Sustainable Development (JPM)
Property managers can reduce energy use and expenses through green practices
by Janice Rosenberg
The following is an excerpt from the May/Jun 2009 issue (Volume 74, Number 3) of JPM�, Journal of Property Management.
Think about this the next time you turn on a light: According to the Energy Information Administration�s Annual Energy Review 2007, energy consumed by residential and commercial sectors accounted for about 39.5 percent of that year�s total U.S. energy consumption. Reducing that figure won�t be easy, but applying sustainability measures can make a difference.
Just what is sustainability? The most widely quoted meaning internationally is the "Brundtland Definition" from the 1987 Report of the World Commission on Environment and Development: Meeting the needs of the present without compromising the ability of future generations to meet their own needs.
"Sustainability is absolutely not going away," said Nick Stolatis, CPM�, director, strategic initiatives, TIAA-CREF Global Real Estate in New York City. "It�s about running properties efficiently, a reduction of waste and the proper utilization of energy. We�re cognizant of our obligation to clients to operate their investments in a responsible fashion."
Sustainability Drivers
A desire to protect the planet drives many people to join activist groups focused on green initiatives. But you don�t have to be a full-time environmentalist to see merits in sustainability. Property managers have taken up sustainability measures because they can save money and attract tenants.
"With green practices we can reduce the environmental footprint of a property substantially while also improving its value and providing a competitive advantage," said Doug Gatlin, vice president of market development for the U.S. Green Building Council (USGBC) in Washington, D.C.
Although it�s true that large scale green efforts such as building wind farms and harnessing solar energy can cost millions, one of the main drivers behind property managers� sustainability efforts can be cutting expenses.
Several years of experience have taught Craig Sheehy, CPM, LEED-AP, president and CEO of Envision Realty Services in Folsom, Calif., the truth of that statement. In 2003 he began incorporating green measures into the management of a 1-million-square-foot building.
"We changed the way we were operating, but we didn�t have to step out of our comfort zone to do it," Sheehy said. "We saved water and energy, and eliminated the bad chemicals we were bringing into the building, and it resulted in huge savings."
Rising energy prices and dwindling water supplies were two main drivers for Steve Ring, CPM, LEED-AP, director of client solutions at Cushman & Wakefield, AMO�, in San Francisco. But over the last couple of years Ring also has been driven by the increasing likelihood that potential tenants will be looking for spaces that meet the requirements of their companies� published social responsibility mission statements.
"In the private sector, large corporations have stated to stockholders that they follow sustainability practices and part of that is that they will only occupy buildings that have those in place," Ring said. "They are looking for recycling programs, material and resource purchasing programs, indoor air quality programs, and the biggie�energy conservation."
Even tenants who are not constrained by mission statements may be attracted to sustainability measures, Sheehy said. Another key driver for his company is the strong perception that sustainability measures in this slow economy may give properties a leg up on attracting and retaining tenants.
"In the future, people will be more and more interested in places that are healthy, give them higher motivation rates and a reason to want to come to work, and have a lesser ecological footprint," said Volker Hartkopf, director of the Center for Building Performance and Diagnostics at Carnegie Mellon University in Pittsburgh, where his research looks at how sustainability measures affect employee productivity.
For residential property managers who have been hit by rising vacancy rates, and ever greater move-in concessions, it may be difficult to justify upgrades that increase sustainability unless they provide a good payback within five years, said Greg Martin, CPM Emeritus, vice president and head of rental residential at Draper & Kramer, Inc., AMO, in Chicago. He recommends that property managers who are planning substantial investments first do careful return analyses. "Following the green path is sexy, so there is some benefit to that," Martin said. �There are still people out there who are very concerned about their environment and might pay a higher rent for something truly sustainable. But there will be fewer in these times."� In a broader context, improving the American economy itself might be seen as a driver for sustainability measures. In a healthy economy, building repair jobs will not be outsourced to foreign countries, Hartkopf said. Instead, local workers will be hired for the jobs.
The full article is available as an online exclusive in the May/Jun 2009�JPM� issue.
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