GlobeSt.com: In your podcast, you mention there'sbeen a major shift among developers and tenants toward greenbuilding. How big a shift do you think this is?

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Brandt: Almost all the country's largestindustrial developers have begun integrating green buildingelements into their new developments, but this is a fairly newshift. In 2002, there were only four new industrial buildings inthe US that registered for LEED certification. In 2007, this numberhad grown to 111. I'd expect this number to be even higher in2008.

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GlobeSt.com: What is the evidence for yourstatement that tenants would prefer to be in a green building?

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Brandt: Since there were very limited greenoptions for industrial tenants five years ago, this is likely thefirst time they have even considered occupying a LEED Certifiedbuilding. If a tenant has an option between two buildings that havethe same functionality and total occupancy cost, I would assume anytenant would prefer to have less of an impact on the environmentand improve their corporate image by occupying a greenbuilding.

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GlobeSt.com: Is the 1% to 3% rental differentialyou mention in your podcast realistic?

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Brandt: Although the cost premiums of greendevelopment will ultimately be passed onto tenants through rent, wehave seen green industrial buildings being offered at competitiverates in comparison to other new but non-green industrial buildingson the market. Rent is only one component of the tenant's occupancycost. The important number to look at is the aggregate of allcosts, and in many cases this aggregate number in a green buildingis lower than in non-green buildings. The US Green Building Councilestimates that 1-3% is the actual cost increase that a developerincurs to build a LEED Certified building as opposed to a non-LEEDcertified building.

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GlobeSt.com: Does it apply to gold or platinumcertified buildings as well?

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Brandt: Gold and platinum certified buildings willmost likely require a slightly higher cost. Nevertheless we arestill seeing developers construct gold certified buildings. I knowof only one industrial platinum in the US.

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GlobeSt.com: How long does it typically take forsavings to show up?

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Brandt: Different aspects of green constructionhave different payback periods. Things that will take less than 5years to pay back include: energy efficient lighting (T5s, T8s andLEDs); daylight harvesting; reflective roof membrane; naturalventilation; and energy management systems. Strategies requiringlonger than five-year payback include: rooftop solar harvesting;rainwater harvesting; vegetative roof; and low-flow plumbingfixtures. You may also lease rooftop space of your building tolocal utilities for solar cell installation. This is no-cost sourceof income and/or power.

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GlobeSt.com: You say industrial lighting costs canbe reduced by "up to 40%," but what is the average savings? Howmuch additional upfront costs would be involved to reach the 40%figure?

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Brandt: From a tenant's perspective, often newbuildings can come outfitted with energy-efficient T5 or T8lighting already in place. There are no direct costs for thistenant, only savings in their monthly electricity costs. Othertimes this cost will come out of a tenant improvement allowance. Ageneral estimate is that T5 or T8 lighting will require a 15%-25%premium over the cost of metal halide lighting. The actual averagesavings is tough to estimate as other factors such as daylightharvesting, motion sensors, interior painting, and skylights allaffect the final number. While this might not be as high as 40% forall tenants, any savings they can realize over older metal halidelighting will help to improve their bottom line.

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GlobeSt.com: Do skylights always improve energysavings?

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Brandt: Most new industrial development doesinclude a roof with 2-3% skylights. That being said, it costs about$500 to install each skylight in a roof. In a 100,000 sf building,this can raise costs up to $50,000. Skylights can also interferewith future installation of solar panels.

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Look for part two of this interview next week's onGlobeSt.com's industrialpage.

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