RE64C11: The Business of Green and Sustainability in Commercial Real Estate

Approved Jan. 10, 2011

A. The Definition of "Green" and "Sustainable'? (15 mins)

  • How does it differ from office, retail and industrial real estate?

B. The history and background on U. S. Green Building Council (USGBC) (15 mins)

  • What is USGBC? Who started the organization and what is its history?
  • What is the perception of the public about "green"?
  • What is Leadership in Energy and Environmental Design (LEED) all about and what does the acronym stand for?
  • What are the levels of LEED? What is the process, how long, who decides the level?
  • What does LEED AP (Accredited Professional) mean? How does a person earn the accreditation?
  • A review of the point system and why it should be important to the office, retail or industrial occupant
  • "Green Building" (Leadership in Energy and Environmental Design)

1. Sustainable development
2. Water Savings
3. Energy efficiency
4. Materials and resources selection
5. Indoor environmental quality
6. LEED certified: 40-49 points
7. LEED silver: 50-59 points
8. LEED gold: 60-79 points
9. LEED platinum: 80 points and above

C. Commercial tenant perceived benefits of Green (15 mins)

  • Opportunity to reduce operating costs
  • Reduces employee absenteeism
  • Lowers staff turnover
  • Healthier working environment
  • Enhances corporate social responsibility (CSR)

D. The Tenant's perspective (the demand side): Request For Proposal (30 mins)

  • Review of new buyer-broker and tenant-broker languages in an RFP to lease or purchase commercial real estate
  • Sample wordings used by brokers
  • Examples of how a commercial broker responds
  • Reviewing these provisions with the commercial consumer

1. Request for Proposal

  • Include a question in the RFP on "LEED Certification"
    "Please indicate if your building has received or achieved LEED certification and, if so, at what level? Please indicate how your LEED certified building benefits the tenant."


2. Commercial Leases

a. Demand on landlord to maintain compliancy or to be compliant as a condition to a lease

b. Landlord might demand tenant to maintain sustainability at TENANT'S EXPENSE

c. Owner-Occupied: Companies are asking to be LEED CERTIFIED for commercial buildings and tenants with younger generation employees with fresh social responsibilities

d. Owner-Occupied: Company Board of Directors Are Asking to Be LEED CERTIFIED

3. Types of Companies

a. Mostly public companies/Govt. Agencies

b. Office retail and industrial

c. Ways the broker can use this knowledge to enhance the buying experience of real estate

4. How Cities Are Incorporating "Green" In Building Codes (10 mins)

  • Sometimes it is not a choice
  • Many cities now incorporate in commercial building codes
  1. Boston
  2. Arlington, Mass.

5. Younger Workforce (10 mins)

a. How GEN X and D are influencing the commercial green movement

b. European companies care

c. West coast companies care

d. Europeans and west coast are also

  • Buying or merging with east coast firms
  • Dot.coms/west coast movement
  • Gen X: 30-43 year olds want commercial green design
  • Commercial tenants are impacted by employees in short supply that want "green" design occupancy
  • Companies are forced to listen to "Xers"/They want accountability for employers social actions

E. The Landlord's perspective: Reasons to go "green" commercial buildings (the supply side) (10 mins)

1. Attracts more commercial tenants

2. Governments are making it part of the building codes

3. It can save 30% on energy, 35% on water use, 30-50% on waster and 50-90% on carbon savings

4. Has people benefits of designing for more natural light, greater temperature regulation, greater fresher air intake and increases employee productivity by 2-18%

5. Examples of "Green" affect the marketability of the property. The considerations are you required to make for a tenant

6. List the cost factors to provide "Green" and review new commercial new construction vs. renovation

7. The added cost to commercial rental costs

8. Being LEED is leading to competitiveness in the market. Commercial brokers recommendations to sellers or landlords to enhance marketability

F. The Architectural and Engineering Perspective (15 mins)

  1. How complying with the demand for Green construction impact the design process
  2. The impact of Green on the selection of commercial materials?
  3. Sourcing of products
  4. Operational cost for systems
  5. The impact of each LEED level has in the overall design and cost of a project
  6. Percentage of green vs. typical construction projects
  7. List other countries that have similar movements (Germany and other European countries)
  8. The history of the emissions with the world environment. A problem that goes back to perhaps 1896. Experts belief about the future on the Earth's environment (pro and con) (see "Hot, Flat and Crowded by Tom Friedman)
  9. The definition of "environmental issue" and the reasons the commercial tenant may care.
  10. The real estate connection to the environmental issues
  11. Carbon footprint issues: commercial real estate impact and case study examples


"Hot, Flat and Crowded" by Tom Friedman
Royal Institute of Chartered Surveyors Winter '09 Green Survey

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