The February/ March 2007 edition of Plenty Magazine has a really good article called "The Plenty 20" by Danielle Wood.  You won’t find it online, so go pick up a copy.  Generally speaking, magazine lists have a tendency to be contrived, opinionated, and/or incomplete, but I thought The Plenty 20 was rather thorough.  The article profiled an Ohio-based company called Fiberstars (NASDAQ: FBST).  The U.S. government funded the research that became Fiberstars’ Efficient Fiber Optic Technology (EFO) with grants totaling about $13 million.  Now, its lights illuminate the Declaration of Independence and the Magna Carta. 

How efficient are EFO lights?  Their efficiency is analogous to improving gas mileage in your car from 12 MPG to 50 MPG.  That’s efficient.  So efficient, these lights were used in the green Bill Clinton Presidential Library. 

EFO lights do not emit heat or ultraviolet rays, so they are perfect for museum or archival applications.  One 70-watt metal halide lamp, which connects to a fiber optic system, can equal the output of eight 50 watt bulbs.  Specifically in terms of efficiency, the EFO saves up to 80% on energy consumption, saves on maintenance (requires less work due to longer life), and saves one watt of HVAC for every three watts of lighting because the EFOs do not emit heat.  Not bad.  Further, Fiberstars EFO may reduce mercury emissions by up to 75% and their Reuse-Recycle Program allows customers to reuse 97% of the lamp and recycle the rest.  Currently, most of Fiberstars’ customers are commercial entities such as Whole Foods, McDonalds, Trump Tower, Starbucks, Nordstrom’s, Chevron, etc.  Maybe we’re not that far from turn-key consumer applications?

Here are some of the other companies on The Plenty 20: Nanosolar, ECD Ovonics, Greenfuel Technologies, Envirofit International, GE, Organic Valley, Tesla Motors, Southwest Windpower, Domini, Toyota, Whole Foods, Green Mountain Energy, Konarka, Goldman Sachs, Ormat Technologies, Ice Energy, Green Sandwich Technologies, Green Mountain Coffee, and Naturalawn.

Here’s the situation.  You have two new 15-story buildings in a good location near downtown.  Both buildings have received several inquiries from potential tenants.  Building #1 is a traditionally-built, modern facility.  Building #2 is similar, but it’s green (LEED-CS + LEED-CI).  A lease for 40,000 square feet of space at #1 is $35 and #2 is $36.50 per square feet.  Would you pay the extra $1.50 per square foot to lease space in the green building?  We’re talking about a serious premium.  I’m interested to hear what your perspective is on this. 

According to the U.S. Green Building Council, these rents are justifiable for a few reasons.  I’m going to clip out a few comments from their article, but feel free to read the entire thing. 

• Organizations with business models reflecting sustainability will be more likely to pay the premium. 
• Although green buildings are going up at an incredible rate, most of these are for use by the owners and most developers view speculative green developments as risky. 
• There is a dearth of tenable green lease space and requests for green space are falling on deaf ears. 
• The market is tenant driven right now and tenants have had success cooperating with owners to make green improvements or renovations. 

I think there will be a paradigm shift, but I don’t know how it will happen.  Somehow, the values of individuals and organizations need to shift towards an appreciation of sustainability, and that will create serious, mainstream adoption of green buildings.  Maybe the impetus will be regulatory?  Self-imposed?  Strategic?  I learned in Starting a Business 101, that some of the best opportunities in business become available due to a void or an absence in the market.  If it’s true that some customers and tenants are requesting green space, but the inventory isn’t available, there’s a void in the market that will be filled by the first innovators.  The rest will wake up some day and think, "I thought green buildings were for hippies?!  What’s going on?"  Which is partially an answer to my post the other day.  Via Appraisal Podcasts. 

The Energy Star-rated Owens Corning (NYSE: OC) world headquarters building in Toledo, Ohio, has added another badge of honor with Silver LEED-EB certification.  Designed by Cesar Pelli (listed by the AIA as one of the 10 Most Influential American Architects) and built in 1996, Pelli spoke approvingly of the certification, "I am pleased this facility provided the solid foundation needed to earn the recognition that the LEED Existing Building certification provides."  For a couple other examples of LEED-EB buildings, feel free to click over to read about Adobe + Union Bank of California Center.  Owens Corning also runs The Pink Panther Energy Blog, which informs customers on insulation + energy conservation best practices. 

Green Features:
Here are just a few of the green features mentioned in the certification: under-floor ventilation for energy-efficient air delivery and specific control of thermal comfort; low maintenance, indigenous landscaping; easterly facing building allowing for natural lighting control via adjustable shading; and reusable, removable, non-adhesive carpet squares throughout almost the entire building.  See also CO + PRNewswire. 

Taking a page from local developer Harwood, it looks like Hillwood decided to throw its hat into the green development ring with One Victory Park.  1VP is a 20-story, 450,000 square-foot, LEED-Silver office building slated for completion in 2008.  I’ve read a few conflicting reports on the actual details of the building, so we’ll have to watch and really determine the true specs.  Hines + Hillwood will be co-developing the project, which includes a Two Victory Park that seems identical to 1VP.  Boka Powell is the lead architect with Austin Commercial as the general contractor.   

1VP already has a tenant for six floors of the building.  Haynes and Boone recently announced that it would relocate from the Bank of America tower (tenant of 22 years), retaining Gensler as the interior design architect.  A recent news article pointed to suggestions that all the offices would be the same size, meaning senior and junior attorneys would be indistinguishable according to office size.  Why?  Efficiency and money savings.  Use your imagination on this one.  Image via. 

Recently, I attended a guest lecture by a seasoned real estate developer, and he was talking about the profitability of his projects.  This speaker has major experience will all types of investments including retail, single family, industrial, condo, etc.  I put him on the spot and asked him about the numbers he’s seen on sustainable developments.  His answer:  "They’re expensive, a break-even proposition at best.  Development is going that direction, but not now.  They’re not cheap, at all.  We’re talking 20, 30, 40% more expensive.  I won’t do them."  I was blown away. 

In stark contrast, on Monday, January 22, Rick Fedrizzi, CEO of the U.S. Green Building Council, said to the Miami Herald, "We are now at the point where you can build to LEED standards and it is not one penny more than conventional buildings.  We are more experienced now.  We have a proliferation of green building products and services."  From this perspective, it’s profitable and financially responsible to be environmental and build green. 

Someone’s wrong, who is it?

When I hear Fedrizzi’s statement, I’m led to believe that he’s accounting for construction on a first costs basis (not including the operational savings).  And I think he is.  He’s saying it costs the same to build green as non-green, on a first costs basis.  I mentioned the obstacles to building green recently, so is this a case where the developer was unaware?  What’s the deal?  I’m interested in hearing some real world discussion here.