Competition driving green building momentum

Experts say market is segmented between city and surburb, but incremental change exists
Monday, April 7, 2014
By Barbara Carss

Among a preponderance of “communities” and “philosophies”, adherents of green buildings are popularly dubbed a “movement”. It’s a suitably active term to describe both the change occurring across the real estate sector and a journey that is still very much in progress.

Some of the human agents of market transformation shared their thoughts about complementary socioeconomic forces and technological supports in a wide-ranging discussion at the recent Green Real Estate conference in Toronto. When asked to assess achievements, challenges and future directions, they placed real estate in the context of higher-order threats that pressure the building stock and the economic activities it accommodates.

“The greener buildings are a means to an end,” asserted Michael Brooks, CEO of the Real Property Association of Canada (REALpac). “If it wasn’t for carbon dioxide, we wouldn’t care about the kilowatts; it would just be another cost in the building. We can talk about business-case driven goals, but let’s focus on the bigger issue: the energy externalities.”

Even so, others suggested that the big picture and the business case are largely inseparable.

“We don’t do it for the Mother Theresa award. We do it because it’s good investment,” said Phil Gillin, senior managing director and head of Canadian property investment for Sun Life Financial.

Fallout from extreme and increasingly volatile weather, rising energy prices and demographic trends were all identified as current and future contributing factors to new approaches to building design, management and operations. The tools of improved performance are typically tangible and often technological — equipment, controls, monitoring and commissioning procedures — but investors’, owners’ and tenants’ intangible perception of value sways decision making and capital expenditure.

Few see a direct correlation between green buildings and employees’ decisions to accept, remain in or leave a position. But the quality and status of the workplace can be components of job satisfaction, productivity and even principles. Gillin theorized that people want to be aligned with companies and organizations that reflect their values.

“It’s part of complex set of variables that attract talent. A green building is part of the broader fabric of the company,” he said.

“I think the transformation is going to be because the big corporations are going to start to push the market,” predicted Dan Probst, who is based in Chicago as chairman of energy and sustainability services with Jones Lang LaSalle.

As a panellist looking somewhat from the outside, he pointed to a couple of notable examples of synergistic change in the United States. Arguing that compulsory energy reporting ultimately benefits the building sector by pushing owners and managers to pursue efficiencies and rewarding those that do, he credits a growing number of major U.S. cities, including New York, Chicago and Seattle, for providing the nudge.

“It has to be a bit of a (public-private) partnership,” Probst observed. “That little stimulus can enable a lot of downstream activity.”

Turning to a grimmer natural influence, he calls Hurricane Sandy a key promoter of the concept of resilience, which has also created market share for alternative energy and micro grid infrastructure.

“It’s not so much for pure energy, but partly from a backup power perspective,” he explained.

Meanwhile — perhaps reflective of local preoccupations — other panellists tackled the perpetual debate of downtown versus suburbs, with more than one panellist expressing mixed opinions from either side of the perceived cultural divide.

“We’re working a lot at cross purposes,” maintained Dermot Sweeny, principal with Sweeny & Co. Architects and a specialist in sustainable design.

He typified traditional residential suburbs as automobile-dependent, energy-wasting, carbon-outputting developments that quickly cancels out the gains made in high-performance commercial buildings. Yet he acknowledged that prosperous urban cores are pushing single-family housing out of the economic range of many.

“There is no viable alternative to a suburban home in a downtown situation. We’ve got to find a viable and reasonable place where people can raise families in the city,” he said.

On the flip side, younger workers’ greater reliance on public transportation is an economic symptom that can play out in leasing decisions and favour downtown commercial space.

“The suburbs themselves need to be intensified,” Sweeny added. “Density is not necessarily a bad thing. It doesn’t have to be in towers.”

“You’ve got to think about how to re-energize the 905 (Greater Toronto Area),” Brooks concurred — advice he also extended to the office sector. “My view of the private market is it is still pretty segmented between the downtown and suburbs. The potential that we think we have in green buildings may be a bit illusionary.”

That comment prompted the discussion moderator, Brad Henderson, senior managing director with CBRE Limited, to interject with examples of recent suburban LEED developments that house prominent corporate tenants.

“I think where we struggle is with smaller landlords and smaller tenants. This has been the same challenge CivicAction and the Race to Reduce (the Greater Toronto collaborative landlord-tenant energy-saving campaign) has to get smaller players involved,” he mused.

Still, that might be in keeping with what’s typically an incremental unfolding of change.

“Rarely do you see a (LEED) Platinum on a new building request in the suburbs, but five years ago you didn’t see a Silver,” Sweeny reported.

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