LEEDING Manhattan to Sustainability
- By L.K. Williams, EPonline
- Apr 24, 2008
Businesses do business for profit. But today, some businesses are stretching their investment because the market is willing to bear the cost for sustainability.
Take 545 Madison Ave., N.Y., for example. The building at this Manhattan address was demolished a little over a year ago but is being reconstructed as a high-end, 17-story office building for 8 to 10 percent more than a conventional Class-A building would cost. The extra investment is going toward Gold certification for the building's core and shell under the U.S. Green Building Council's Leadership in Energy and Environmental Design program.
Core and shell certification includes the building's exterior wall, central equipment, lobby, bathrooms, and elevators.
Chris Nolan, director of development for property developer LCOR, said, "We estimate that it is somewhere around an 8- to 10-percent increase in the cost of a project. It's not that bad -- except the cost of a project overall is severe. The cost of construction and development today is already high."
|New York State Energy Research and Development Authority's
New Construction and Green Buildings Activity Through 2003
• 902 active projects
• 87.9 million square feet of building floor space
• More than $13.5 billion in construction activity across New York State
• 105,961,551 kWh in energy savings
• 46,700 tons of carbon dioxide reductions
• 31 percent estimated electrical energy savings over base case
• 32 Green buildings projects, over 9 million square feet
Cost Reality Check
According to its Web site, the council charges a registration fee of between $450 and $600, depending on membership status. Membership dues are based on gross annual revenues for specific categories, such as contractors/builders, educational institutions, and real estate. Precertification for core and shell is $2,500 for members or $3,500 for nonmembers. For certification, design review fees are fixed for buildings having less than 50,000 square feet ($1,250 for members, $1,500 for nonmembers) and more than 500,000 square feet ($12,500 for members, $15,000 for nonmembers). For buildings in between those sizes, the fees are, at most, $0.03 per square foot. There also is a construction review that can cost $500 for members and $750 for nonmembers on the low end and ten times that much for those categories on the high end.
Developers who want to go green at this level have to factor in increasing the value of an exterior wall and the efficiency of mechanical systems and then balance that sum with how much rent tenants are willing to pay, Nolan explained. Those numbers spill off into the cost of doing business and have multiple ripples, he added.
Energy savings over the long term are expected to help offset the initial construction costs, however.
The Madison Avenue property has been precertified for LEED (meaning that fees and paperwork have been turned over to the council toward certification) and the developer can make public its green plan. For each "achievement" in six categories, a building will earn points. For example, 15 points are possible under the "Sustainable Sites" category. Points in this category can be awarded for anything from brownfields redevelopment to providing bicycle storage and changing rooms. A Gold rating requires between 34 and 44 points. The highest score possible for a Platinum rating is 61.
To earn the Gold, LCOR is using local and recycled materials; solar reflective glass on the exterior; a chlorofluorocarbon-free heating, ventilation, and air conditioning system; and low-mercury fluorescent light fixtures with occupant-sensing devices. Natural light is a large part of the interior because the architect has designed a floor-to-ceiling glass curtain wall. The company also opted for wind power from ConEdison Solutions, a subsidiary of Consolidated Edison Inc.
Nolan said that sustainability is difficult in the development context because it depends partly on what the market is willing to accept. "The money is at risk," Nolan said. However, green buildings are becoming "a plus" in safeguarding that investment as insurance companies and financial investors are recognizing their value.
Green Is Not a Lonely Color
Others also are trying to assist the green building movement. The New York State Energy Research and Development Authority (NYSERDA) will pay a percentage of consulting costs related to initial planning and documentation for the LEED program. And in the construction phase, NYSERDA will subsidize certain costs related to the energy aspects of the project, Nolan said.
"At 545 Madison, we took advantage of all the programs we could, but others could be helpful," Nolan commented.
Currently, NYSERDA offers assistance to homeowners who want to install solar panels and reduce their costs. Excess solar power can be sold back to the grid. State bill A08690, "An act to amend the public service law, in relation to net energy metering for nonresidential solar electric generating systems," would allow commercial facilities to participate in the program. But the bill has been stalled in the Senate.
Political will is at the very heart of the green building movement. In cities where people are aware of sustainability issues and believe they have, incentives evolve and green initiatives are emerging.
LCOR signed a 75-year lease for the 545 Madison Avenue property. Within a few months, Nolan said he expects to receive a temporary certificate of occupancy from the city. That will pave the way for tenants -- high-end financial and legal firm prospects -- to implement sustainable options on their floors.
"In the end," Nolan said, "the investment is supported for a Class A building."
LCOR is the national real estate development, investment, and asset management firm that led the $1.4-billion Terminal 4 project at JFK International Airport. 545 Madison Avenue is its first LEED building in construction but the company has plans in the works to develop more. Partners on the Manhattan project include Lehman Brothers and BlackRock Realty.
According to Ashley Katz of the USGBC, New York City has 15 certified projects. Some 268, however, are registered and seeking certification.