Global Real Estate Giant Costars With Former President Clinton At Greenbuild Conference in Chicago

 

In this issue of CoStar Green Report, another large real estate company jumps on the green investment train; the California governor gives thumbs up to some green legislation while nixing other green building bills; the International Real Estate Federation launches a global competition for the Sustainable Prix d'Excellence Award; JC Penney becomes the first retailer to receive the Energy Star label and Regency Centers "greenlights" a formal sustainability initiative.

GE Bringing 'Green' Things to Life

GE Real Estate, one of the world’s largest investors and owners of commercial real estate, announced a new initiative yesterday to green its real estate investment practices -- a global business that generates more than $30 billion in annual transaction volume across 28 countries.

Ron Pressman, who succeeded Michael Pralle as president and CEO of the global real estate company in June, announced the initiative at the Greenbuild conference in Chicago on Wednesday. GE Real Estate and former President Bill Clinton also unveiled a new partnership with the Clinton Climate Initiative (CCI), the $5 billion energy-saving and emissions-reducing effort in large urban areas by the former president’s foundation, funded by five of the world’s largest banks.

GE Real Estate joins the ranks of CB Richard Ellis, Jones Lang LaSalle, the California Public Employees Retirement System (CalPERS), Transwestern, Hines Interests and other large CRE players that have adopted green strategies.

Under GE’s plan, sustainability will become part of the company’s investment process from start to finish -- from deciding how and where to originate investments to underwriting, due diligence and management of assets. The goal is to improve the environmental performance and values of assets and to improve the health of tenants.

Commercial buildings are one of the largest contributors to greenhouse gas emissions, producing between 30% and 40% annually.

"We believe GE Real Estate is in a position to reduce those numbers" because of its sheer size, Pressman said.

"With thousands of buildings in our portfolio, and more added each year, we believe we can make a significant, positive impact on the environment and benefit our business," he said.

The partnership with Clinton, who delivered the keynote at the conference Wednesday, will allow GE Real Estate to tap into CCI resources to improve the environmental performance of its properties.

GE's green commitment will include:

Evaluation of acquired properties for financially attractive green retrofit opportunities using energy and environmental audits

Tracking of energy and environmental metrics along with asset financial performance

Incorporation of the U.S. Green Building Council’s LEED rating system and international equivalents as benchmarks for GE Real Estate's portfolio

Sharing of best practices and information with GE Real Estate customers and business partners to help owners of properties in GE’s $30 billion lending universe, which supports some 11,000 buildings globally

Engaging more than 5,000 partners, customers and vendors across its global network on green issues.

GE said the program builds on its existing green initiatives, which includes projects in the U.S., United Kingdom, France, Spain and Australia (Arden Realty, acquired by GE last year, has one of the largest portfolios of EPA Energy Star buildings in a single commercial portfolio).

The company said it lowered electric energy consumption across 10 million square feet in 99 buildings by about 72 million kilowatt hours in 2006, a 30% reduction that eliminated more than 35,000 metric tons of CO2 emissions.

The Greenbuild conference continues Thursday with a film festival and numerous educational seminars and workshops.

CA Gov. Inks Some Green Bills, Axes Others

California Gov. Arnold Schwarzenegger has vetoed three bills that would have set energy-efficient standards for commercial buildings and another that would have required landlords to offer recycling services to tenants.

To be fair, however, the governor last month also signed 18 of the 25 environmental bills endorsed by the Sierra Club, including several that directly affect the commercial real estate industry, such as Assembly Bill 1103 by Assemblywoman Lori Saldana, D-San Diego, which requires electric utilities to maintain energy consumption records on all non-residential buildings in their service areas and requires building owners to provide energy benchmarking data to potential buyers, lessees or lenders beginning in 2010.

The green building bills vetoed by Schwarzenegger were labeled "job-killers" by the California Chamber of Commerce, which contended they would drive up construction costs and hurt the economy and an already battered real estate industry. They include:

AB 35 (Ira Ruskin; D-Redwood City): Would have required the California Environmental Protection Agency to set sustainable standards for new and renovated state buildings.

AB 888 (Ted Lieu, D-Torrance): Would have mandated that some commercial buildings greater than 50,000 square feet meet the equivalent of a standard developed by the Cal-EPA.

AB 1058 by (John Laird,, D-Santa Cruz): Would have required green-building standards for residences built in 2013 or later.

AB 548 (Lloyd Levine, D-Van Nuys): Would have required the owners of residential buildings with five units or more to provide recycling services.

Schwarzenegger said in his veto message that while he supports such standards, they should not be written into law, adding that the state’s Buildings Standards Commission was created to "ensure an open public adoption process allowing experts to develop standards and periodic updates to the buildings codes."

Both of the green building bills would have required commercial and residential buildings to sharply reduce water and energy use by 2013. In his veto message, the governor said he was concerned that language in one of the bills would violate California's earthquake safety standards.

Measures signed by the governor with potential impact on commercial owners and tenants include:

AB 1109 (Jared Huffman, D-San Rafael), the California Lighting Efficiency and Toxics Reduction Act, enacts the nation’s first efficiency program for light bulbs. The measure prohibits the manufacturing for sale or the sale of certain general-purpose lights that contain hazardous substances. In addition, the bill requires the California Energy Commission to adopt energy efficiency standards for all general-purpose lights. The measure requires the state to set rules making indoor light bulbs 50% more energy efficient by 2018.

AB 1406 (Huffman) promotes water recycling in condominiums, adding condos to the meaning of "structure" with respect to the use of recycled water for toilet and urinal flushing.

AB 1470 (Huffman) is billed as the nation’s first incentive for solar water heaters. The bill creates the Solar Water Heating and Efficiency Act of 2007, which places a surcharge on natural gas bills to raise $250 million to fund incentives to attain the goal of installing 200,000 solar water heating systems in the state by 2017.

AB 1560 (Huffman) requires the California Energy Commission to incorporate standards for water efficiency and conservation into the existing building standards governing energy efficiency.

AB 1481 (Hector De La Torre, D-South Gate) creates a uniform, statewide permitting process for landscape irrigation uses of recycled water, such as parks, playgrounds and golf courses. It requires the State Water Resources Control Board to adopt a statewide general water quality permit.

FIABCI Enters Green Arena With Sustainable Programs
By Andrew Burr

Leveraging a worldwide reach that spans four continents, the International Real Estate Federation (FIABCI) has announced a series of new initiatives to promote sustainability and green real estate.

In launching the green programs -- which include a sustainable building award, a chart of environmental principles and an eco-film festival -- FIABCI dug into its archives and found a book it published 15 years ago that outlined sustainability advocacy but was never implemented, says Elizabeth Belenchia, the vice president of FIABCI's Legislative and Environmental Committee and president of Spartanburg, SC-based Carroll Properties Corp.

Despite its 50-year history as United Nations consultant and its vast network of chapters in almost 50 countries, "We [FIABCI] have not ever postured ourselves for a public advocacy position on sustainability even though our leadership identified that target in 1992," Belenchia told CoStar. "The time is now."

In what will almost certainly be the most highly publicized of the initiatives, FIABCI has spun-off a green version of its popular Prix d'Excellence real estate award. The Sustainable Prix d'Excellence will consider green projects which both "go beyond standard or regulatory techniques" and demonstrate a "measurable impact" on the local region. "By offering these awards we're challenging people to be competitive," Belenchia says.

With entries expected from all over the world, the award should offer an intriguing lineup of geographically diverse green strategies and projects. And despite a U.S. green building stock that trails other parts of the world -- specifically Europe -- by a considerable margin, Belenchia says that U.S. projects can compete through creative approaches to sustainability.

"Americans are more likely to go out-of-the-box," she says, citing programs like an organic farmer's market hosted onsite at the Hearst Tower, the iconic midtown Manhattan high-rise which became the city's first LEED Gold-certified tower last year.

More importantly, Belenchia believes the award can help advance green buildings in the states and elsewhere by showcasing their advantages. "Very few people have bought into sustainability being mainstream, but those people that are making it part of their basic criteria are going to have the product that has the highest return on investment. In five years, I think the marketplace will find product not certified green as functionally obsolete," she said.

The award will be presented next May in Amsterdam.

JC Penney Stores First to Receive Energy Star Label for Retail
By Sasha M. Pardy

The Environmental Protection Agency's Energy Star program named four JC Penney stores as the first retail buildings in the country to earn the Energy Star label for superior energy efficiency and environmental performance. Located in Puyallup, Vancouver, Bellevue and Burlington, WA, the stores combined to spend nearly $1 million less per year on energy, and avoided the release of more than 3 million pounds of carbon dioxide (CO2) per year, which is equal to the greenhouse gas emissions associated with electricity powering nearly 200 homes.

JC Penney is also a 2007 Energy Star Partner of the Year. The four stores awarded this label total 460,000 square feet and are estimated to use 35% less energy than a typical JC Penney store. The Energy Star program, as of Oct. 1, allows retail buildings to qualify if they rate in the top 25% of similar retail buildings nationwide in terms of energy efficiency, which the EPA tracks in a comprehensive database.

Regency Centers Announces Sustainability Program
By Sasha M. Pardy

Jacksonville, FL-based Regency Centers, which owns a 59 million-square-foot retail portfolio, has formally launched a green building program. Last year, the company formed a green building task force that recommended how Regency should incorporate environmental sustainability into its business strategy and operations, and those recommendations have been adopted. In addition, Regency is a partner in the USGBC's LEED certification program for shopping center developments.

Regency's commitment is to LEED certify 20% of its 2008 development starts, 40% of 2009's starts and 60% of its 2010 starts. The company also plans to LEED certify its redevelopments of existing properties and will also hire a sustainability officer to oversee the company's green initiatives.

Regency's "Greenlight" program is its baseline of sustainability measures that will be incorporated into all new and existing centers. Some of those elements include smart irrigation and planting of native foliage, low flow plumbing fixtures, low volatile organic compounds (VOC) in paints and adhesives, high efficiency heating, ventilation and air-conditioning (HVAC) efficiency and lighting for reduced energy consumption, and eco-friendly housekeeping chemicals. At existing centers, elements could include "cool" roofs, native plants and parking lot lighting replacements. Regency also encourages its tenants to adopt sustainable practices and is not leaving out efficiency at its own corporate offices.