Going Greener: Major Real Estate Companies Align with the EPA

Going Greener: Major Real Estate Companies Align with the EPA

The U.S. Environmental Protection Agency (EPA) now offers corporations the option of aligning their common goals through a Memorandum of Understanding (MOU), confirming a commitment to build sustainable work environments together.

As part of the new MOU, organizations promise to address a broad platform of initiatives aligning closely with EPA interests and to utilize their tools to strengthen water conservation, recycling and energy reduction.

So far, star signers of the EPA’s MOU include the New York Mets, St. John’s University and two major commercial real estate services providers, namely SL Green, which signed the MOU in the first quarter of 2012, and Cushman & Wakefield, which signed on in 2008.

NREI spoke with Jay Black, LEED-AP, SL Green’s first director of sustainability, who joined the firm in 2011, and Eric Duchon, manager, real estate strategies for Cushman & Wakefield’s corporate occupier & investor services group, about how aligning with the EPA has impacted their corporations’ sustainability programs.

An edited transcript follows.

NREI: Why, essentially, are your companies going further than LEED, in a sense, by partnering with the EPA?

Eric Duchon: Cushman & Wakefield was the first real estate services firm in the U.S. to enter into such an initiative aimed at addressing environmental issues in the commercial real estate sector. The MOU establishes environmental best practices designed to reduce carbon emissions from energy, water, and waste consumption at C&W’s managed properties and corporate offices. To date, our efforts have resulted in over 163,000 MTCO2e in reductions.

I don’t believe this is [going] further than LEED, actually. While our LEED-certified properties certainly contribute to our efforts, our MOU targets properties that have not yet engaged in sustainable operations. We use our Environmental Challenge competition as a forum to engage these on-site management teams to implement no-and-low cost improvements that can significantly enhance environmental performance, even if the property is not eligible for LEED.

Jay Black:To me, the relationship that was created [between SL Green and the EPA] is really trying to publicly recognize in dollars the importance of sustainability, how it’s a critical tool for businesses today that can help with a lot of different factors—whether it’s creating a healthier work environments or helping improve economics through energy efficiency and water usage reduction. There are a lot of benefits [to aligning with the EPA]: It highlights the types of things we’re focused on in our buildings and is really a good way to recognize our program and the importance we see behind it.

We utilize LEED as a guideline to formulate our approach. There are buildings that we’ve taken through to receive LEED certifications—for instance, most recently, 360 Hamilton Avenue in White Plains, N.Y. received a LEED Gold certification for existing buildings…and is only one of 10 buildings in New York State to receive that level.

We also see elements from the LEED program permeate into a lot of elements that we’re addressing in our portfolio, like recycling and water conservation. For example, recently, with all our suburban properties and our first 10 properties in New York City, we retrofitted all the sink faucets to use low-flow aerators which align with LEED standards, and we estimate that with those buildings alone, we’re going to be saving close to 8 million gallons a year in water. We saw that as a fantastic first step in the program.

How was the decision to sign the MOU with the EPA made?

Eric Duchon: With a portfolio of managed properties as large as ours, and understanding that buildings are one of the largest contributors to global warming and [that they] consume large quantities of natural resources, C&W recognized the need to be good corporate citizens.

Jay Black: Sustainability for us has always been about progression. It’s been about starting small and building our sophistication over time.

Even before the term green started to become popular, there were individuals within the company pushing various measures. And then in 2011, I became SL Green’s first director of sustainability. Marc Holliday, our CEO, recognized that we had a good sustainability program and there were a number of individuals doing good things but that we could have one person overseeing that and taking all that energy and directing it.

NREI: How does this enhance your competitive edge?

Eric Duchon: At Cushman & Wakefield, we are very proud of our results and successes from our MOU, though we did not do this for marketing/publicity purposes. As I mentioned previously, we wanted to be good corporate citizens and recognized that this was the most effective and impactful way to do so.

NREI: What are the benefits for your tenants?

Eric Duchon: Whether asking for the initiative or not, our clients are always happy to see environmental performance improvements, and even more so when they result in cost savings to the property and increased NOI. [In terms of] tenant/occupant education and satisfaction, we are always sure to engage the occupants of the buildings we manage in order to educate them on what has been done at the property, as well as how they can help both in the office and at home.

Our building occupants are always happy to hear that we have made the building more efficient, provide better indoor air quality, or are recycling a large percentage of the building’s waste stream.

Jay Black: Our tenants are excited to see that we’re focused on this. A lot of them have sustainability programs and agendas and initiatives underway and it’s important for us to be able to connect with them and work together to build on those programs. A lot of our tenants, for example, are really committed to the idea of recycling, and one of the first things we did this year throughout the first quarter was literally go building to building—myself alongside our waste recycling hauler—and we presented to representatives of our tenants in every single building. We helped reinforce the education of how recycling works.

We’re recycling 75 percent of our office waste based on the tenants’ current programs and trying to provide them the tools to do more. We know that even minor changes can have a profound effect, and maybe we can be recycling 80 or 85 percent as time moves forward.

Our tenants are excited to hear this information because it lets them know there’s support behind them as they continue to push their own initiatives.

NREI: And how does fully embracing sustainability impact your company?

Jay Black: For me, sustainability is something we’ve really been addressing since 2007—that’s when we started to make a more concerted effort and recognize that it was not just tied to a tool to make the business better but that there are also environmental considerations behind it.

For example, we looked at recycling and knew we wanted to start to build on that. Many people said, “Oh, well, you’re a landlord so you’re immediately focused on energy efficiency.” Well, coincidentally, our first initiative was actually expanding our construction recycling to incorporate carpet tile carpet.

It’s five years later and we’ve now recycled over 2 million sq. ft. of these materials. If we’re doing demolition, we’re recycling that material and that’s had a big impact on our recycling rates.

On the energy side, it also goes back to starting small and building. In 2007 we said, “What can we do to improve our tenant construction when we’re building office spaces out?” So we put in some occupancy sensor devices and LED exit signs—easy stuff that wasn’t a substantial cost but could start to have a little impact and get us comfortable.

When that was over, we thought, “We’ve affected the ability to turn off the lights, so how about making the lights more efficient when they’re on?” We researched a variety of fixtures and found one that was 40 percent more efficient. And now as a standard we utilize this fixture throughout all our construction.

In 2009, we decided if we can do this for one fixture, we can do this for all our areas—garages, stairwells, lobbies, mechanical rooms—and we completed our first portfolio lighting retrofit in 22 buildings throughout the suburbs.

That was a $1.4 million program, for which we received approximately $650,000 in incentives from the state in utilities and we started saving close to $600,000 a year in energy costs, so this was a profound jump in the program and really jumpstarted people’s understanding of what energy-efficiency programs could aim do for our business.

In 2010 we started on the heating and air-conditioning side, doing upgrades of building management systems, putting in variable frequency drives and high-efficiency motors. The first project we did was 1055 Washington Blvd., a 180,000-sq.-ft building in Stamford, Conn. That alone was a $500,000 program and we received about $125,000 in incentives and began saving $175,000 in energy costs. We’ve been expanding that application throughout our portfolio and we’ve reduced energy consumption in our suburban portfolio alone by 15 percent.

Eric Duchon: [Embracing sustainable practices brings further] professional development of Cushman & Wakefield employees, both corporate and in on-site management—our professionals learn and grow by implementing sustainable operations at their properties. Having a network of educated and experienced professionals allows us to “lift and shift” our knowledge and resources to better all of our clients and their properties. Plus, we encourage our properties to pursue recognition for their efforts through building certifications, i.e. LEED and Energy Star. Our clients are always happy when their properties achieve LEED certification or an Energy Star label.

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