Wednesday, November 11, 2009

Owners Increasingly Seeking LEED Certification for Existing Buildings

Despite the economic challenges of today’s market and economy, developer interest in the U.S. Green Building Rating System’s Leadership in Energy and Environmental Design program is on the rise. Notably, while still not quite as prevalent as LEED certification for new construction, LEED retrofitting of existing building continues to grow.

“LEED for Existing Building is a growing rating system,” a USGBC spokesperson told CPE. “Retrofitting buildings ideally would be most green, not having to tear-down and rebuild or build from scratch, but rather greening the existing stock of buildings which so desperately need energy retrofits, et cetera.”

As of Aug. 4 figures, which are the most recent available, there were 290 certified LEED for Existing Buildings projects, the spokesperson said.

Riverside Commons Building No. 2 – in the Dallas suburb of Irving, Texas – is one of those refurbished projects to earn the LEED certification as the first of its kind LEED-CS (core and shell) in the Dallas area.

Leadership at the Dallas-based Westmount Realty Capital L.L.C. already planned a $2 million building remodel when the idea to seek LEED certification arose. During the renovation project, the firm got an unexpected offer to buy the six-building complex form one of its tenants.

On Jan. 21, CPE reported on the sale of the 460,300-square-foot Class A property to two-year tenant Research in Motion, the Ontario, Canada-based maker of BlackBerry wireless devices. Riverside Commons is the location for the firm’s U.S. headquarters.

Following the sale, Westmount executives continued to pursue the LEED certification for the property, which was achieved for a minimal amount of additional expense of above the approximately $2 million of an already planned building remodel, Steve Kanoff, Westmount’s executive vice president and partner, told CPE.

“Not only was [seeking LEED certification] the right thing to do, but we felt at that time that it would also give us a competitive edge with other space in the marketplace,” Kanoff said. “We busted a common myth that building to LEED certification would be too costly. It is a common misconception that it is economically infeasible. The belief is that it is harder to achieve that certification in a cost efficient manner, but we proved that was not the case.”

Kanoff said the six-building complex had large floor plans and was seeking out larger tenants, many of whom would be required by policy to seek out green office space.

“Many of those larger corporations which would occupy that space are more likely to have green mandates,” he said. “Since we determined that going green would add only a slight premium to the refurbishment, we sought to make the project stand out in the crowd versus other available office space. If you aren’t green, you’re narrowing your potential pool of tenants and you’re not going to be competitive.”

“I think we did the right thing,” he said. “It was very little premium associated with it, too. If you’re not LEED compliant, you are eliminating a large pool of potential tenants especially when you realize that going green is not cost prohibitive,” Kanoff said. “Tenants have an infinite number of choices for office space in Dallas and we wanted to distinguish our property from the competition.”

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