Retrofitting for Sustainability

By Karl Heitman, AIA, LEED-AP

In the effort to reduce negative impacts that buildings have on the environment, we cannot overlook the massive environmental challenge that the majority of our existing buildings present. A limited view of sustainability, relating only to new construction, would overlook the primary sources of ineffecient energy use and harmful emissions that are attributable to existing buildings.On April 8, 2008 I had the honor of moderating a panel of distinguished real estate professionals at the Building Green Chicago conference hosted by Index Publishing. My panel focussed on retrofitting existing buildings for sustainability. Each panelist has played a significant role in retrofitting our nation’s largest buildings, among them, the Merchandise Mart. Built in 1930, this environmentally-sustainable makeover became the largest LEED-EB Silver Certification in the world, making it the poster child for green retrofitting.

Panelists included Lloyd Davidson, Vice President and General Manager of Merchandise Mart Properties, representing both building owner and tenant; John Schinter, President of Energy and Sustainability Services for Jones Lang LaSalle, representing corporate brokerage services; Aron Levine, Chicago Market Executive for Commercial Real Estate Banking from Bank of America, representing capital investment source; Robert Bagguley, Midwest Region President for Transwestern, representing real estate asset management and Phillip Edison, a partner with the law firm of Chapman & Cutler, representing legal interest.

Many interesting ideas were discussed. The following are highlighted topics of that panel discussion.

Diverse Objectives

Green buildings are approached differently both from design and operational perspectives depending on specific industries and location. A diverse real estate portfolio that manages hundreds of buildings for thousands of individual tenants may have more interest in attaining Energy Star certification. A single corporate owner with hundreds of regional facilities, such as Bank of America, may invest in attaining LEED Platinum certification for their most visible and newest facilities, as part of their corporate social responsibility, business model, ten year plan and long-range budget.

Accountability

There are challenges and hurdles to implementing green retrofits, including allocating for the real costs and discounting the perceived additional costs. It involves justifying and measuring return on investment; and educating everyone from stake holders to contractors and suppliers. It especially requires moving quickly because the commitments to “go green” are coming at an enormous speed. Law firms have created new “environmental law” departments and are struggling to define the risks and liabilities that may result from the green building movement. There needs to be a balance between what it will cost to green retrofit a facility, and what savings it will bring.

One of the most interesting challenges to building owners and property managers is that more and more corporate tenants want the building they lease to be retrofitted into a green facility. Although an individual tenant can initiate the process to retrofit their space and be certified LEED-CI for Corporate Interiors, there is increasing pressure for the entire building to upgrade in order to retain and attract tenants.

Political

It was noted that all three major presidential candidates support between 60-90% reductions in carbon emissions within a 3-5 year timeframe. California began implementing guidelines six years ago that are now becoming benchmarks for state and federal mandates. By 2009, most buildings in Europe will be required to publically display energy ratings. There’s no question that world pressure will influence federal US legislation.

On the governmental level, cities across the country now refer to “the Chicago Standard” because of the innovative programs that Mayor Daley has spearheaded. The State of Illinois has upgraded its minimum energy standards this year, and is requiring that all new state facilities, beginning in 2008, must be LEED certified. From the banking and financial industry, Bank of America clients have an estimated $600 billion invested annually in energy costs, and a growing percentage is being invested in renewable energy sources such as solar, hydro and wind power.

Market Drivers

WalMart is a well-known example of the retail market completely rethinking site locations as well as energy use. For national retail chains and shopping centers, green and retrofit buildings will augment traditional retail developments, especially in a downturn market.

The contract furnishings industry has been especially committed to research and development of entire new product lines. Because the built environment is so tied to issues such as specifying new building products, disposal of construction waste, improving indoor air quality and developing sustainable and healthier products, they are valuable partners to the architecture and construction industries.

Important benefits that might take effort to uncover include tax incentives and utilities savings from energy conservation. Events such as “Earth Hour” this past April demonstrated reductions in energy significant enough to warrant different methods of analysis for facility operations. More subjective social benefits have been demonstrated by collective efforts of tenants and coworkers to implement voluntary recycling programs. As a recruitment benefit, there’s no doubt that the young, talented, enlightened workforce wants to work for companies that reside in green buildings. The health benefits of better indoor air quality are just beginning to be statistically quantified in terms of worker productivity and fewer missed days.

Mainstream

By now, most of our industry knows about LEED. The main certification categories for retrofit facilities include Existing Building (LEED-EB) and Corporate Interiors (LEED-CI). There are a number of websites such as the USGBC’s that have extensive information on how to quantify benefits and claims. The Energy Star program is an extensive resource on products and services. BREEAM is the world’s longest-standing and most widely used environmental assessment method for buildings. Its website offers web-based measurement tools to simplify the complex process of designing buildings with low environmental impact and life cycle costs.
An architect who is an Accredited Professional (LEED-AP) can navigate these rating systems and points calculations to bring clarity to this rapidly growing industry.

Sustainability is becoming mainstream globally, and is defining a new asset class of buildings in the US, as defined by higher square footage lease rates, tenant retention rates and property values. These rates may also correspond to the category of LEED certification of a facility. At last count, the USGBC has over 11,500 member organizations—that’s mainstream! Climate Leaders, an EPA industry-government partnership, includes over 125 different organizations in the US that have made large commitments to sustainability, and as a result must find space that fulfills that need.

Conclusion

The movement to go green is multifaceted and exciting. The mobilization required to reposition our existing buildings and to implement change in new construction will be unparalleled in U.S. history, say some economists. These are exciting times, and issues of green building can be discussed and synthesized in a unique way with panels representing diverse experience, in conferences such as this one.

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