How To Be A Sustainable Business

Transcription

1 Keeping an Eye on the Green in Infrastructure and Building David L. Pogue, LEED AP National Director of Sustainability CB Richard Ellis COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 1

2 COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 2

3 Sustainable Buildings Rating Systems ENERGY STAR LEED GREEN GLOBES BOMA 360 CLIMATE LEADERS Nationally administered benchmarking tool by EPA Buildings rated on a scale of Scores of 75 or higher demonstrate superior energy performance and qualify for an ENERGY STAR plaque Certified by USGBC s Green Building Rating System Buildings earn points to achieve Certified, Silver, Gold or Platinum level certification Certification for new and existing buildings Managed through the Green Building Initiative Widely used in Canada Awarded in areas of Waste, Energy Efficiency, etc. Introduced in 2009 by BOMA International Evaluates factors of a building s sustainability programs and practices in five distinct categories Corporatewide inventory of greenhouse gas emissions provided by EPA Requires annual reporting and aggressive greenhouse gas reduction goals COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 3

4 CA FL TX NY IL WA PA MI CO OR GA MA VA AZ MD OH NC NJ MN WI NV DC MO IN SC TN CT IA ME UT NM ID NH AR AL KY KS VT HI MT RI LA NE OK MS DE WY SD AK WV Sustainable Buildings LEED Properties by State Number Of LEED Properties By State Jan January 2010 COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 4

5 Sustainable Buildings LEED as % of Total Buildings January 2010 Sources: CoStar and USGBC COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 5

6 DC ND VT MN OR VA MA CT WA SD MD NM WI AZ KY PA Sustainable Buildings FL SC OH ID KS MT WV MS ME AK ENERGY STAR as % of Total Buildings 0.90% Energy Star Buildings as % of Total Building Counts Jan 2010 Data: CoStar and USGBC 0.80% 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00% January 2010 Sources: CoStar and USGBC COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 6

7 Sustainable Buildings Greenest Cities Rank City or District Penetration Per Million People 1 San Francisco (6.23%) 2 Houston (5.89%) 3 Washington DC (4.63%) 4 Denver (4.32%) 5 Duluth (4.32%) 6 Minneapolis (3.88%) 7 Seattle (3.71%) 8 Honolulu (3.67%) 9 Burlington, NC (3.57%) 10 Chicago (3.46%) Data Based on Office Stock Penetration, Source: CoStar Analysis by Eugene Choi in Green on Buildings Forthcoming in the Journal of Sustainable Real Estate, 2011 COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 7

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9 Regulatory Pressure California Must release ENERGY STAR data and ratings for the previous 12 months to parties in a commercial real estate transaction (AB 1103) Seattle Must benchmark utility usage and disclose results to any potential tenants, buyers and/or lenders (Seattle Ordinance ) Washington, DC Must measure and make public energy use in buildings over 200,000 SF effective 1/1/10; compliance will increase to smaller buildings in future years (Clean and Affordable Energy Act) New York, NY Recent bills mandating: A New York City Energy Code for building renovations (Int. No. 564-A) Annual benchmarking of energy consumption (Int. No. 476-A) Lighting upgrades and sub-metered tenant spaces (Int. No. 973-A) Energy audits once every decade and implementation of energy-efficient maintenance practices (Int. No. 967-A) COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 9

10 Recent Developments SEC Regulations Published interpretive guidance advising public companies and foreign private issuers that may result in an increase in the amount and scope of climate change disclosure contained in SEC filings Bank of America Shareholder Resolution Trillium Asset Management requests a report describing the implementation of its policy barring funding of companies engaged in mountain top removal Fifth Third Bancorp Shareholder Resolution Unitarian Universalist Association of Congregations requests a sustainability report describing strategies to address the environmental and social impacts of Fifth Third Bancorp s business, including strategies to address climate change COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 10

11 Attitudes McGraw-Hill Study Position of Respondents Survey Characteristics 52% 57% 48% 203 Respondents representing 75% of the $36 trillion U.S. equities market 21% 22% No firm below $250 million in revenues Geographic diversity 0% CEO/COO/Other CFO CSO Source: 2009 Greening of Corporate America (Siemens/McGraw-Hill Construction) Accuracy: 95% Confidence Interval +/- 7% Survey Period: February 3 to March 20, 2009 COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 11

12 Attitudes McGraw-Hill Study Stages of Corporate Involvement Stage 1 Comply with regulations only Stage 2 Internal operations only, seen as cost Stage 3 Consistent with company profit mission; Incorporated practices; Not part of products or company-wide Stage 4 Profit perspective of offering sustainable products to the market; Enjoy competitive advantage; Issue annual sustainability report Stage 5 All operations, products and services become sustainability oriented Based on Mirvis and Googins Stages of Corporate Citizenship COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 12

13 Attitudes McGraw-Hill Study Corp. Involvement in Sustainability 40% 39% % 30% % 15% 11% 5% 2% 7% Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Source: 2009 Greening of Corporate America (Siemens/McGraw-Hill Construction) COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 13

14 Attitudes McGraw-Hill Key Findings Sustainability is becoming business as usual 75% see green as consistent with their profit mission Firm expect sustainability to retain and attract customers Majority of CEOs (61%) recognize that sustainability leads to market differentiation Energy savings remains the most important driver for sustainability Firms report increasing benefits as their dedication to sustainability grows Corporations are driving market demand for green by requiring vendors to report on sustainability Half of firms are committed to renewable energy, reflecting growing government support COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 14

15 Attitudes McGraw-Hill Study Expected Business Benefits from Sustainability Adoption Customer retention and attraction 73% Drop in operating costs 71% Greater productivity 62% Employee retention and recruitment 61% More tax incentives 39% Source: 2009 Greening of Corporate America (Siemens/McGraw-Hill Construction) COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 15

16 Attitudes CB Richard Ellis Study Data Points 154 Buildings Nationwide Approx. 3,000 Tenants 51,614,501 SF Rentable Space ENERGY STAR (83 Avg. Score) $10.21 PSF Avg. Operating Expense Survey Locations Seattle Bay Area Denver So. California Dallas Houston Chicago Atlanta Boston Washington, DC COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 16

17 Attitudes CB Richard Ellis Study Perceptions Nearly all the public companies had sustainable mission policy statements, and many strongly agreed with it Public and Client Image Strongly Agree 34% Agree 40% Neutral 25% Disagree, 1% COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 17

18 Attitudes CB Richard Ellis Study Perceptions 70% agree that occupying green space is important for image This percentage is even higher for public companies Owner and Shareholder Image Strongly Agree 28% Agree 42% Neutral 29% Disagree, 1% COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 18

19 Attitudes CB Richard Ellis Study Productivity 55% agreed that productivity increased after moving This 4.88% average boost translates to about $20 PSF/year for those who agreed Employee Productivity Agree 43% Neutral 43% Strongly Agree 12% Disagree, 2% COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 19

20 Attitudes CB Richard Ellis Study Productivity Average 2.88 decrease in sick days, or about $5.00 PSF/year Fewer Sick Days vs. Previous Location Agree 45.5% Neutral 44.5% More 10% COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 20

21 Attitudes CB Richard Ellis Key Findings Operations Green buildings tend to be more intensively managed, have stronger occupancies & lower utility costs (including lower experience of much higher expenses) Separate metering has more impact on energy savings (21% savings) than almost any other factor Each point higher in ENERGY STAR saves.8-1% in electricity Productivity Green buildings observe higher claims of productivity in comfort, air, lighting and sick days Higher reported productivity + gains from fewer sick days = nearly $25/PSF improvement for those responding yes (nearly the amount of average rent) COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 21

22 Attitudes CB Richard Ellis Key Findings Commitment Most tenants won t admit to paying more for green features, yet evidence shows that they do (and will) pay more for green Green lease provisions are increasingly important (70%) Healthier indoor environments matter to tenants for staff retention (61%) and client image (74%) COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 22

23 Market Survey CB Richard Ellis Study 2009 Q1-3 Survey set vacancy 3.5% better than market in Q3 General Market vs. Surveyed Vacancy Rates Vacancy Rate 20% 16% 12% % General Market Survey Set 4% CBRE Econometric Advisors, CB Richard Ellis Fall Q 09 2Q 09 3Q 09 COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 23

24 Market Survey CB Richard Ellis Study Commitment While encouraging compared to earlier surveys, most tenants pay more rent for green buildings independent of their survey response Higher Rent for Green Space CBRE Econometrics Rent Per Square Foot $40 $30 $27.00 $30.54 $20 Market Survey COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 24

25 Academic Reviews and Studies There is a growing and consistent body of academic reviews and studies that is beginning to define and measure the economic benefits of sustainable commercial real estate. Doing Well by Building Green Does it Pay? Nils Kok, Ph.D. Universiteit Maastricht Business School, The Netherlands Responsible Property Investing Gary Pivo University of Arizona Sustainable Real Estate Trends Norm Miller, Ph.D. University of San Diego COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 25

26 Academic Kok Findings Asking rental premium ranges from % Effective rental premium ranges from 6-10% Transaction price increases by 16-17% Energy efficiency leads to rental/value premium Among green buildings, a 10% more efficient building transacts for 1% more One dollar of energy savings yields $18 of increased value a cap rate of 5.5% COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 26

27 Academic Pivo Findings 82% of executives would increase their allocation to Responsible Property Investing if it could meet their risk and return criteria 5-13% higher net incomes except in CBD Regeneration areas ENERGY STAR label had a NOI impact of +5% on rent, +1% on occupancy and -10% on utilities (rent premium similar to other studies but occupancy premium was less) ENERGY STAR labeled buildings had a +13.5% higher value COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 27

28 Academic Miller Findings Occupancy Rates 2.5% Difference COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 28

29 Academic Miller Findings Direct Rental Rates $4.73 Difference COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 29

30 Academic Miller Findings Occupancy Rates Note: Absorption on new LEED projects is running 3 : 1 sq. ft. 5.4% Difference COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 30

31 Thank you DAVID L. POGUE National Director of Sustainability, CB Richard Ellis COPYRIGHT CB RICHARD ELLIS CB Richard Ellis Page 31