Posted on December 17, 2008 by Chris Cheatham

So Many Reasons to Build Green

Green Building Law Update’s review of reasons to build green has somehow become a top 5 list.  Here’s a recap of the first four reasons:

1.    Increased opportunity to obtain financing
2.    Build to the state of art
3.    Distinguish your project from traditional construction
4.    Your customer is demanding green

Rounding out the top five is a reason that you ignore at your own peril:  your government requires it. 

Previously, Green Building Law Update has highlighted states – Virginia, Indiana, Maryland – and cities – Washington, D.C., Alexandria, Portland, Los Angeles – that require or incentivize green building.  As we move into 2009, the political support for green building initiatives will increase.  As more cities and states require green building, parties will have to keep track of these green building regulations in order to ensure compliance.  Why not just build green and avoid the hassle?  

There you have it.  Five reasons to build green, including one reason why you will have to build green.  You’re convinced now, right?

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Posted on December 12, 2008 by Chris Cheatham

Your Customer Expects Green

While I was at GreenBuild, I became motivated to think about reasons to build green despite the slumping economy. While Green Building Law Update has been critical of some green building trends and focused on the potential risks associated with this type of construction, there are many reasons to undertake green building projects now. 

Green Building Law Update decided to compile the top five reasons to build green despite the current recession. Lets look back at some of the reasons we have reviewed:

 

  1. Improved financing opportunities
  2. Build to the state of art
  3. Distinguish your project from traditional construction

The next reason to build green is blunt – because your customers are demanding green projects! Don’t believe me? Do you believe 400 commercial real estate executives?

Commercial real estate executives are increasingly seeking greener office space -- and are less inclined to pay premiums for it, according to a recent survey by CoreNet Global and Jones Lang LaSalle.

 

"They are less willing to pay a premium for sustainable space because they understand that is doesn't cost the owner more to make that space efficient," said JLL Senior Vice President Michael Jordan.

The study found that 69 percent of real estate executives embrace sustainability, up from 47 percent in 2007. 

 

If Michael Jordan supports green building, shouldn’t you? 

 

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Posted on December 10, 2008 by Chris Cheatham

Distinguish Your Existing Building

In two previous posts prior to Greenbuild, Green Building Law Update focused on reasons to build green in the slumping economy.  Continuing that theme, here’s another example of how green buildings help parties distinguish their projects as demand for new construction decreases:

 “LEED for Existing Building helps owners compete in tough market”

You may know that the USGBC has several different green building rating systems, one of which is LEED for Existing Buildings.  Instead of building a new shell or changing the exterior or interior structure, LEED for Existing Buildings deals primarily with changes to a building’s operations and management systems.
 
How can you use LEED for Existing Buildings to distinguish your green building project?

“LEED for Existing Buildings can help differentiate a building owner in an existing building market and allow them to stay competitive with new building stock,” says Barbara Ciesla, co-leader of the sustainable design group of HOK Canada’s Toronto office.

I hope you see the opportunities created through green building projects, despite the current recession.  You can increase your likelihood of obtaining scarce financing.  You can build for the future state of art.  Most importantly, you can distinguish your project from the surplus of available space.

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Posted on November 21, 2008 by Chris Cheatham

Need Green? Build Green

In previous posts, Green Building Law Update pointed to anecdotal evidence that financing difficulties were affecting the green building industry.  While there may be specific examples of green building difficulties, the bigger picture does not look as dire. 

According to a recent article, the green building industry is “staying afloat” despite the tight financing market.  More importantly, at least in New York City, incorporation of green building strategies may actually be a prerequisite for obtaining financing: 

Douglas Durst said that in this day and age, all the top tenants demand green projects, a fact the banks know, making financing such projects easier, not harder. With credit so difficult to come by, a few sustainable features or a LEED application may be the deciding factors on that eight-figure loan.

So the state of the art will likely require green building projects and obtaining financing requires green building strategies.  Why are you not in Boston learning about green building?  Want to learn more?  Contact me at chris@greenbuildinglawupdate.com. 

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Come hear construction, design and surety experts speak about emerging green building litigation and risks:

Green Building:  Opportunity or Legal Quagmire?

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Posted on November 19, 2008 by Chris Cheatham

The State of Green Building

In anticipation of GreenBuild, Green Building Law Update is going to step back and ask: what is the state of green building? 

These are definitely interesting times for the green building industry.  On the one hand, as I have highlighted, green building projects may have to be shelved due to the tight lending market.  But making conclusions based on a snapshot of the current green building industry is short-sighted.  Prior to the economic crisis, we were in the middle of a “green revolution” and the revolution will continue when we emerge from the slumping economy. 

I am not the only one voicing these long-term positive expectations for green building: 

"The state of the art will be green," said Block, partner at Tannenbaum Helpern Syracuse & Hirschtritt LLP. "There’s no question about that." Block pointed out that as part of their more stringent standards, lenders will insist on the-state-of-the-art when it comes to financing new construction. Moreover, government is leading the way in mandating green standards, he added.

If the state of the art is going to be green, maybe it’s time you learn about green building.  Stick with Green Building Law Update and we will lead you through the “green revolution.” 

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Come hear construction, design and surety experts speak about emerging green building litigation and risks:

Green Building:  Opportunity or Legal Quagmire? 

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Posted on November 7, 2008 by Chris Cheatham

The Google Delays Green Building Project

 

As the economy continues to stumble along, the effects on the green building industry are starting to emerge.  Green Building Law Update previously predicted that LEED certification would find itself on the chopping block and specific examples were discussed.  Now, via Jetson Green, an even more stark example has emerged: 

Google Puts Plans for Beyond LEED Platinum Offices On Hold

 

Touted as the "greenest building of all time", Google (or The Google, if you prefer) intends to build a project that goes beyond LEED Platinum.  But the down economy has even affected Google's green building project: 
Dave Radcliffe, Google's vice president of real estate, said the project didn't make financial sense at the moment, even though the company reported unexpectedly high profits this quarter.

"We're focused on making the most efficient use of the space we have," he wrote, "and new construction at the site doesn't currently make the most economic sense."
Importantly, Google intends to build the project sometime in the future.  Instead of eliminating the green building strategies, Google has simply put its green building project on hold.  Google, it seems, recognizes the costs to build green will be repaid in the future:  
"I don't think it's going to cost any more than it would to do a Class A style building for Google," Farrell said. "It's certainly going to cost less in the long run -- 10 to 20 years."
As we wrote last week, projects that do not incorporate green building strategies risk being outdated in the very near future as more projects incorporate such strategies.   Google gets it, do you? 
 
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Posted on October 31, 2008 by Chris Cheatham

A Week of Epiphanies: Go Green or Die Not Trying

The final Green Building Law Update epiphany for the week will come in the form of a headline I came across this past weekend:  

In the LEED:  Green certification will be the norm in a few years

Last week, Green Building Law Update focused on how the economic downturn may result in a slowdown of green building developments.  On Wednesday, we discussed how government projects should consider foregoing the green building certification process due to certification costs.  But the exact opposite is true of private developments.  Private developments should continue to seek green building certification primarily because “green certification will be the norm in a few years.” 

Why does this matter?  Well, why would you build a project now that you know will be outdated in a few years?  Others are also recognizing this factor in their green building efforts:

“I think that over time, cities will start to adopt some of the LEED standards into building codes,” CEO Bill Cawley said. “It will cease to become something that sets companies apart and start to become standard – I would think in the next five, maybe seven years.” 

Mr. Cawley also brings up another great point that relates to Wednesday’s post:  government’s should adopt LEED standards into building codes.  But that is a topic for another post. 

Are there better reasons for continuing to pursue private project green building certification in a struggling economy? 

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Posted on October 22, 2008 by Chris Cheatham

Can State Budgets Support Green Building?

As part of our review of the economic downturn's effect on green building, on Monday we looked at private projects that have cut LEED certification due to associated costs.  Today, we move from private projects to public projects.  Despite this shift, the theme is the same:  the economic downturn will result in less public projects pursuing LEED certification.  Want proof?  In the same Gazette.Net article cited to on Monday, one Maryland public project has already abandoned LEED certification:

A Frederick County Public School project, the Earth and Space Science Lab at Lincoln Elementary in Frederick, also had registered for LEED certification. Directors withdrew from the process in the spring, realizing it could not meet the standards without incurring additional costs.
This blurb got us thinking here at Green Building Law Update: what will happen to all of those states that passed regulations requiring public projects achieve LEED certification?  As you probably know, during economic downturns, less taxes are collected, which affects state budgets. Maryland, which has an estimated budget of deficit of $248 million heading into 2009, is a great example:

Gov. Martin O'Malley directed state agencies yesterday to look for budget cuts of up to 5 percent that could include layoffs or unpaid furloughs for state employees, as he seeks savings in this year's budget and prepares a spending plan for next year.  An economic downturn has cut tax collections, so O'Malley must make cuts for the fiscal year that began in July to keep the $14 billion operating budget in balance, as required by law.

One area where state agencies may seek budget cuts is through green building programs.  For example, the Maryland Green Buildings Tax Credit (you may remember this from the Shaw Development case) has yet to be renewed in 2008 and it seems unlikely to be renewed in the face of the state's huge deficit.  Additionally, Governor Martin O'Malley signed Maryland's High Performance Buidings Act on April 24, 2008, which requires construction or major renovation of public projects to achieve green building certification through LEED, Green Globes or an equivalent green building system unless a waiver is obtained.  If agencies are asked to cut 5 percent from their budgets, it's not a stretch to imagine agencies using  waivers to eliminate green building certification and the associated costs. 

Obviously, Maryland is not the only state with a major deficit that has now been hit by the economic downturn.  It will be interesting to see Maryland and other states manage the green building certification process in face of state deficits. 

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Posted on October 20, 2008 by Chris Cheatham

Projects Cut Out LEED Certification

Previously, Green Building Law Update wrote that the struggling financial sector may impact the number of projects seeking LEED certification. This past weekend, an article highlighting this point came across my desk that I had to share. Gazette.Net profiled numerous green building projects in Maryland that, despite initially incorporating numerous green building strategies, will not seek LEED certification:

Despite its bevy of energy-saving features, local construction material and preferred parking for hybrid vehicles, the latest office building by Matan Cos. of Frederick isn't receiving the green imprimatur of the U.S. Green Building Council.
 

Matan's RiversideFive office building — a 126,151-square-foot, four-story structure near the Monocacy River — meets the council's criteria for its Leadership in Energy and Environmental Design, or LEED, certification. But Matan is waiting until a tenant requests a LEED-certified building to actually complete the certification process, which can cost up to $2,250.
 

Matan Cos. went on to claim that LEED certification was not pursued because of owners “conscientious of savings.”  The article also highlights another development project that initially sought LEED certification and then abandoned green building strategies:

BP Solar, which is expanding its Frederick headquarters, originally sought LEED certification with a planned green roof, solar panels and energy-efficient design. Plans for going green changed when BP announced it would not complete the $97 million project to expand its manufacturing capacity, but finish only the $30 million addition for office space.
 

 
Obviously, this is just anecdotal evidence but these projects suggest that LEED certification will find itself on the chopping block as projects struggle to gain financing.  On Wednesday, we will discuss a Maryland public project that eliminated LEED certification.  State budgets, in particular, will feel a substantial impact from the financial downturn, and state green building efforts may pay the price. 

Photo Credit:  Matan Cos.

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Developers cede LEED label for savings (Gazette.Net)

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Posted on October 17, 2008 by Chris Cheatham

Cutting Edge LEED on the Chopping Block?

Green Building Law Update would be remiss if it did not comment on the recent financial struggles and the impact these events will have on the green building industry. Simply put, here at GBLU, we anticipate scaled back green building efforts as developers struggle to obtain financing.

A recent article in Globe and Mail (Canada’s National Newspaper!) does a great job highlighting the recent financing struggle for project development. The article focuses on a major condominium project in Canada and the developer’s struggle to obtain financing:

Just eight months after frenzied buyers lined up for days to buy units of the $450-million luxury skyscraper to be erected at the corner of Yonge and Bloor Streets, the global credit and U.S. subprime mortgage crises tightened their grip . . . .

Mr. Gold moved a few months ago to seek out new financing partners. Conditions are getting tougher, but the location and quality of the project helped him sign on two European pension funds, Mr. Gold said.

While this developer was able to find new sources of financing, the article points out that “it’s the marginal projects that could get hurt.” Additionally, as financing becomes harder to come by, developers may be forced to “scale back their projects.”  While Mr. Gold’s project apparently is not seeking LEED certification, if Mr. Gold had been forced to scale back the project due to a lack of financing, LEED certification may have been on the chopping block. Unfortunately, as developers fail to obtain financing, green building certification may be one of the first components of construction projects to be eliminated.

Do you agree or disagree?

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