The recent Bisnow Sustainability Summit attracted 250 Seattle-based real estate professionals for an energetic networking session and discussion on the future of sustainability. Tom Paladino, CEO of Paladino and Company, moderated the keynote interview with Kevin Daniels, president of Daniels Real Estate and participated in the following panel discussion about the design and management of buildings.
New Ideas Need Old Buildings
The panelists agreed that historic buildings contribute to the health of communities and present an untapped opportunity to focus on wellness and occupant health — a growing trend driving high performance building. While the business case for sustainability has been proven, they said developers are still eager for incentives to help push performance further.
The keynote interview brought together two professionals who are passionate about historic preservation – Kevin Daniels, whose development firm focuses on urban commercial real estate and historical preservation and reuse; and Mark Huppert, senior director of the National Historic Trust Preservation Green Lab.
Both expressed a belief that reusing old buildings is arguably more green than building new, and that the preservation of a diverse building stock supports healthy, growing communities.
The National Historic Trust recently published its study, Older, Smaller, Better: Measuring how the character of buildings and blocks influences urban vitality. How could smaller and older be a real estate selling point?
Based upon statistical analysis of the built fabric of three major American cities, the study found that established neighborhoods with a mix of older, smaller buildings perform better than districts with larger, newer structures when tested against a range of economic, social, and environmental outcome measures.
Citing the visionary Jane Jacobs who said, “new ideas need old buildings,” Mark pointed to Amazon and Microsoft as companies that both started in old buildings. He said that and small, funky spaces create a resilient fabric and a home for start-ups. Kevin pointed out that when the carbon conversation focuses on new construction and technologies, 90% of the building stock is not being addressed and acknowledged more needed to be done to improve their performance.
Tom asked about the appetite of larger companies for smaller, older buildings. While conserving small diverse space is good for incubator businesses and start-ups, it seems at direct odds with the needs of larger organizations like Amazon.
Kevin pointed out that companies like Starbucks and Blue Nile are indeed interested in “funky” buildings, and emphasized that preservationists are not trying to save every single building. His philosophy is to look at how a building serves the community and whether it can fulfill a need that’s not being met.
Mark stated that sustainability wasn’t about technology, but resiliency. He compared cities to a shopping mall—a variety of small, diverse businesses wrapped around a few large anchor tenants. Smaller, older buildings that house start-ups and minority and women-owned businesses are crucial to maintaining a healthy, diverse economy.
Health and Wellness is a Growing Focus
The panel following the keynote interview focused on the design and management of high performance real estate. Panelists included Tom Paladino, Jason Dardis with DLR Group, Allan Montpellier with PAE, and Stefan Riedl with Google.
The panel discussed the key drivers and trends in the green building market and how new green buildings need to be managed in order to realize the benefits as designed.
The panel agreed that while energy and carbon reduction is still a critical issue, health, wellness and the occupant experience are becoming more important to owners and tenants.
Tom identified a shifting focus from environmental impact to a focus on the people inside the building. As clients in competitive markets like financial services seek to use their buildings to attract employees, occupant wellness tends to allow for more productivity and less attrition.
The panel also noted that today’s green building strategies require more engagement from the design team and the occupants once the building is handed over. Allan shared that they are seeing more requirements in public and institutional RFPs that call for performance guarantees over one, three or even five years.
This means the design team has to stay connected to the project for much longer, which his firm views an incredible learning opportunity. He said that occupants need to be re-educated about how to live in their space. While we all know how to open a window or turn on the heat when we get home to control our comfort, we expect it to be automatic when we get to the office.
Developers Still Want Incentives
The final panel focused on incentives and regulations – the carrots and sticks that drive developers to build sustainability. Participants included Brandon Morgan with Vulcan Real Estate, Brett Phillips with Unico Properties, Don Horn with GSA, Amarpreet Sethi with DLR Group and Sandra Malloy with the City of Seattle’s Office of Sustainability & Environment.
The first question posed was whether developers would go green without incentives. The panel agreed that there has to be a compelling business reason to build green, but that those reasons were shifting. Brandon echoed the previous panel and stated that talent attraction, retention and productivity was becoming a key driver, even though it’s more difficult to measure the impact on the bottom line.
Brett believes that the preservation of the Pacific Northwest’s environment is also important – it’s part of the reason why businesses and employees want to locate here — so it is becoming critical for companies to protect it as an asset for the economic success of the region.
He compared LEED rated buildings to non-rated buildings, and found of the 14 buildings studied (comprising over three million square feet), rental rates were $2.20 higher per square foot and occupancy rates were 8% higher than non-rated buildings. He argued that developers need more incentives to enable them to increase their portfolio of green buildings.
However, Sandra countered that he had proved the business case for green buildings, and that was actually a sign that incentives may need to evolve to support projects that need it more. There’s no question incentives drive change, but the city needs to look at where it can create the most impact.
Continued Commitment to Sustainability
Despite varying viewpoints, one conclusion is clear—Seattle is a leader in sustainability, and the members of the real estate industry are not about to let that slide. If anything, there is a growing commitment from the industry to continue to push building performance further.
Maggie Santolla is Director, Marketing & Communications for Paladino and Company