Interest in 'green building' boosted by slowing market

A slowing real estate market may improve the attractiveness of environmentally sound design, construction and renovation of commercial buildings.

In a hot market, one in which investors were flipping buildings in 12 to 18 months, there was little incentive to go green, says Craig Sheehy, director of property management at Thomas Properties Group in Sacramento.

But now, in a slowing market, owners who plan to hold a building for seven to 10 years find environmentally oriented construction and retrofits make sense for long-term profitability.

Sheehy, an advocate of green buildings, visited with northern Nevada builders, architects and project managers this month at a seminar hosted by the Nevada State Office of Energy. Sheehy also spoke to members of the Economic Development Authority of Western Nevada during his swing through the region.

"There has to be an economic benefit to move forward," he said.

Going green can cost a premium of up to 2 percent, he said, but the payback is quick buildings perform 20 to 60 percent better. And sometimes it costs no more to build green than to not.

Just how big are the savings? Sheehy cited Adobe, a California company that spent $1 million for a green retrofit. That initial investment generated $1 million a year in savings thereafter.

And the perceptions of higher costs for new construction involving green techniques don't always jibe with reality, said Rod Wille, green projects manager at Turner Construction Co.

A good design team can put up a green-certified building for a 1 percent more than traditional construction or sometimes for no additional cost, he said.

The perception of high cost is a discouraging factor right now, Wille said, but green building is the future of architecture and design. By 2010 it will represent 5 to 10 percent of the market because energy costs will drive the movement.

Thinking green isn't just about design and construction.

Sheey said Thomas Properties, which manages office space around the country, noticed that in one high-rise, the lights burned all night as janitorial crews team cleaned the building. It decided to turn the lights off and shift the cleaning to daylight hours. Power bills plummeted, to the tune of $100,000 a year.

But other benefits also boosted the bottom line.

Sheehy said that other than complaints about heating and cooling, the most common employee gripe is about office cleaning.

Janitors were issued quiet vacuum cleaners, and employees stopped complaining that their spaces were never cleaned. They saw the cleaning crews at work.

The shift to daylight hours reduced janitorial turnover, because the cleaners could live a normal home life.

And it lessened workers comp claims because cleaners could no longer take a fall when no one was looking. Finally, cleaning during office hours stopped employee complaints about janitorial theft.

Environmentally sound practices, Sheehy says, can cut property management costs in half for some properties a significant savings for building owners.

A new Nevada law makes the state one of the first to offer tax incentives up to 50 percent of property taxes for 10 years for designs that meet standards set by the group known as LEED: Leadership in Energy and Environmental Design.

"It's not just a California thing," he says.

Points in the LEED system are awarded in six design categories including site selection; efficient use of water, energy and atmosphere; materials and resources; indoor environmental quality and innovative design.

To receive a state tax abatement, the building project must be registered with the USGBC (www.usgbc.org) and have a letter of verification from the director of the Nevada State Office of Energy. Applications for the project registration process can be downloaded from the www.energy.state.nv.us Web site.

Once a project has its letter of verification, an application can be made to the Nevada Commission on Economic Development for the partial abatement of real property taxes.

Assemblywoman Chris Giunchigliani, who sponsored the legislation making the rebates possible, said,

"This legislation works on three levels. It promotes a better use of Nevada's land and resources, fosters economic development with new construction technology, and in the long term employers will see reduced health care costs as a result of healthier buildings."