A 2011 study on the political economy of “green” industrial warehouses found that local political ideology plays a role in rent and occupancy levels. The research was funded by NAIOP and looked at 20,000 industrial warehouse properties across the nation. The study authors found that the effect of environmental certification (such as LEED or Energy Star) on rents and occupancy for industrial warehouses was contingent upon local politics. “Green” certified warehouses in politically liberal areas received rent and occupancy premiums, renting for 10% more than their counterparts. However, environmentally certified warehouses in conservative-leaning areas rented for 20% lower and had 25% higher vacancy than non-certified competing properties in the same area.
The results suggest that environmental amenities in real estate are not valued solely for monetary factors, such as their impact on energy bills. Instead, green features in industrial warehouses appear to be valued (or not) just as much for political purposes, marketing, or other factors. The study also highlights the importance of knowing your market. The authors note that the pattern they found may not hold true in other real estate sectors, and that results might change over time as environmental certification programs grow in popularity.
Click here to view the study article in its entirety.
This post is from the University of St. Thomas Bulletin Today.
The generous use of insulation was just one of many steps that led to gold-level LEED certification for the Anderson Student Center.
The University of St. Thomas’ new Anderson Student Center has been awarded Leadership in Energy and Environmental Design (LEED) gold certification by the U.S. Green Building Council.
The university in 2008 adopted a policy of pursuing green, sustainable and energy-efficient strategies for all new building projects; this marks the first time, however, that it submitted a building for LEED certification.
“I was absolutely thrilled to hear the news,” said Dr. Mary Ann Ryan, associate vice president for student affairs. “And I am still thrilled. It reflects the commitment that our campus community, and in particular our president, Father Dennis Dease, has to environmental sustainability.”
Dease, along with college and university presidents from across the country, in 2008 signed the American College and University Presidents’ Climate Commitment.
LEED certification is granted at four levels that vary based on the number of environmentally conscious efforts that go into a facility’s design and use. To earn one of the four levels of certification, a building is awarded points in each of six categories: sustainable sites, water efficiency, energy and atmosphere, materials and resources, indoor environmental quality, and innovation and design.
Gold is the second-highest of the four LEED certification levels. “As the design process progressed, we had an idea about how many points the Anderson Student Center would earn in each category,” Ryan explained. The university’s initial goal was silver. “As the building neared completion, we thought we’d be close to gold, but we could not be sure until we got the official word.”
As commercial real estate professionals we are all familiar with the concept of green building, designing a building to consume less natural resources and provide a healthier atmosphere for occupants and the community. But the wild card has always been the building occupants – their attitudes, reactions, and daily habits shape the ultimate performance of a building, even if it’s engineered to the highest standards.
Christie Manning, a professor of Environmental Studies at Macalester College, with assistance from UST Psychology Professor Elise Amel conducted studies funded by the MnPCA (Minnesota Pollution Control Agency) to determine exactly what factors influence whether or not individuals choose sustainable behaviors (recycling, reducing energy consumption, biking to work, etc.)
What she found is that social cues play an important role in our emotional responses, which in turn dictate whether or not we will perform a specific behavior. In other words, even though we may rationalize a decision one way (“Sure, I think recycling is important so that we can use less natural resources”), ultimately our behavior may not reflect that rationale (“I don’t want to wander around this convention hall with my Coke can searching for a recycling receptacle”).
Graduate students in the Master of Science in Real Estate program have the opportunity to complete hands-on projects catered towards their individual interests in real estate throughout each semester. In addition to compiling a development site plan for REAL 770, students in Dr. Tom Musil’s development class are researching and analyzing the effects of sustainability on the market and development trends.
Several students cited the recent study conducted by CB Richard Ellis and the Burnham-Moores Center for Real Estate at the University of San Diego. The study which began in 2009, now in its 3rd phase, tracks a portion of CBRE’s portfolio, 150 office buildings, to report the impacts of sustainability measures, such as LEED certification, on building occupants, energy consumption, and NOI. You can access information from these reports as well as read recaps of CBRE’s sustainability webinars here.
Greenbiz.com recently released its own report entitled “Green Building Market and Impact Report 2011,” available for download here. Beyond LEED, students are looking at the impact of new technologies on commercial real estate and housing, including net-zero energy communities.
Minnesota is ahead of the curve in LEED certification, ranking 19th out of the 50 states in total number of LEED-certified buildings. In its commitment to sustainability, the University of St. Thomas has established a policy that all new buildings be constructed to LEED silver status.
Minneapolis / St. Paul Business Journal – by Ed Stych
The Capella Tower
August 5, 2011
Minnesota ranks 19th among states nationwide when it comes number of LEED-certified environmentally friendly commercial spaces, according to a new analysis.
The U.S. Green Building Council has certified 8,776 commercial spaces nationwide through its LEED (Leadership in Energy and Environmental Design) certification program as of June.
The Memphis Business Journal, a sister paper of the Minneapolis/St. Paul Business Journal, analyzed the council’s data.
A few tidbits from the report:
* Minnesota has eight platinum-certified buildings, the highest level of LEED certification. The largest is the Marquette Plaza in Minneapolis. There are 56 buildings with gold certification, 41 with silver, and the remaining have the “certified” label.
Everyone is increasingly feeling the pressure of rising energy costs, especially those who own and manage property. The second annual Minnesota Real Estate Journal Commercial Building Energy Summit offered insights into how property owners and managers can take easy steps to decrease energy expenses, regaining control of their buildings and their bottom line.
Many buildings can achieve a 15% reduction in consumption without any capital investment. According to Priscilla Koeckeritz of Energy Print, Inc., a St. Paul based company that provides energy management software and services, energy expenses are rising faster than any other building operating expense, at a rate of 6-8% annually. The 5 million existing commercial buildings in the US spend $200 billion annually to power their facilities. Participation in energy-reduction programs like EPA’s Energy Star can easily result in energy savings of 30%, reducing total energy costs from an average of $2.33 per square foot to $1.63 per square foot.
Conference attendees indicated that they have spent more time tracking energy data in the past year than ever before. Koeckeritz explains that “energy cannot be managed, if energy information is not measured.” Energy Print provides a tool for owners and asset managers that automatically collects consumption data from utilities and normalizes it based on weather conditions. Energy usage can then be compared historically for a property or amongst an entire portfolio, so that investors can target capital expenditures towards their worst performing assets. The “3 C’s of cost, consumption, and carbon” for an entire portfolio can be tracked and reduced from a user-friendly website. Koeckeritz cites that in addition to reducing expenses, building owners who market their efforts properly can see additional return in the form of increased occupancy rates, typically around 4.1% higher for LEED certified buildings and 3.6% for Energy Star rated buildings.