Sustainability Grows on Corporate Radar

Cynthia J. Hoffman is editor of Real Estate Forum.

DENVER-One good reason to go green, say many corporate real estate and property professionals, is that their clients expect them to do so. "Our clients are charging us to be more environmentally aware," noted Steve Hess, senior director of real estate development at Exel, a division of DHL, during a session on "Greening the Supply Chain" at the CoreNet Global Summit here. "We can't wait until there's a line item on an RFP dealing with sustainability." It is an issue, he stressed, that must be addressed today.

And many firms are doing just that. "Sustainability is really a business approach that focuses on economic, social and environmental factors," said Jack Rizzo, managing director of global development for ProLogis. When the industrial REIT began constructing its corporate headquarters here in 2004, it began looking at environmental design elements, which it then decided to incorporate into their other projects, he said. Today, the company's efforts to be more environmentally conscious include having teams focused on renewable energy here and abroad and participating in the Chicago Climate Exchange, a greenhouse gas-emission registry, reduction and trading system.

The overall theme of the CoreNet Denver Summit, "triple-bottom line sustainability beyond green buildings," reflects the increasing focus of corporate real estate executives to develop an approach to sustainability that embraces the three factors Rizzo enumerated. It's an approach that brings into balance "human and natural resources in a socially responsible way," noted CoreNet chairman Mark Golan during the opening session. Golan heads the connected real estate Internet business solutions group at Cisco Systems Inc.

Preliminary results of a survey of its US members revealed that some 80% of participants believe that sustainability is a critical issue or will be one in the next two years, stated CoreNet director of research Eric Bowles and Ben Breslau, vice president and director of research at Jones Lang LaSalle, which partnered with CoreNet on the survey.

(This compares to a 60% figure from its Asian membership in a poll held in conjunction with a recent sustainability conference in Singapore. CoreNet plans to hold similar conferences in London and Melbourne later this year.)

Approximately 78% of respondents to the US poll said they would pay more for sustainability. However, the researchers noted that most people overestimate the costs involved to get there. Just 37% of participants recognized that the cost premium to going green is generally in the 1%-to-5% range.

True to the theme of the conference, several sessions went beyond green to address broader aspects of sustainability. One program centered on how corporations can develop a long-term strategy that will enable them to build a sustainable workforce. "Regions, cities and places that can attract workers are going to be the most successful in the long term," noted moderator Del Boyette, principal at Boyette Levy.

Sarah K. Abrams, president of Fidelity Real Estate, a division of Fidelity Investments, which oversees a nine-million-sf portfolio, detailed how demographic research revealed that the Boston-based firm would be facing a shortage of skilled workers within the next decade or so. Such trends as the slowing of the growth of the labor force, an aging workplace and a migration of skilled workers from the Northeast to other markets would greatly impact the financial services firm, which was heavily concentrated in Massachusetts. Working in concert with colleagues like Brian Johnson, EVP of staffing and strategic initiatives, Abrams and her team took into account a host of factors that ranged from regional wage differentials and which business units needed to be located together to how well specific locations partnered with the government and business and educational communities.

While the strategy is designed for the long term, Fidelity recently put it to work in securing a site for 1,200 workers in Jacksonville, FL. According to Johnson, the company has had a better-than-anticipated staffing rate. While a ratio of 10 applicants per new hire is average, the Jacksonville facility has been seeing a rate of five applicants per new hire.

In addition to relocating its labor force, Abrams noted that Fidelity "may have to rethink our approach" when it comes to skilled workers. Options include "reskilling" its employees or being more flexible, such as enabling part time employment for retirees or stay-at-home parents.