For Real Estate, Transparency is the New Black
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Did you Read Co-star’s article today about “the state of energy efficient and green buildings” in across the US?
Read all the hand-wringing there about how hard it is to green buildings?
Of course, its a tough time for landlords to navigate their portfolios towards energy efficiency — what with new state energy disclosure regulations, percolating federal building labeling discussion and all breathing down their necks.
Interesting to us is call for more transparency in our industry. Notes Co-Star:
“The issue of tenants, real estate brokers and landlords all having access to more transparent and readily available information to enable them to make better informed decisions remains one of the biggest challenges facing the industry today, noted the panelists”.
This time last year, “getting the plaque” was all the rage. And some firms became a little too good at talking the green talk without necessarily walking the walk.
Experts pointed out that some buildings had obtained LEED-Gold certification, without significantly improving their energy profile beyond code requirements. They were able to achieve certification via sufficient LEED credits from other categories. And this caused a few to raise public doubts about the market strength of third party ratings system to address market transformation to low energy buildings. Those concerns were misplaced.
We hope in the coming months that the voluntary, transparent dislosure of a building’s energy use becomes as trendy as getting a LEED plaque on a trophy office building was last year. That would go a great way toward shifting market perception in favor of a value premium for certified green and energy efficient commercial real estate.
I know EBOM and 2009 address energy and measurement of performance, but these two issues still have a long way to go. It’s interesting that so many local standards have used LEED as their measure for energy efficiency regulations in buildings, when it does not necessarily mean a drop in the building’s energy consumption. As you say, the best thing to do is to just look at the energy bills.
Can you elaborate on your statement that “those concerns were misplaced”?
Thanks as always for a great discussion topic!
~Ari Frankel
Hi Ari! Great to hear from you. When we said that the concerns were misplaced, we meant that some of the pundits were predicting that the market would shun the LEED rating system because of these perceived flaws. Now that it is a year later, it is clear that the market has not shunned the LEED rating system, despite the accurately identified problem of being able to avoid more stringent energy requirements and still qualifying for LEED-Gold, which most professionals perceive as representing strong evidence of an asset being demonstrably less energy intensive than conventionally built peers.
Everyone seems to want to do the “hand wringing” when it comes to green building. It’s no different in the private sector. My family has lived completely off grid by choice for over 11 years. We use both solar and wind and found we do nothing but save money now. Not to mention, there is rarely a need for an emergency power system when a disaster such as storms hit! This would be great for such things as hospitals and secure buildings. Too bad they don’t see it