Green-building advocates take the LEED

Many four-letter words are being tossed around these torturous days in the world of commercial real estate.

Only one would not offend the polite police. It is, however, prompting considerable debate within companies and among property owners.

That word: LEED, for Leadership in Energy and Environmental Design.

Since its debut by the U.S. Green Building Council in 2000, LEED has rapidly become the rating standard by which green-building advocates measure commitment to the cause. As "going green" has evolved from a fringe lifestyle choice to a widespread initiative, even at work, the pressure has grown for building owners to at least consider LEED certification.

So landlords crunch numbers and evaluate operations to assess whether a LEED rating - from simple certification to silver, gold or platinum, the highest level - is worth the cost and effort.

For cash-squeezed commercial-property owners, never have those calculations been so important. With the recession, landlords are struggling to retain tenants and make mortgage payments as demand for office space - and, consequently, rental income - has dropped.

Then again, green-building advocates contend the time is fast approaching when not having a LEED-certified building could hamper a landlord's efforts to attract tenants.

In the last few years, employers have reported a growing number of job applicants asking about workplace-sustainability efforts.

"There's a PR side to this," said Missy Quinn, director of client solutions for Cushman & Wakefield of Pennsylvania Inc., a real estate services company.

As of last week, Pennsylvania had 216 LEED-certified buildings; New Jersey, 83. Nationwide, talk still far outpaces actual action where LEED is concerned.

"We're at a fraction of a percent of the built environment," said Scot Horst, the Green Building Council's senior vice president, LEED.

The total U.S. LEED building inventory is 4,825, with the Merchandise Mart in Chicago and the Getty Center in Los Angeles among the higher-profile examples. In New York, the Empire State Building boasts one LEED-certified floor (based on its commercial interiors) and is now pursuing structure-wide LEED status.

In Philadelphia, the Comcast Tower (with its now-famous waterless urinals) is LEED-certified in the "core and shell" category.

This week, local green-building advocates will again rejoice - over the city's first LEED certification of an existing multi-tenant building, the circa-1969, 36-story office tower at 1601 Market St. Mayor Nutter will join officials from the Delaware Valley Green Building Council for a plaque presentation Wednesday.

Janet Milkman, executive director of DVGBC, hopes the fanfare will entice other properties in the city to go LEED.

Opportunity is plentiful, Milkman said - just look around. "Most of the buildings that are going to be around in 30 years have already been built," many with inefficient energy systems.

LEED for new construction - the program's focus for its first four years - is important, she said. But "LEED for existing buildings is going to have a bigger impact."

That's if owners of those buildings do what it takes to be certified. And that's no small endeavor.

Consider 1601 Market's quest, which began in September 2008, just two months after APF Properties bought the building.

For principal Berndt Perl, a native of Germany, where green building is far more common than it is here, there was no question LEED certification should be sought for 1601 Market. What he wanted was for the property's managers, Cushman & Wakefield, to get it done faster than the typical two-year timetable.

Originally, the plan was to seek a silver LEED rating, said Cushman & Wakefield's Quinn. Then, she said, financial realities set in: About $200,000 in capital improvements would be needed.

Quickly, the strategy shifted to qualifying for LEED certification, then working toward a higher rating in the future. Certification, with fees ranging from $2,000 to $27,500 depending on property size, lasts up to five years; interim compliance is self-monitored.

For the most part, 1601 Market's LEED certification resulted not from costly building changes, but from a substantial paperwork effort, said Jessica Kavanagh, a LEED-certified consultant at Partridge Architects in Philadelphia.

For instance, of the 38 LEED points awarded, four were for a transportation survey of 605 of the building's 2,100 occupants, which revealed that 89 percent get to work by public transportation or other sustainable means, such as biking or walking.

Demonstrating that the janitorial service had switched to environmentally sensitive cleaning products was worth another three points; a quarterly newsletter to tenants about sustainability was worth one point.

On Jan. 5, 1601 Market learned it had been LEED-certified. Among the jubilant was Colleen Teears, director of administration for Radian Group, which occupies eight floors and was implementing its own green practices.

"They're using the energy more efficiently in the building," Teears said. "So effectively, when operating costs are passed back to us, we'll see savings as the tenants."

Counting costs, however, is a very individual thing in commercial real estate.

Developer Donald Pulver, for one, doesn't see the upside to LEED certification. He hasn't sought it for the seven office buildings - single tenant and multi-tenant - he's built on the Schuylkill riverfront in Conshohocken and West Conshohocken since 1988. And he has no plans to.

Complaints from his 100 or so tenants about the lack of LEED status are nonexistent, Pulver said, and "what you get versus what you pay was not worth it to us."

At much-smaller 436 Walnut St., the 12-story North American headquarters of ACE Insurance Group, the expense seemed worthwhile.

A LEED-certification plaque hangs in the lobby, and in August the building brought another LEED first to Philadelphia - a silver rating for a single-tenant existing building.

Aiding the effort were replacement of a 30-year-old boiler and new aerators in the bathroom sinks to reduce water flow from 2 gallons per minute to 0.5 gallons.

Melissa Young, the company's environmental analyst, declined to reveal how much money ACE had invested in its LEED certification.

Citing a 17 percent drop in energy consumption since 2007, Young said, "The cost, we think, was minimal compared to the payoffs."