| FEATURE ARTICLE, MAY 2008
THE GROWING IMPORTANCE OF LEED-EB
Building owners are realizing the value of going green in their existing buildings.
Julie Hendricks
In just a few short years, the U.S. Green Building Council’s (USGBC) LEED for new construction program has become the accepted standard in large Texas cities, as evidenced by many of these cities now requiring LEED certification for new buildings. For instance, Houston now requires all new buildings over 10,000 square feet to be a minimum LEED Silver. Incredibly, the market saturation for LEED-rated new office buildings in Houston is now over 70 percent.
Comparatively, however, LEED for existing buildings (LEED-EB) has been slow to catch on, with fewer than 1 percent of Houston office buildings currently certified or seeking certification. Until recently, those real estate professionals who were aware of the standard had a perception that it was too expensive, difficult to understand, and wouldn’t create value. That is changing, as a confluence of factors have brought LEED-EB into mainstream discussion.
Market Transformation
Increasing evidence shows that LEED-rated buildings are valued more highly in the marketplace; it is now widely accepted conventional wisdom that LEED is the new Class A. Several high-profile LEED buildings have recently sold at record prices. In September 2006, Hines fetched $400 per square foot for its 41-story, LEED-Gold 1180 Peachtree tower in Atlanta. The following month, its 820,000-square-foot, LEED-Silver One South Dearborn tower in Chicago sold for $422 per square foot.
At the same time, many large companies have written sustainability into their mission statements, including giants such as Bank of America, 3M, and Ford Motor Company. One way these companies are looking to fulfill their missions is by occupying space that reflects their environmental values. At a packed Greater Houston Partnership luncheon in June 2007, Jeri Ballard, director of real estate and facilities for Shell, stunned the crowd by announcing that Shell would no longer build or lease space in a building that wasn’t LEED rated. Other companies including Sysco Foods and BP have made similar assertions.
The current supply of LEED-rated office space is inadequate to meet this kind of demand. With only 1 percent of the building stock in any given year being new construction, that leaves 99 percent of the buildings as existing. In order to meet the demand for LEED-rated space, the owners of a growing number of these existing buildings are looking to LEED-EB.
The USGBC has been working with a number of large property management companies, including CB Richard Ellis, Cushman & Wakefield and Transwestern, which are looking to get ahead of market trends by greening their entire portfolios. CB Richard Ellis announced a big push in November 2007 to certify 100 of its buildings, 10 percent of the buildings the company manages.
Also influencing the increased interest in LEED-EB are improvements that the USGBC is making to the standard. The newest version has many changes, the most significant being that LEED-EB is more responsive to the needs of multi-tenant buildings. Previously, the standard was largely inaccessible to multi-tenant buildings unless every tenant participated in the process. The changes, which were approved by USGBC member ballot in October 2007, allow building owners to participate in the program even if their current tenants are not interested. The version of LEED-EB that incorporates these changes (officially called LEED for Existing Buildings: Operations and Maintenance) is available for registration now, though the reference guide and submittal templates are not yet available as of this writing.
Achieving LEED-EB
The LEED-EB system focuses on building maintenance and operations. Unlike the other LEED standards, points are awarded for established programs and policies with measured results over time. Metrics are taken during a performance period lasting from 3 to 12 months. Like the LEED for new construction products, points are awarded in six categories: sustainable sites; water efficiency; energy and atmosphere; materials and resources; indoor environmental quality; and innovation in operations. There are a total of 92 available points, with a minimum of 34 required for the lowest level of certification.
When considering a building for LEED-EB, first look at the minimum performance standards for water and energy efficiency. For certain older or very inefficient buildings, these requirements may make LEED-EB certification prohibitively expensive.
For water, the standard requires that buildings whose plumbing fixtures were installed during or after 1993 use no more than 120 percent of the water they would use if they met the 2006 International Plumbing Code (IPC). If the building’s plumbing fixtures were installed before 1993, then indoor water use must not exceed 160 percent of 2006 IPC standards. The 2006 IPC standard requires lavatories to use 0.5 gallons per minute, urinals to use 1.0 gallons per flush and toilets to use 1.6 gallons per flush. A building with plumbing fixtures installed in the 80s, for example, including toilets flushing 3.5 gallons per flush (218 percent of the 2006 IPC toilet performance requirements), would most likely need to replace most or all the flush fixtures in the building in order to comply.
For energy, the minimum performance required is an Energy Star score of 69 or above. Note that all LEED projects are required to earn two points under the Optimize Energy Efficiency credit (EA credit 1); an Energy Star score of 69 will earn those two points for an existing building. Under Energy Star, achieving a 69 score means that a building performs better than 69 percent of existing buildings. Buildings that fall significantly short of this goal may require expensive HVAC or building envelope upgrades in order to meet minimum LEED-EB standards. Buildings that are just short of the goal may be able to achieve sufficient savings using less expensive strategies such as changing occupant behavior.
The next thing to consider within the LEED-EB standard is the development of policies related to green building operations and maintenance. Building owners and managers must have an array of programs in place for which compliance and performance must be measured and/or logged during the performance period. Extra points may be earned if the policies are expanded to include purchasing and recycling for building tenants as well.
Cost of LEED-EB
Because of its relative newness to the market, there is not much data available about the costs of LEED-EB, although anecdotal evidence indicates that buildings that go through the program have improved performance and impressively short payback periods.
The soft costs from employee and/or consultant time spent developing and implementing the LEED-EB policies are a big component of the total cost. This time will vary considerably depending on such factors as the level of LEED the project is seeking, the amount of involvement by tenants and the number of tenants, and the familiarity of the project team with the requirements of the standard.
There is also relatively little information available about the hard costs of building upgrades associated with LEED-EB. From experience in certifying my firm’s building, Kirksey spent approximately $1 per square foot for building upgrades for a building of 25,000 square feet. Certified in 2006, our building was the first in Texas to receive the LEED-EB distinction. As a result of efforts related to our LEED-EB certification, Kirksey has reduced our operating costs for a payback on our total investment of a little over 2 years.
Building owners across the spectrum are beginning to recognize the value of going green in their existing buildings. Kirksey currently is working on over 2 million square feet of LEED-EB projects. It seems no owner wants to be the last one in town holding a building without a LEED certification.
Julie Hendricks, AIA, LEED® AP is an Associate with Kirksey, an architecture firm in Houston.
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