Greening the Deal

When Simon Wasserberger of CB Richard Ellis began marketing 7 World Trade Center for Silverstein Properties two years ago, talk of the building's green features generally elicited the same response from prospective tenants. Heads nodded, eyes glazed and talk quickly moved on to presumably more important questions like square footage, or the view of the Hudson River. Several months ago, however, Wasserberger, a senior vice president with CBRE, noticed a major sea change occurring.

"Almost overnight, corporations started initiating the conversation and asking about green very early on," he says. "People had been paying lip service to the concept of green building before but suddenly it became a real corporate value. It reached an inflection point."

As a leasing agent for New York City's first LEED Gold-certified speculative office property, Wasserberger's job is to tout benefits like 7 World Trade's rainwater collection system and daylight dimming (he is also marketing 11 Times Square, where SJP Properties is seeking LEED certification upon completion in 2009). But the more commonly held view among brokers has been that sustainability and green building practices make for good marketing copy and soundbites but won't affect them or influence their deals in any significant way. However, as developers become keenly aware of how green building concepts can add to their own bottom line and major corporate users mandate the leasing of LEED-certified offices, brokers have had no choice but to get with the program. Savvy brokers, like other professionals across the business spectrum, have realized that learning about and understanding sustainability is an important asset that can be beneficial not only for their clients' bottom line but for their own pockets as well.

"The brokerage community is sort of the last mile in delivering and explaining the value associated with green building to the tenant community," says Andrew Shapiro, president and CEO of Green Order, a green strategy and marketing firm whose clients include Silverstein Properties. "You can have developers, contractors and architects in tune with this but, if the brokerage community doesn't get it, it's hard to get the point across properly because tenants will ask questions like, 'What features should I be looking for?' Things like water consumption and indoor air quality are a whole new world for most brokers. But the situation has evolved over the last few months. We've seen some of the biggest firms start to take this quite seriously."

Shapiro likens the phenomenon to the emergence of IT and the digital revolution a decade ago.

"At that time, brokers had to start understanding the need for data centers and things like that, which are a standard part of the real estate lexicon now," he says. "I don't know if we're totally there yet with green, but it's happening the same way."

Wasserberger concurs. "I don't think anybody in the brokerage community could list the requirements for LEED certification four months ago," he says. "But brokers are really quick to adopt the values of their clients. That's not something you can push on anyone but now, believe me, they are getting smart about sustainability very quickly."

Both locally and nationally, real estate service firms are taking steps to educate their staff and clients by making them aware of the latest initiatives and developments in green building.

"The brokerage community, especially in New York, was skeptical about green building at first, believing that tenants were not in the position to demand anything because there's so little inventory," says Gayle Matthei-Meredith, managing director for marketing with Grubb & Ellis. "But just because we have a heavily built-out environment doesn't mean we can't think green. The USGBC now has a certification process for interiors, apart from base buildings, which empowers the tenant a bit more."

Grubb's response was to launch what it calls its "Ready Green" initiative, in order to guide clients through the process of greening their own workspaces by adding sustainabile but relatively cost-neutral features like enhanced recycling and wastewater reduction programs.

"There's no reason not to go for LEED certification on new construction now," Matthei-Meredith says. "It's occupied, pre-built office space that's contributing to carbon emissions. That's where we as a brokerage are in a position to do some good."

Moss Real Estate Group, a boutique residential and commercial firm based in Soho, recently began marketing itself as "New York's first green brokerage." The company, which powers its offices with wind-generated electricity and uses only 100% recycled paper, decided that promoting its own, environmentally-responsible internal practices could help give it a competitive advantage in the current pro-green climate.

"Two years ago, if you spoke about green principles, people thought you'd rather be hugging trees than selling buildings," says Christopher Moss, the firm's founder and president. "Now, they will at least have a vague idea of what you're talking about and will probably be interested to hear what you have to say. It's a very different sphere."

According to David Arena, president of Grubb & Ellis' New York region, reading about and internalizing green methodology is something brokers of all ages should be doing, not just younger, hipper ones.

"It's easier for an inexperienced broker to accept as gospel that this is the way they need to operate but I think the green movement cuts across the generation gaps," he says. "Some older brokers understand it even more as a marketing tool. It's another way to sell, and add value to a client. The smarter, more sophisticated professionals get it right away."

While the widely held perception is that brokers only care about the bottom line, Arena says that the key is to appeal to their sense of civic duty rather than their pockets.

"Sustainability is not yet important, financially, from a broker's point of view," he says. "That will come. It's important today because it's the responsible thing to do. I think people are missing that in the marketing. A lot of folks are starting to feel like this is a gimmick to sell products. Maybe to some level it is, but it's also about contributing to the planet and engaging people at that personal level where it's about their kids or their grandkids."

Do brokers really need to become experts in alternative energy strategies and water filtration systems? Of course not. But if they want to maintain a competitive advantage in this new era, they will need to understand why these features are important to their clients and be able to help locate them, Moss says.

"It would be overkill for brokers to know everything about all the green products out there," says Moss. "But we should have these type of resources available to our clients. To be able to answer questions about these topics quickly and accurately—that's what's important."