Benefits of LEED Certification May 2015

Anyone can say that there building is “Green”, what does that really mean? Green in the simplest sense could mean earth friendly. For the past 100 + years, as the different countries on earth developed their resources, greenhouse gases were produced as a by-product. The buildup of these carbon emissions has caused erosion of the ozone layer that protects our planet from the heat of the sun. This is causing the climate changes we now see every day, severe storms, excessive temperatures in the summer, droughts, the Polar Vortex affect in winter.

For many people Hurricane Sandy was a great awakening. Part of the climate changes is the melting of the north and south poles which increases the level of the oceans. As a result of this, the hurricane pushed the ocean over the NYC sea walls and flooded out the city and many other parts of the tri-state region. Governments all over the world are now very focused on climate changes because all of these natural disasters require billions of dollars in rescue, recovery and infrastructure repair.

From a practical view green is thought of as improving the energy efficiency and air quality of a building, from an environmental point of view it means reducing the carbon emissions of that building. In the United States we have 4.8 million commercial buildings and 350,000 industrial buildings which consume 40% of energy use and 72% of electricity and produce 39% of all carbon emissions.

In 1998 the US Green Building Council (USGBC) introduced Leadership in Energy and Environmental Design (LEED). This is a rating system on new construction or improvements to an existing building. What LEED effectively did was answer the question, “How do I make my building green”. LEED provides building owners and operators a concise framework for identifying and implementing practical and measurable green building design, construction, operations and maintenance solutions. It address all facets of the building from site selection (for a new building), lighting and water efficiencies, indoor air quality, construction materials and how to minimizing carbon emissions.

LEED has given us the foundation to improve our buildings and LEED Certification is now recognized as a prestigious accomplishment of the building’s owners. Accomplish 40 points to be LEED Certified, 50 points for LEED Silver, 60 points for LEED Gold and 80 points for LEED Platinum. Each point represents a process of saving energy or helping the environment. There are now over 6,000 LEED certified building in the United States. Plus there are currently over 44,000 projects, representing 7.9 billion square feet, seeking LEED certification. It is projected by the USGBC that by 2016 half of the new construction in the US will be green.

In the NYC and Long Island area there are hundreds of LEED certified buildings. Just to highlight a few: in the city, the Bank of America Tower and the Hearst Tower are LEED Platinum and the Empire State Building is LEED Gold. On the Island, Stony Brook Universities Technology Center and Southampton Campus Library are LEED Platinum, the new construction TD Banks are LEED Platinum, and the Amityville and Westhampton Village Halls are LEED Gold. The first supermarket to ever attain LEED Gold was Wild by Nature in Oceanside; most of the Stop and Shop supermarkets are now LEED Certified. Many office buildings have LEED ratings but they are only identified by their street address. LEED concepts can be applied to any type of building commercial or residential.

Owners can improve their buildings without getting them LEED certified and many do. But the question arises, perhaps in a potential tenants mind, “…the owner says his building is green but what have they actually done?” By having a building LEED certified an owner has proof that the building is green. Certification is done by the USGBC’s Green Building Certification Institute, an independent third party verification of the work done on the building. The LEED certification also requires the building be maintained at these standards and go through a recertification process within five years or lose the rating.

The real benefit of following the LEED guidelines shows up in the reduction of the buildings operating expenses; using less water and electricity, reducing heat and air conditioning cost. When we reduce operating costs we increase the net operating income (NOI) of the building; as the NOI increases so does the value of the property.

In some leases the operating costs are “passed through” for the tenants to pay. If the owner improves the buildings efficiency these savings are then benefits to the tenants, making this building more competitive in attracting and retaining tenants.

Today we have the technology to measure the results of these improvements. We can monitor how much electricity and water is consumed in a building, the indoor air quality
and the carbon emissions produced. In NYC a law went into effect last year requiring buildings of 50,000 SF or more to benchmark (record) these statistics. A future measurement will show if the building is improving or getting worse. With the serious focus on reducing carbon emissions, the buildings that do so will be considered more valuable.

There is also another benefit of constructing or renovating using LEED standards, we have a happier and healthier work environment. Better indoor air quality, better lighting, more windows or interior glass walls allowing more works to “see the sun” create a better atmosphere to work in. We now have statistics that employees working in green buildings take fewer sick days and are more productive. Good news for the employer who also sees better retention of their employees.

Some government municipalities are now requiring all new construction to be LEED certified. The Town of Babylon requires all new commercial construction over 4,000 SF to be LEED Certified. The City of New York requires all new municipal construction or major reconstruction projects with an estimated capital cost of more than $2 million, except schools and hospitals, must meet LEED Silver certification standards. Non-municipal projects meeting the above criteria and receiving at least 50% of project costs or $10 million from the city treasury must also meet LEED Silver certification standards School and hospital projects meeting the above criteria need only meet LEED certification standards. The federal government now requires all buildings owned, leased or to be built for their use to be LEED Silver Certified.

LEED is the cornerstone of the future; its guidelines have provided a win-win for the building owners and the environment. Today’s technology has given us the ability to measure carbon emissions and to do things to reduce them. But it has also given us the ability to have a healthier place to live and work in – in a big way we can thank LEED for that.

Edward S. Smith, Jr.
Commercial and Investment Real Estate
Instructor, Consultant and Broker
Phone 631 807 2050
Smith Commercial Real Estate
Edward S. Smith Jr., Real Estate Broker
Licensed in New York and Connecticut
Berkshire Road, Sandy Hook, CT