Finding the Green in Building Renovation
Lisa Chamberlain, NYT:
It is a rare announcement for a new commercial office building these days that does not trumpet the new structure’s “green” features. In fact, nearly 5,000 buildings across the country, 90 percent of them new construction, are awaiting evaluation by the United States Green Building Council.
The council is the Washington-based nonprofit organization that, in 1998, created the notion that buildings could be certified as environmentally friendly.
As part of the environmentally aware renovation of an office building in Seattle, carpeting was removed to reveal the original terrazzo floor. The trend, however, has not caught on to the same degree in the renovation of existing buildings. But one developer based in New York is banking on the potential growth of this so-far-overlooked market.
Jonathan F. P. Rose, a third-generation developer who founded the Jonathan Rose Companies in 1989 to marry for-profit development with a socially conscious mission, began the Rose Smart Growth Investment Fund a year ago. The $100 million limited partnership is one of the few environmentally oriented investment funds — perhaps the only one — to focus exclusively on the acquisition of existing properties in locations served by mass transit. The expectation is that the fund will make environmentally conscious improvements to the properties and hold them as long-term investments.
“Over the life of a building, more energy is consumed traveling to and from a building than is used by the building itself,” Mr. Rose said. “So location in urban areas with good mass transit is critical to reducing environmental impact. And when you pick transit-based urban sites, supply is already constrained. So the strategy is to hit a sweet spot of holistic development and economic return.”
The fund’s first redevelopment project is under way in Seattle at the Joseph Vance and Sterling Buildings, two adjacent structures erected in 1929 and 1910, respectively. Situated at Third Avenue and Union Street, the office buildings were purchased for $23.5 million and are undergoing $3.5 million worth of “practical green” renovations.
By tuning up heating and cooling systems, replacing old windows and tearing out carpeting (exposing the original terrazzo floors), the buildings will be transformed from drab, inefficient office space that was about 20 percent vacant into a model of modern green redevelopment, according to Mr. Rose.
This will not only reduce operating costs over time, but also make the spaces more valuable by $4 to $6 a square foot or more (rents ranged from $16 to $20 a square foot before the renovation). In addition to enjoying cost savings from energy efficiency, tenants are increasingly willing to pay for the cachet of green design, brokers say.
As tenants move out, all 103,000 square feet will be renovated to the Green Building Council’s standards for existing buildings. The council’s Leadership in Energy and Environmental Design (LEED) standards certify a building’s energy efficiency and low-impact, nontoxic construction.
In part, the standards can be met by adding simple design features, like “light shelves.” Positioned over desks, the shelves simultaneously prevent glare on computer screens while redirecting light and heat to the interior space.
Another simple improvement, particularly in a temperate climate like Seattle’s, is to install double-hung windows that can be opened on the top and bottom.
More important is that even though the buildings are not in the heart of the retail or office districts, they are on a main bus line.
Properties owned and operated by the Rose Fund will also incorporate environmentally aware principles into tenant leases, distributing a tenant improvement manual that demonstrates the most efficient way to operate the space. “You can put in all the systems in place, but if they aren’t used properly, you don’t get the savings,” Mr. Rose said.
