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NAIOP recently released report on energy reduction feasibility–which noted that a 50% reduction in usage was impossible and even a 30% savings unlikely–has created a storm in the development community, with energy experts decrying the report and its methodology. NAIOP President Thomas Bisacquino spoke with GlobeSt.com about the motivations behind the study, the controversy behind its results, and what they really mean for green building.

GlobeSt.com: So the study has been a little controversial?

Bisacquino: You know what they say in the military: If you’re not over the targets, you’re not getting any flak. At least we’re over the target. We’ve got pigs in tuxedos and all sorts of great stuff being hurled at us.

GlobeSt.com: What made you decide to do the study?

Bisacquino: We wanted to do the study simply because there was no data. NAIOP was one of the first trade organizations to have a sustainable development policy. Six months later, we came out with an energy policy. Let me put that right on the record–we as an organization are very pro-energy savings.

We felt there were feel-good numbers being picked out of the air, [with some] saying ‘We need to mandate or legislate these targets through building code.’ They weren’t goals, or even nice targets to hit. They were going to become law. We asked, ‘Is there data out there that supports these goals as something we can achieve and keep the building profitable?’ That’s the key. We [decided to] look at a typical suburban office building, model that building and see what can be done.

For five years, we’ve been giving green awards out to our members. But all buildings aren’t the same in terms of usage. A lot of what was reaching some of these efficiencies were corporate headquarters. A lot of our membership are in multi-tenant rental buildings, and the type of building we modeled is representative of more than 50% of new construction.

It’s been mischaracterized that we’re advocating that type of building. We’re not. But we’re also looking at the economic realities–that’s the type of building currently being built. We think it’s a goal that people should be reaching more efficiencies. It’s the right thing to do, the right thing to do for the environment, and a good business decision because energy costs are going to go up. But it’s not going to happen overnight. What’s getting lost in this discussion is that some of these legislative proposals mandate these efficiencies by 2010. That’s nine months away. We think it’s very positive that if you use standard design, you can reach upwards of 23% without building a green building.

If I sound a little frustrated, I am, because I think we’re being tarred and feathered as a Neanderthal group that doesn’t believe in sustainability. Nothing could be further from the truth. Some who are quoting that NAIOP is in the middle of a misinformation campaign are, I think, in a misinformation campaign of their own. There is very little data out there when you look at these numbers…That’s why we started looking at this, and saying, ‘look 30% is great, but it’s not a target you probably can hit with a large percent of these buildings and keep them economically viable, by 2010′. … Do we think that’s the future of buildings? Absolutely not.

Members in different parts of the country say they don’t have the expertise in [their] marketplace. That’s not to say they shouldn’t strive for it, or that in a few years that expertise won’t migrate to those markets. Again, if you’re making a mandatory goal for 2010, I doubt it’s going to happen that fast.

GlobeSt.com: Were you shocked by the results?

Bisacquino: There was a quote out there that we had a preconceived notion. We had no preconceived notions. Part of us was rooting for being able to hit that goal so we could educate our members. Part of me was a little disappointed that we couldn’t say, ‘Hey you can hit it.’ But part of me also was surprised that you could get as high as 23% without deploying what they call holistic design elements. Depending on whom you talk to, between 5% and 10% of new construction is going for green. That means between 90% and 95% are not. We really want to work on that 90% to 95% to get all new development green. Again, there is a timeline. Rome wasn’t built in a day. You don’t expect it to happen in 12 to 18 months.

I’ve read that you can use a lot of these technologies like solar to get a much quicker payback than our study indicates. They’re right, but where they’re suggesting that is in where there are incentives at the city level, the county level, the state level. That’s what we’re advocating. We think incentives are good things. We don’t want mandates. We want incentives.

GlobeSt.com: Did you reassess the methodology of the survey, whether you should have used different cities, for example?

Bisacquino: We did not look at cities – there have been quotes that we used the wrong utility rates in Baltimore. It was not Baltimore that we were looking at. We were looking at the climate zone. That’s why we took that utility rate. People suggest that the ROI would be quicker in a city like Baltimore because they have peak rates. They’re right; we’re not denying that. But this wasn’t that comprehensive a study. We’re saying, look at these different zones, let’s look at the utility rates in that zone. There certainly are going to be differences. And this is the first toe in the water for one product type.

GlobeSt.com: Has your phone been ringing off the hook?

Bisacquino: Not really. Some of our members find this criticism very interesting. Many of the people criticizing the study are fee-driven. Some are saying that the developer should not be assigning the level of profit–that should be done by society. Certainly that’s outside the scope of what the study was designed to do.

The bottom line is that we’re an industry that does make a profit, with investors who have to be satisfied. They have to look at the operations of the building. Profit is not a bad thing. That’s how these companies work. If the project doesn’t pencil out, they’re not being asked two years later to kick back a percent of their fee.

But I can’t emphasize enough how committed our members and our association are to sustainable development. For five years we’ve been talking about it. We’ve given national awards on it. We’ve partnered with USGBC. We’ve been working with them for over three years to help develop an adjusted LEED rating system that will provide incentives for distribution centers to get certified.

The reaction to the study has been really blown out of proportion. It’s clearly a case of shooting the messenger for the message. I’m not saying the study is perfect. I’m sure there are technical flaws. But it generally gives you a sense that to mandate these targets now, of 30% efficiency by 2010, is unrealistic for a lot of properties.

GlobeSt.com: So you’re not saying building green is a waste of money?

Bisacquino: Not at all. Not at all. We think building green is a smart thing to do, and is the future of development. We’re committed to seeing sustainable development. But one size does not fit all and Rome was not built in a day. If these efficiency goals were set three, four, five years out, it would be a different story. A lot of these goals are here and now, the next 10 to 12 months. That’s where we see an issue.

I can point to members who have built buildings that have exceeded that, for a lot of different reasons: they’re in a market where tenants are demanding it; it’s a corporate headquarters building. It’s a bit naïve to categorize all buildings the same. There are a variety of buildings, and that’s what we’re trying to reflect. We’re not holding this building out to be a model. This is a building that represents a large stock of what is being built. Hopefully, can we change those practices? Yes, but it’s not going to happen overnight.

Globest.com: Are you going to do another study next year?

Bisacquino: We’re looking at a variety of different products. That was a suburban midrise. Do we look at a CBD building, a high-rise, industry? Yes, we’re considering that. But the truth of the matter is the debate on this issue is going to move very quickly in Washington. All of the other trade groups are very supportive of what we’ve done. Regardless of product type, they’re all in the same situation.

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