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VOICES FROM THE INDUSTRY: Making green make sense in a competitive market

April 28, 2008

Day after day, the news seems filled with stories of disruptive credit markets, an economy teetering on recession, and increasing energy costs. As business professionals grapple with such issues daily, why would commercial real estate professionals consider the time and effort to "go green"?

Historically, green initiatives suffered in part from stereotypical "tree-hugger" false perceptions. Such perceptions may lead people to believe that green investments simply aren't worth it.

The truth? The real focus has always been the efficient use of resources and adhering to established best practices for operational efficiency.

In other industries like manufacturing, a commitment to efficiency appears in the form of programs such as Six Sigma, lean manufacturing or ISO certifications.

In the commercial building realm, a green-focused efficient building represents a high-performance facility. Far from a fuzzy commitment to a social cause, going green means adopting a structured management plan to reduce operating costs and limit the facility's environmental impact.

Today, new commercial construction often begins with the upfront goal of achieving LEED, or Leadership in Energy and Environmental Design, certification. New construction aside, there exist thousands of commercial buildings that can generate significant energy savings and reduce environmental impact without any capital outlays. According to the Environmental Protection Agency's Energy Star Program, the average existing commercial office building in America wastes approximately 29 percent of the energy consumed. So how can building operators in central Indiana start saving money and stop wasting energy?

Consider these five pillars for a successful green building management program:

Resource management

The idea here is to implement no-cost and low-cost measures and establish a benchmarking system (such as Energy Star) that constantly monitors energy consumption. According to the EPA, Energy Star-rated buildings consume 35-percent less energy than traditional buildings.

Given that energy usage typically represents the second-highest building operating expense, energy savings produces an immediate payback.

Still not ready to go green? Consider that the Indiana Utility Regulatory Commission projects that central Indiana electric rates will increase approximately 20 percent between 2008 and 2012. Using simple cost-saving measures such as retro fitting existing lighting, installation of motion sensors, adjusting equipment controls, operating equipment as it was designed, and occupant education in turning off lights and equipment, helps reduce the EPA-estimated 29-percent energy waste. And that saves real cash.

Waste stream management

The three R's of recycling-reduce, reuse and recycle-represent both common good sense and a necessary part of any effective green building program. Consider the fact that the summer of 2007 saw record or near-record prices for many metals due to the ever-increasing global demand for limited resources. Cost savings attained in the recycling of batteries, light ballasts, paper, cardboard, lamps, pallets, steel framing, and other materials should offset traditional disposal costs.

Green building materials

Because of skyrocketing costs associated with limited natural resources, more products than ever are being produced with recycled content. By employing strategic supply-chain partnerships, the costs for green products are the same as or only a bit more than traditional materials.

Education and training

This represents perhaps the most important attribute of a successful green building operation. Many government or not-forprofit resources exist to help small groups implement sustainability initiatives. You can't effectively go green if you don't know how. For maximum success, provide targeted training to service partners, suppliers, tenants, owners, staff and others associated with your operations.

Communications

Related to the above is the need to communicate and communicate well. At present, "going green" may represent a high abstraction and something that is not easily understood. Communicate progress on sustainability initiatives and share resources freely so others can buy in and establish their own sustainability program no matter how small the scale.

Green building practices are here to stay and here are a few of the reasons why:

Increased property values through reduced expenses,

Lower lease costs adding major value over a typical three- to five-year lease,

Increased employee productivity, and

Reduced greenhouse gas emissions, and less material waste.

Commercial real estate managers are working hard to add value for their owners, reduce energy use, create more pleasing environments for building occupants, and reduce the impact on the environment. Seize the advantages and go green.



Stefanski manages major real estate assets for the Indianapolis office of CB Richard Ellis.Views reflected here are the writer's.
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