In this issue of CoStar Green Report, we report on Wal-Mart's new green supply chain project with the CDP; a green construction award for Skanska USA; the arrival of Boston's 3 million-SF Fan Pier development; an eco-friendly office tower from Shorenstein; and Washington's first environmentally friendly hotel.


An Offer They Can't Refuse? Wal-Mart Encouraging Supply Chain to Report Carbon Emissions

In a major push to "green" its supply chain, mega-retailer Wal-Mart has partnered with the Carbon Disclosure Project (CDP) to encourage its massive network of suppliers to report on their carbon footprint data, including greenhouse gas emissions, emissions reduction targets and climate change strategy.

Wal-Mart announced the initiative with CDP, the non-profit group that collects and analyzes carbon footprint data from many of the world's largest corporations, at the launch of CDP's fifth annual report last week in New York.

In a statement, CDP CEO Paul Dickinson called the partnership, "a very significant milestone in corporate action to mitigate climate change.

"By engaging its supply chain in the CDP process, Wal-Mart will encourage its suppliers to measure and manage their greenhouse gas emissions, and ultimately reduce the total carbon footprint of Wal-Mart's indirect emissions," Dickinson stated.

Wal-Mart does business with an estimated 60,000 suppliers across hundreds of industries, Wal-Mart Chief Merchandising Officer John Fleming said at the CDP report launch.

"The sheer number of people that our company touches goes far beyond the four walls of our stores," Fleming said.

"After all, what holds the most value for our business, and the most promise for our planet: Is it one company doing everything a sustainable business should do and doing it perfectly, but never sharing it with others? Or is it helping thousands of suppliers, millions of associates, tens of millions of customers make billions of individual decisions that sustain themselves, their communities, and in turn, the planet?"

Wal-Mart is joining a growing list of multinational firms pressuring their suppliers to go green, including Dell, IKEA, General Motors, Eaton Corp., Pfizer and Starbucks. Some of those companies have joined green supply chain partnerships such as Green Suppliers Network, established by the EPA and U.S. Department of Commerce, and Suppliers Partnership for the Environment, a collaboration of EPA and auto manufacturers.

"Operating across the globe ... where so many different elements make up the equation, measuring emissions throughout a business and managing a company's total carbon footprint can be very complex indeed," said CDP Chairman James Cameron, who co-founded London-based Climate Change Capital, an investment bank specializing in low-carbon commercial opportunities.

"Managing emissions through the supply chain is a vital next step in reducing emissions globally," Cameron said.

Last year, Wal-Mart introduced a "packaging scorecard" to evaluate suppliers on the sustainability of their packaging. More than 3,400 suppliers are participating in the program since its official launch in February, according to Fleming, who says innovative and eco-friendly packaging can significantly lower shipping costs for suppliers.

Wal-Mart will soon make the scorecard program available to buyers who can use the data to influence purchasing decisions. The retailer is aiming to achieve a 5 percent reduction in overall packaging by 2013, which could save its supply chain more than $3.4 billion, it says.

Wal-Mart is also looking at ways to remove non-renewable energy from all its products. It has conducted discussion groups with select suppliers over the past year to determine reasonable environmental expectations from its supply chain.

Fleming says many of the company's suppliers already participate in the CDP, but Wal-Mart "will have done enormous good" if it can bring new suppliers to the process.

"The discussions we have been having over the last couple months have showcased the opportunities we have to spur innovation and efficiency throughout our supply chain," he said.

In other sustainable initiatives, Wal-Mart has pledged to reduce its overall carbon emissions by 20 percent over the next eight years by selling eco-friendly products and introducing hybrid vehicle fleets, new recycling programs and renewable energy and high-efficiency lighting in stores.

CDP is a collaboration of more than 315 institutional investors, including Merrill Lynch, Goldman Sachs, CalPERS and AIG, with assets under management of more than $41 trillion. The organization has polled the world's largest publicly owned corporations on climate change practices annually since 2002, encouraging carbon disclosure and analyzing the impact of climate change on shareholder value and commercial operations.


Skanska Ranked Greenest U.S. Contractor

Skanska USA is the nation's top green contractor, according to Engineering News-Record's (ENR) inaugural Top Green Contractors Survey published last week.

The list ranks the top 50 U.S.-based contractors based on 2006 revenue from sustainable development and green construction projects which were registered with or certified by third-party organizations, such as the U.S. Green Building Council's LEED system or Green Building Initiative's Green Globes platform.

"Caring for the environment is one of Skanska's four core values. We are continuously improving fundamentals in the green services we provide and the projects we build in the U.S. and globally," stated Elizabeth Heider, pre-construction senior vice president of Skanska and Chair of Skanska's Green Council.

Skanska USA, which includes Building, Civil, and Infrastructure Development groups, built the nation's first LEED Gold hospital -- Providence Newberg Medical Center in Newberg, OR -- as well as the nation's first LEED certified airport terminal, a redevelopment project for Delta Airlines at Logan International Airport in Boston.

Skanska USA is a subsidiary of Stockholm, Sweden-based Skanska AB, a global group of construction services firms that employees more than 56,000 people.

The Top 10 green contractors include the following companies (in order):

Fan Pier Breaks Ground in Boston

After years of impasses, false starts and development hurdles, Boston developer Joseph Fallon has broken ground on Fan Pier, the 3 million-square-foot commercial project spanning nine city blocks on the South Boston waterfront.

"Fan Pier is one of those key developments that only comes along once-in-a-lifetime," Fallon said in a statement.

The project is slated to include three Class A office buildings totaling 1.5 million square feet, a 20-story boutique hotel and more than 300,000 square feet of retail space and 1 million square feet of residential space. Almost 2,300 underground parking spaces will support the development, and more than four acres of public parks and a deep-water yacht marina are also planned.

What's the green angle? The entire project is being constructed to high performance green standards to comply with Boston’s green development mandate, which would make Fan Pier one of largest LEED-certified developments in the nation.

"Fallon and his team are getting the job done by building a green, mixed-use development that will rival some of the most premiere, earth-friendly developments in the world," Boston Mayor Thomas Menino stated.

Menino helped plan Boston’s green development legislation, which passed earlier this year and requires large developments and rehabs within the city to meet a sustainable development checklist.

The first building at Fan Pier is an 18-story tower with 500,000 square feet of office space, 40,000 square feet of retail space and an underground parking facility. The spec property, which Fallon says is already receiving interest from prospective tenants, is scheduled to complete in late 2009.

Boston-based architect Elkus/Manfredi designed the building and Turner Construction is providing construction services.

The first phase of Fan Pier, planned over the next four years at a cost of $800 million, will also construct a luxury hotel with 175 guestrooms and 100 residential units and a second high-rise office building of 575,000 square feet.

Fallon is finalizing design plans for the marina, parks system and harbor-front recreational area over the next few months. Under current plans, a total of nine buildings are planned at Fan Pier.

"When you fly into Boston, you’ll immediately see an entirely new neighborhood on the waterfront," Menino said.

Fallon acquired the 21-acre Fan Pier site from the Pritzker family of Chicago in 2005 for $115 million. Boston’s Institute of Contemporary Art moved from the Back Bay to a new building it constructed at Fan Pier late last year.

Fallon’s financial partners in the project are life insurance firm Mass Mutual and Hartford, CT-based Cornerstone Real Estate Advisers.


Shorenstein Adding New Green Tower to Oakland City Center

Institutional real estate investor Shorenstein Properties of San Francisco has partnered with MetLife Real Estate Investments to develop a 500,000-square-foot green office tower in Oakland, CA.

The building will sit on a block known as T-12 in Shorenstein's 3.5 million-square-foot Oakland City Center development, a commercial hub in downtown Oakland. The block is bounded by 11th, 12th and Jefferson streets and Martin Luther King Way, one block north of Lafayette Square.

"This building will do more for Oakland than just change our skyline. It speaks to the economic vitality and innovation the city is encouraging from all sectors of business and industry," Oakland Mayor Ron Dellums said in a statement.

The project demonstrates strong interest in Oakland's office market, according to John Redmon, vice president of MetLife Real Estate Investments. It would be the first new building in Oakland City Center since Shorenstein developed 555 City Center, a 20-story tower of almost 700,000 square feet, in 2002.

MetLife and one of Shorenstein's real estate funds will jointly own the property, with Shorenstein handling leasing and management services.

The joint venture expects to break ground next spring, according to Shorenstein. The project is currently in the design approval phase.

Ted Korth of Korth Sunseri Hagey is designing the tower to meet LEED standards for sustainable design. It would be the largest privately owned green office building in the city.


Starwood Bringing Eco-Friendly Hotel to Nation's Capital

Starwood Capital Group is bringing its new eco-friendly 1 Hotels brand to the nation's capital, the Greenwich, CT-based real estate investment firm said this week.

Starwood will develop the green hotel, a first in the Washington, D.C. area, in a joint venture with District-based private equity firm Perseus Realty LLC. The 180-room property would sit at 22nd and M streets NW in the West End neighborhood, two blocks north of George Washington University.

"Washington is home to some of the world's most important environmental organizations, so it means a great deal to me personally to be able to demonstrate that we can combine a truly world-class, five-star living experience with environmentally responsible building and design under their watchful eyes," Starwood Capital Chairman and CEO Barry Sternlicht said in a statement.

The hotel would break ground in mid-2008 and achieve LEED certification when it delivers in 2010, according to Starwood Capital. The National Resources Defense Council (NRDC) is serving as an advisor on the project, and 1 percent of the profits from the property will be donated to local environmental organizations guided by a steering committee with NRDC representation.

The project coincides with recent legislation in Washington mandating LEED certification for public and private commercial development. The requirement is being phased in until it takes full effect in 2012.

"For the vast majority of hotels, eco-friendliness means washing guests' towels less often," stated Perseus Executive Vice President John Wood Bolton, Jr. "The 1 Hotel, Washington, D.C. will demonstrate that luxury, comfort and impeccable service can co-exist with environmental sustainability."

Starwood is launching the 1 Hotels brand in downtown Seattle, where the first hotel is under construction at a reported cost of $200 million. Starwood partnered with Portland-based Avalon Holdings to develop the 23-story hotel, which is slated to deliver in mid-2009.