Read the first part of this interview here

|

In October, AMB Morgan Business Center-Building 100, inSavannah, GA, became the largest investor-owned industrialdevelopment in North America to achieve Gold LEED Core & Shellcertification from the US Green Building Council. But the capitalcrisis has prompted some observers to wonder if the346,000-square-foot facility owned by San-Francisco-based AMBProperty Corp. in may be part of a trend doomed to be halted in itstracks as developers and tenants abandon environmental concerns infavor of paring budgets. In this second part of a GlobeSt.cominterview with Chris Brandt, an associate in the Los Angeles officeof Jones Lang LaSalle, we delve into the likely impact of thecurrent economic situation on the future of sustainabledevelopment.

|

GlobeSt.com: Do you think the current economicsituation will set back the move to sustainability, particularlysince many tenants looking to survive may want to reduce costs NOWby lowering their rent rather than thinking long-term?

|

Brandt: Industrial tenants looking to lower theirrents now should still consider green buildings. While it is truethat increased development costs are ultimately passed on to thetenant through rent, these costs are considered over the long termby the developer. The tenant can enjoy the short-term benefits oflower energy costs and improved workforce environment over the nextfew years without the full liability of paying for theseimprovements.

|

GlobeSt.com: With the cost of borrowing going updue to tighter standards, won't the long-term cost-savings formulasneed to be revised?

|

Brandt: Yes. We will see how this affects howdevelopers choose to react. But industrial developers are doingthis not only for the improved environmental consequences of theirbuildings. Many cities are now requiring that new buildings bebuilt to LEED standards. Beginning Nov. 1, the cities of LosAngeles and San Francisco enacted ordinances requiring that all50,000+-square-foot industrial buildings must be built according toLEED principles, regardless of the economic situation. Furthermore,many cities and counties are offering incentives for incorporatingsustainable practices into industrial projects.

|

GlobeSt.com: Is greater use of sustainablebuilding practices bringing construction costs for these featuresdown?

|

Brandt: Yes. For most architecture andconstruction firms, sustainable practices are standard operatingprocedure rather than something exotic that had warranted a costpremium in the past. To some extent, the same thing is happeningwith recycled materials such as drywall, or energy-efficient HVACproducts. The cost premium compared to less sustainable productshas decreased and in some cases disappeared.

|

GlobeSt.com: Are claims about improved workerproductivity proving out in practice, or is it primarily academictheory at this point?

|

Brandt: It's nearly impossible to attributeproductivity increases to one particular factor. It's common sensethat if the air quality of a building is better, that there will beless absenteeism and therefore greater productivity. When wesurveyed CFOs on sustainability a year ago, a majority believedthat sustainability enhances productivity. But conventional wisdomis not proof.

|

GlobeSt.com: To what extent is improved socialimpact turning out to be a significant impetus for change? Does itever override economics?

|

Brandt: Companies are ultimately in business tomake money, but sustainability and economics tend to work together.To use just one example, a company's social impact can affect itsreputation which in turn can affect revenue and profitability. Thereal question is whether companies need to see an immediate,measurable payback when they invest in sustainable buildings. Inthe current economic environment, many companies are focusing onstrategies that have little or no upfront cost (and there are a lotof those) or that cost a little more but pay for themselves veryquickly, often in energy savings.

|

As an example, ProLogis has made a pledge that beginning in 2008that every new warehouse will be built to LEED Certificationstandards. Does this make "economic" sense for every building theywill build from here on out? Probably not in every single occasion.Nevertheless, they see value in this initiative and perhaps thisreputation will pay dividends in the future.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.