Payback: Getting Your Money's Worth
A new or retrofitted 65-story office tower in midtown Manhattan will more than likely have sustainability factored in by its stakeholders––in fact, Jay Black (SL Green) says projects are expected to not only meet the latest standards, but “raise the bar and set a precedent for the rest of the city.” Despite this progress, there are still many slow adopters. Industry leaders discussed sources of friction with us last week at our Building Green: Calculating Payback panel with NAIOP NYC.
A primary driver for green buildings has been operational savings for owners, but sustainability has evolved far beyond energy costs to include factors like health and wellness, resiliency, and community benefits. While standards like the Living Building Challenge and the WELL certification are solidifying new definitions and metrics––and the benefits of improving indoor air quality and access to nature are no doubt felt and demanded by target tenants––Catherine Dannenbring (Thor Equities) and Stephen Schleider (Metropolitan Valuation Services) agreed that there is a need for stronger longitudinal data across building sectors on the cost savings for these elements. Schleider called benchmarking “a boon for green building” as it will provide long-term data for banks appraising energy efficiency projects.
There is also the day-to-day challenge of white noise keeping tenants, owners, and developers from breaking out of the business-as-usual behaviors. Vincenzo Palmigiano (Triplenet Energy) explains that this is where technologies like demand-response platforms come into play for sharpening tenant awareness of the costs behind their routines. Architects and designers have to invest energy and time in diving into the accounting world to translate their proposals into dollars and cents, and also be ready to guide all the stakeholders in navigating different versions of various standards. For Class B projects, these challenges are even harder to overcome as the payback periods are much longer, and tenants are less likely to expect and take part in building improvements.
So what might help smooth the road ahead? Black said carrots are very effective, giving the example of major municipal incentives for retrofit projects in Stamford, Connecticut. In New York City, Margot Walker (NYC Department of Environmental Protection) introduced the audience to the DEP’s green infrastructure grant program, providing significant funding for many well-known projects like the rooftop farm in the Brooklyn Navy Yard and the green roof on The New School’s LEED-Gold student center.
Panelists wrapped up on a hopeful note that new doors are opening all the time with more incentives, better data and new technologies.
Steven J. Schleider, MAI, FRICS
LEED Accredited Professional BD+C
Metropolitan Valuation Services, Inc.
44 East 32nd Street, 11th Floor
New York, NY 10016