Posts Tagged ‘sustainable design’

Save the Planet; Prevent Commercial Mortgage Meltdown

Thursday, November 4th, 2010

The “CRE Solution” could create green jobs while averting commercial building foreclosures.  A total of $1.4 trillion worth of commercial real estate loans are coming due between now and 2014, with the majority on small- and medium-sized buildings that are either under water or very nearly there.  Writing for the Huffington Post, Daphne Wysham says that “crisis breeds opportunity. It turns out that buildings are responsible for about half of America’s emissions of greenhouse gases.”  Wysham, a fellow and board member of the Institute for Policy Studies, is founder and co-director of the Sustainable Energy and Economy Network, as well as founder and co-host of Earthbeat Radio, which airs on 54 stations in the United States and Canada.

According to Wysham, “Here’s the crazy truth:  With a national effort to boost energy efficiency, we could actually meet the building sector’s greenhouse gas emissions target set by the Obama administration for the next few years, put 1,300,000 million workers – 600,000 of them construction workers, 20 percent of whom are unemployed – back to work and dodge the next wave of mortgage meltdowns.  We could make a painless downpayment on our emissions reductions goals, while giving some of our beleaguered businesses a tax break and saving money we’re now squandering on wasted energy.”

Architects and researchers from Architecture 2020 have devised what they call the “CRE Solution”, which would allow small business and business owners in danger of default a multi-year tax break if they retrofit to improve energy efficiency.  “The more energy efficient the building becomes, the greater the tax break,” Wysham said.  “Commercial building owners could trade or sell these tax deductions to investors, who would be invested in putting our highly skilled construction workers back on the job, retrofitting these properties.  For the $6 billion in tax breaks the federal government would provide for this purpose, Uncle Sam would receive $10 billion back in net federal tax revenue, while state and local governments netted $5.25 billion.”

R. J. Brennan: Cost Cutting in a Real Estate Portfolio

Thursday, November 5th, 2009

badloans2Don’t waste a good crisis.  Right now is a great time to sit down and rethink and reinvent how we look at real estate and the workplace.  That’s the opinion of R. J. Brennan, Associate and Director of Workplace Strategies at IA Interior Architects in Chicago and former president of the Chicago Chapter of CoreNet Global.  Additionally, Brennan has lectured internationally on sustainable design, high-performance work spaces and change management.

In a recent interview for The Alter Group Podcasts on Real Estate, Brennan notes that a new study by CoreNet Global called “Portfolio Research Consortium” has found that Corporate America’s highest priority is cutting costs.  Space consolidation and alternative workplace strategies occupy second and third place.  The danger, Brennan warns, is not to cut so much that companies eliminate critical components necessary to support change.  If you don’t have adequate space to move staff as necessary, that creates a problem with doing business effectively.

Procurement, especially in terms of furniture, is another critical area where potential savings and greater value can be achieved.  Furniture systems, case goods and demountable walls are a strong negotiation point that can achieve an additional savings of three, four or even five percent.  On a 300,000 SF headquarters building, that could add up to a savings of more than $1 million.

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Lenders Get Green

Thursday, October 2nd, 2008

Marketing green is a new step in the emergence of sustainability.  In a tight credit environment when rates have climbed and LTVs have dropped, green may offer a way to ease the underwriting criteria on a deal.

The green-building revolution is spreading, and the underwriting community has embraced sustainable design because it enhances marketability and income.  To illustrate, net rent in a particular office market may include a $15 psf in base rent and another $8 in common-area costs – the latter driven largely by energy and water-use costs.  It adds up that if you reduce that common-area cost and pass the savings along to the tenant, your building will be more attractive because it operating costs are lower.

Community banks in environmentally conscious markets or in areas where local building requirements foster sustainable projects are offering standard loans with terms favoring green development.  In San Francisco, the New Resource Bank offers qualifying green projects a generous loan-to-value ratio of as much as 80 percent, and a slightly better interest rate than it does to conventional project developers.  Green lenders look for incremental steps such as preferential review, quarter-point interest-rate discounts, longer amortization and relatively small changes in return for LEED or Energy-Star certification.

In Houston, the Green Bank recently moved into a 20,000 SF headquarters specifically designed to earn LEED’s gold certification.  Previously known as the Redstone Bank, it was acquired by a local banker who rebranded it as Green Bank and launched in January of 2007 with a focus on sustainability.  Just 1 ½ years later, Green Bank has $275 million in assets and is creating a group of environmentally conscious companies and individuals.  One vital goal is to educate team members to identify green-oriented customers, whether they are recyclers or LEED-certified construction space users.