Arguably the most over-used and under-defined term in modern real estate practice, “sustainability” is a buzzword and a blank canvas for a wide range of practices, interests, and intentions. At the April ULI Breakfast Forum, a panel of local and national experts led the audience through the confusion to hit at the true bottom line: dollars and cents.
Member Post written by Tim Glass, AICP | Director of Strategic Planning | Las Colinas Association
Marta Schantz, the Senior Vice President of ULI’s Greenprint Center for Building Performance, introduced how the Center’s unique alliance of high-quality developers from around the world has collected data and designed metrics to translate building performance into financial and environmental returns. Founded in 2009, the Greenprint Center provides benchmarks and insight across four key areas critical to real estate success: risk reduction, cost reduction, revenue maximization, and balancing time and money. Data from over 8,000 real estate assets are available to the Greenprint Center to share and identify best practices. An annual performance report provides information on the latest trends, investments in innovations, and how they translate into the benchmarks that drive asset value. Schantz shared the latest results from the Greenprint Center’s 2016-17 performance report, which can be seen in the PowerPoint presentation. Example case studies include Granite Park in Plano, where the suburban office development was retrofitted with mixed-use elements that increased density, landlord-operated transit that reduced car trips, and a virtual concierge consolidated tenant services. At Los Cabos’ Rancho San Lucas, a sophisticated analysis created the perfect setbacks from the protected beachfront while still maximizing the value of the built elements.
Schantz was joined by a panel of local experts in the field of sustainable real estate. Brad Bell, an associate professor at the University of Texas at Arlington’s College of Architecture, Planning & Public Affairs (CAPPA), described how CAPPA is integrating sustainability and equity into all of the college’s academic programs and studios. Bell indicated that today’s students don’t want to be specialized into a “lane” of their field, instead demanding a comprehensive look. For architecture students, that emphasizes the role of density and urban design elements. CAPPA has also recently launched a new BA program in Sustainable Urban Design that cross-pollenates the programs within CAPPA.
Jim Manskey, President of landscape architecture firm TBG Partners, and Jessica Warrior, Director of Property Management for Granite Properties, discussed how sustainability can be built into the design of buildings and how building managers can be involved from the onset to ensure high-performance in the long run. TBG has made data-driven decision-making integral to their design process, as the numbers have borne out the value to clients: Energy Star ratings for buildings increased market values by 13.5%, and LEED certification add 13% in value and 8% to effective rent. “Landscaped performance” is the guiding concept that TBG uses, focused on smaller carbon footprints, lower water consumption, biodiversity in the landscape, and a higher quality of life. TBG is also working with more niche consultants on hyper-specific challenges around unique environmental needs.
Running through the Park 17/1717 McKinney mixed-use development in Uptown Dallas, Warrior identified how the project incorporates elements that fit within the Greenprint Center’s sustainability program by replacing a surface parking lot with a mixed-use development that includes a large green amenity area on the parking garage roof. According to Warrior, the financial case for the amenity area is secondary to the value provided by marketing to tenant comfort. Schantz agreed and described it as “sustainability as a side effect” where the primary driving force is ultimately the benefit to the building’s users.
Bell discussed how CAPPA is researching the effects of new materials on building performance. Thinner prefab concrete has the double benefit of requiring less energy to transport to the building site and lower overall cost. Automatic shading windows can adjust to the weather and the sun angle throughout the year, cooling the interior of the structure more efficiently. Better understanding of how the building envelope can affect energy consumption and efficiency can better inform material choice, as can site-specific effects like sunlight and topography. Bell also described how capstone projects for CAPPA students are required to incorporate sustainable systems and the school is also expanding its education on these subjects through public forums in local neighborhoods in DFW.
Driving at the bottom line, Warrior used the example of Granite’s experience with LED lighting. In one example, Granite saw an IRR of 46% on investment and a 2-year payback when switching to LED in one of its office buildings. From a property management perspective, the Internet of Things (IOT) has tremendous potential to add efficiency by identifying problems with systems earlier and monitoring energy consumption in even greater detail. Warrior acknowledged that these upgrades do require owners with considerable access to cash on hand.
Schantz closed by remarking that at the end of the day, the world hasn’t really changed – the financial bottom line is still the most important consideration in any transaction. However, she asserted, the shift in thinking and in measurement allowed by new technology opens the door for environmental metrics to be an important part of sweetening the deal and getting the signature on a contract. She expects the process to continue to evolve, with architecture and design firms to be more involved later into a project, monitoring systems against expected outcomes and providing services to allow for more continuous improvement throughout a building’s lifecycle. The Greenprint Center will be monitoring these trends and sharing information with the broader ULI community.