Editor’s note: This is the first in a series of investigative articles on green building and the U.S. Green Building Council’s Leadership in Energy and Environmental Design certification standards.
For the renovation of its newest commercial property, the two-story office building 1331 Lake Drive SE in Eastown, Second Story Properties will conduct a uniquely public experiment in what it takes to develop a green building.
“My company has always prided itself on social responsibility,” says Second Story President Sam Cummings. “A lot of what we’ve done historically has been green in practice but not officially LEED. We’d like to get to the point of doing LEED on all our buildings. But first we have to prove that a green building can work in a commercial application. We just don’t know if the marketplace will accept the additional expense of a LEED-certified restoration.”
If you live or work in West Michigan, odds are you’ve at least heard of LEED, which stands for Leadership in Energy and Environmental Design, the U.S. Green Building Council’s portfolio of green building standards. Due to the local influence of the office furnishings industry and a regional commitment to sustainable business and philanthropy, West Michigan has distinguished itself with one of the world’s proportionately largest concentration of LEED buildings.
Certified projects listed on the council’s current LEED directory include the Grand Rapids Art Museum, the new Metro Health Hospital, a Meijer store and 40 other factories, schools, universities, retail centers, corporate headquarters and non-profit uses, but not a single commercial office building.
“What I’ve noticed is that the lion’s share of LEED-certified projects are either user-driven, philanthropic or institutional,” Cummings says. “There are very few that are office buildings, and I can’t name a single one of those that was developer-driven.”
Now, the development world is populated by not only apples and oranges, but seemingly a different fruit on every street and sidewalk – there is no standard case. With that said, renovating 1331 Lake Drive to LEED specifications will add an estimated $100,000 to an originally $325,000 construction budget, $35,000 of that in professional and certification fees. To make the project work, Second Story will need to increase its rental rates by 50 cents per square foot to $8.50 per square foot, triple net, just slightly above average office rental rates for the Eastown neighborhood.
“While we’re not entirely comfortable with paying that premium, we want to give it a shot,” says Nick Koster, Second Story’s vice president of development. “It’s better for the world and it’s better for our clients. Ideally we do this and find out it’s worthwhile, then every project we do will be LEED certified.”
As part of the experiment, Second Story invited Rapid Growth to follow the project from its design phase and early summer groundbreaking to completion and occupation this fall. Along the way, the developer and the magazine aim to educate readers on the process and principles of LEED certification and green building, including other important projects currently underway in West Michigan.
Launching LEED 1.0
In a given year, buildings account for more than 30 percent of U.S. energy consumption and 60 percent of electricity use. A typical North American construction project will generate up to 2.5 pounds of solid waste per square foot, with new development continuously stressing municipal infrastructure and natural habitats. On top of that, poorly designed buildings can be just as bad for human health as they are for the environment.
John Stivers, principal of JHStivers Project Services and a project manager for green building consultancy Catalyst Partners, both in Grand Rapids, learned firsthand the value of sustainable building practices as a project manager on one of Herman Miller’s several LEED-certified projects. At the same time as that project, he was involved in the construction of a new headquarters for a local non-profit, which did not use green building practices, particularly the recommendation against wood flooring adhesives with high concentrations of volatile organic compounds.
“They had moved in before the flooring was done, and when I stopped to check in, the fumes hit me pretty hard,” Stivers says. “At Herman Miller, you couldn’t even smell the paints they were using. But there, some of the staff had gotten sick and they had to clear out for the day. That’s when I really knew there was something to green building.”
Stivers and Catalyst Partners President Keith Winn were on staff at Herman Miller for what was arguably the birth of the LEED standard. In 1993, the Zeeland furniture manufacturer was one of the founding members of the USGBC, a coalition of builders, developers, businesses, and other community stakeholders seeking consensus standards to guide sustainable building.
That year, the company began a study of its existing manufacturing facilities and eventually its new GreenHouse – a factory and office complex designed by pioneering architect William McDonough – to determine if there were any tangible benefits to green building. The data suggested a correlation between green building and productivity, plus lower operations costs, and became the model for the 1998 launch of LEED Version 1.0.
Classifying the Construction
Today there are six LEED rating systems in various states of approval, plus another six market sector concentrations. The vast majority of projects are certified under LEED for New Commercial Construction and Major Renovations, or LEED-NC, which was initially designed for new commercial office buildings but can be applied to everything from factories to churches.
Other commonly used standards are LEED for Existing Buildings, a property management distinction, LEED for Commercial Interiors, for occupants or tenants with little control over a building’s infrastructure and mechanical systems, and LEED for Core and Shell, a standard designed for developers that will not occupy the finished building and have little control over the end-users’ operations. Second Story Properties seeks LEED-CS for 1331 Lake Drive.
While each standard is different, all address a common set of concerns:
· Sustainable site planning
· Water efficiency
· Energy efficiency and atmosphere
· Materials and resources
· Indoor environmental quality
Within each system, credits are awarded for meeting specific green building standards, with the total points for the project earning one of four certification levels: Certified, Silver, Gold and Platinum. The total point values are different for each system, but basic certification is equal to roughly a third of total credits, plus any required prerequisites.
Leaping to LEED
“Why do people decide to go LEED? The most common thing I hear is that it’s the right thing to do,” says Sam Pobst, president of green building consulting firm Eco-Metrics in Grand Rapids, chair of the USGBC Heartland Regional Council and two-time chair of the West Michigan chapter. He also teaches a class for LEED accreditation, a designation for green building professionals, on behalf of the Associated Builders and Contractors West Michigan, which both Cummings and Koster have taken.
“Some people need it for their marketing message, but for most of my clients they’re looking at it as the right thing to do,” says Pobst. “It’s the right thing for stockholders, for their bottom line, for the environment, for their employees...They’re looking at it holistically.”
Over the past decade, Grand Rapids-based Bazzani Associates has been synonymous with green building. Its corporate headquarters, the former Helmus Building on Wealthy Street, was the first LEED-certified building in Grand Rapids and the first LEED project in West Michigan not associated with the office furniture industry.
“If you truly believe in sustainability, there isn’t two ways to design something,” says Nate Gillette, Bazzani’s chief architect. “There is only the sustainable way. LEED is just a benchmark to get you where you want to go. So it all depends on what your goals are: Are you just trying to fill up the LEED score card or do we have something we’re trying to achieve?”
Gillette goes into every project intending to cut energy use and create a healthier indoor environment, whatever the situation. Whenever possible, the firm seeks LEED certification for its projects. This type of development can come at a price premium, generally three to six percent in additional upfront costs. But operational savings have generally delivered a quick payback, usually three to five years, not including the intangible benefits of higher worker productivity and lower environmental impacts common to LEED construction.
“There are potential price premiums, but you really have to do a paradigm shift in your thinking,” said Gillette. “People have always looked at buildings from a cost perspective. Well, what are the costs to run that building and have people who aren’t happy or productive? What are the additional operating costs? You have to look at it holistically.”
For many developers, that is easier said than done. Second Story, for instance, is not new to green building. It partnered with Bazzani on 924 Cherry Street last year, the LEED-certified home of the Green Well restaurant, and the LEED-registered Inner City Christian Federation headquarters, also on Cherry. Its upcoming Gallery on Fulton will also be a LEED project. But with no guaranteed occupancy on such a large project, the 30 percent increase in upfront costs for 1331 Lake Drive will be a hard pill to swallow.
“When we partnered with Bazzani, it was something of a leap of faith to incur the additional cost of ‘going green,’” says Cummings.
“It’s a no-brainer if we can make it work,” Koster adds. “Ideally, we do this and find that it’s worthwhile. We find that it reduces operating cost and adds value for our clients.”
Probing the Premium
Two recently released studies are showing increased performance and marketability of LEED commercial properties nationwide. A study by the New Buildings Institute determined that a LEED-certified building was 25 to 30 percent more energy efficient than a non-LEED building. Gold and Platinum LEED certified buildings had average energy savings of nearly 50 percent.
A study by real estate intelligence firm CoStar determined the LEED buildings command rent premiums of $11.24 per square foot over non-LEED buildings and have 3.8 percent higher occupancy. LEED buildings sell for an average $171 more per square foot.
The latest data from the USGBC also suggests that upfront costs in many situations can be reduced to zero.
“That’s the most common question I hear, and I would say the difference is zero” says Sam Pobst. “It need not cost a penny more than standard practices.”
Daniel Schoonmaker is a freelance journalist and a copywriter for Alexander Marketing Services in Grand Rapids. He is currently studying for accreditation as a green building professional through the U.S. Green Building Council.
Photos:
1331 Lake Dr. - Eastown
Sam Cummings of Second Story Properties
Grand Rapids Art Museum
One of Herman Miller's office buildings
Guy Bazzani of Bazzani Associates
924 Cherry - a joint project between Second Story Properties and Bazzani Associates
Photographs by Brian Kelly - All Rights Reserved