In Texas and across the country today, Americans are increasingly occupied with ways to green up the environment. Smart, new initiatives are popping up in unexpected places: Microsoft and Ford are working together on an energy management application for Ford’s electric cars.
In a separate initiative, Ford is retrofitting a defunct automobile assembly plant in Michigan into a renewable energy plant. FedEx is introducing the first all-electric parcel delivery trucks in the United States. No doubt these innovations will fuel new ways of living and working in the decades to come.
At newsstands in Texas, information abounds about how to green up our lives at home. The equivalent resources, however, are not readily available for business decision-makers who are looking for ways to navigate the waters of sustainability, energy efficiencies and imminent government mandates.
Today, the concept of greening up commercial structures and office buildings is still uncharted territory. This series will look at what it means for businesses in Texas to go green, and we will answer the questions decision-makers are asking about the possibilities for commercial venues.
What’s the value of building green?
More and more people are saying it’s the wise thing to do. After all, who can argue with the idea of preserving our natural resources and the green in our pocketbooks at the same time?
In our personal lives, the value is tangible: less energy consumption and lower utility bills. To the business community, however, the idea of building green has little relevance because there was no clear way to determine bottom-line gain.
According to Clay Little, A.I.A., principal partner of Austin-based NoackLittle Architecture and Interiors (noacklittle.com), the tide has turned.
“After 30 years of technology and building-method advancements, we can now calculate paybacks for many sustainable initiatives from water reclamation to increased efficiencies for mechanical and HVAC systems,” Little says. “Since we can now measure real value, building owners and tenants are rethinking the kinds of office spaces they build and lease.”
The current retrofitting of the Empire State Building (ESB), New York’s iconic landmark, is a clear example of the market incentives at play in the commercial arena. The ESB’s owner is undergoing a $550 million retrofit that is expected to save 38 percent of the building’s energy costs over the next 15 years and $4.4 million annually in building maintenance costs.
“Our ability, as architects, to project ROI during a project’s planning stages is reducing risk for owners and increasing advantage on the leasing side,” Little says.
The most powerful advantage in commercial green building – for both owners and tenants – is found in pass-through costs. These are a building’s utility and maintenance costs that are passed through to tenants.
Typically, tenants share these costs equally, regardless of the size of space they occupy and the energy they consume. As a result, a tenant’s triple-net costs (taxes, maintenance and energy) are not predictable.
In a smart building, maintenance and energy costs are measurably less because they are more efficient (see November/December issue for specifics). These savings are then passed through to the tenants.
Compounding the savings for tenants, sustainable structures commonly use electric sub-meters, which control usage rates on an individual tenant basis.In smart buildings with sub meters, tenants pay only for the energy they consume directly.
“We find the marketing advantages of pass-through costs are often overlooked by clients,” Little says. “There is a clear financial advantage in this aspect of green building alone, especially in this economy. It can affect time-on-market and occupancy rates.”
This benefits both project owners and tenants.
Compelling incentives aside, what does the law say about commercial green building in Texas?
Right now, retrofitting existing commercial structures and building new green buildings is voluntary. This scenario is poised to change in the years ahead as more proposals designed to drive energy efficiency are being considered at the local, state and national levels.
LEED certification is the national standard that guides most of the commercial retrofitting and green building we see today. Often confused with being law, LEED is a rating system designed to improve performance in key areas of resource consumption: energy, water, CO2 emissions, indoor air quality and waste. It is not a mandate. Little clarifies a common misperception that it is not possible to be sustainable without LEED certification.
“For commercial structures, LEED is a benchmarking tool,” he says. “Think of it in these terms: A well-trained, accomplished actor who doesn’t win the Oscar is still a great actor.”
If you are a municipal building in Austin, however, a LEED silver rating is required.
Local governing bodies, however, tend to use LEED as the measurement standard. The U.S. Green Building Council’s Central Texas Chapter points out that the number of LEED-certified projects has more than doubled in Central Texas in the past two years.
This increase might indicate better understanding of the benefits of green building, coupled with increasing market incentives. It might also be an indicator of accelerated movement toward more mandates.
Among Texas’ top cities, Austin is upheld as the model green city. To some observers, it is also the most highly regulated. The city recently named a first-ever chief sustainability officer and passed a law requiring owners to disclose the energy efficiency of their buildings at the point-of-sale. The Energy Conservation Audit and Disclosure Ordinance (ECAD) is the first of its kind in the United States. According to ECAD, 74 commercial buildings in Austin have disclosed energy ratings.
Although this law does not mandate retrofitting or new green building, it does mandate a rating disclosure for all commercial buildings in Austin by June 2011. ECAD sources say integrating energy costs into property values incentivizes sellers to improve energy efficiency.
Similar initiatives are underway across Texas, especially related to recent federal legislation requiring all municipal buildings to cut energy usage by 30 percent (gsa.gov).
So what’s the best way to evaluate need?
Start the process by consulting a licensed architect. Professionally trained to synthesize project objectives with individual business needs, an architect will help you make informed business decisions – even before you buy or lease a property.
In the next issue of NSIDE, we will walk through an architect-led commercial retrofit in downtown Austin. We will also identify some of the most and least affordable sustainable options available today and evaluate the tradeoffs.
GREEN LINGO + RESOURCES
Green Building – Often called smart or sustainable building, green building reduces material waste and energy costs. The Austin Green Building Program is a nationally recognized model.
LEED Certification –
This stands for Leadership in Energy and Environmental Design. It’s a voluntary rating system developed by the U.S. Green Building Council. LEED can be applied to any building type at any point in a building’s lifecycle, and it measures performance in key areas from sustainable sites to energy efficiency and design innovation. The Austin Green Building Program was a precursor to LEED.
This stands for Energy Conservation Audit and Disclosure, a new Austin City Council ordinance mandating energy ratings by June 1, 2011, for all commercial buildings that were 10 years old or more as of June 2009 and receive electricity from Austin Energy.