product.”