Right Now
Hot Topics in Commercial Real Estate
Vol. 1 - September 2008
Looking past the buzz words: An introduction to LEED and BOMA Go Green
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An introduction to LEED and BOMA Go Green
Welcome to the first edition of DTZ Barnicke’s newest publication, Right Now. We look forward to delivering you informative and relevant information on real estate issues and trends in future editions. In this edition we wanted to explore a topic that has seen growing interest from both the tenant and landlord/developer community - green buildings. With all of the trendy jargon and lingo circulating around this topic, we felt it was time to break down green building certifications to their fundamentals. Words like efficient, sustainable, footprint, and green with respect to the impact of our daily activities on the environment have been used for decades, but only in recent years has ‘green’ lingo had an expansive reach in Canada’s commercial and industrial real estate market. But the question remains, what do all these buzz words mean in the context of real estate? By now, most builders, landlords, and tenants are familiar with environmental certifications for buildings such as LEED and BOMA Go Green, but how many of us really understand what goes into these certifications and what the implications are of owning or renting a property deemed efficient, green, or sustainable. Many questions often go unanswered such as, what is environmentally friendly about the building? Is it the way it was built, the way it is operated and maintained, the quality of the work environment, or a combination of the above? Today there are approximately 107 completed and certified LEED projects, over 500 certified BOMA Go Green buildings, and over 800 projects attempting LEED certification in Canada. A strong indication these certificates are not a fleeting trend, but rather long-term enduring standards. Provided below is a brief summary of environmental certifications for buildings in Canada, what they mean for you, and what to expect in the future. Certification Levels for LEED NC
Points
Certified
26 to 32
Silver
33 to 38
Gold
39 to 51
Platinum
52 or more
Right Now Hot Topics in Commercial Real Estate
First LEED Platinum Building in Canada by Larry McFarland Architects
LEED Leadership in Energy and Environmental Design (LEED) in Canada is governed by the Canadian Green Building Council (CaGBC), but LEED certification is a global initiative with certified buildings throughout the world. LEED is comprised of many different versions and within each version there are four levels of certification; Certified, Silver, Gold, and Platinum, with Platinum being the most difficult to obtain. There are nine different LEED Rating Systems for different types of construction, but the versions of the LEED rating system most applicable to commercial and industrial buildings are LEED for New Constuction (NC), Existing Buildings (EB), Commercial Interiors (CI), and Core and Shell (CS). LEED Rating System
Purpose
LEED for New Construction
Benchmark for new construction projects and major renovations
LEED for Existing Buildings
Benchmark for the operation and maintenance of existing buildings
LEED for Commercial Interiors Benchmark for the tenant improvement market LEED for Core and Shell
Benchmark for the construction of core and shell projects
Each version of LEED is comprised of a set of prerequisites in order to qualify for certification and a list of credits that can be chosen from to reach a score that decides the level of certification. The prerequisites and credits fall into six major areas; Sustainable Sites (SS), Water Efficiency (WE), Energy and Atmosphere (EA), Materials and Resources (MR), Indoor Environmental Quality (EQ), and Innovation and Design Process (ID). Vol. 1 - September 2008
Prerequisite and Credit Category
Examples of Credit Topics
Sustainable Sites (SS)
Alternative Transportation, Development Density
Water Efficiency (WE)
Water Use Reduction, Water Efficient Landscaping
Energy and Atmosphere (EA)
Renewable Energy, CFC Reduction, Energy Performance
Materials and Resources (MR)
Building Reuse, Waste Management, Recycled Content
Indoor Environmental Quality (EQ)
Low-Emitting Materials, Indoor Air Quality Management
Innovation and Design Process (ID)
Innovation in Design, LEED Accredited Professional
In short, every LEED building is unique and is certified for a combination of different reasons. Building ‘A’ may be LEED Silver because of the number of credits received in the Materials and Resource (MR) and Indoor Environmental Quality (EQ) categories and Building ‘B’ may be LEED Silver because of the number of credits received in the Water Efficiency (WE) and Energy and Atmosphere (EA) categories. Both buildings may have the same certification but the environmental implications and cost advantages of the two buildings will vary a great deal. Building ‘A’ may improve employee satisfaction and productivity with the use of more natural light and independently controlled workstation and Building ‘B’ might reduce your operating cost by shrinking your water and energy bills. The greatest critique of the LEED rating system is the cost and impact of achieving different credits is not taken into consideration when weighing the value of a credit. This often leads some developments or renovations to focus on achieving LEED certification in the least costly manner as opposed to the best long term interest of the landlord, tenant, and environment.
BOMA Go Green The Building Owners and Managers Association (BOMA) Go Green program is a Canadian environmental certification program governed by BOMA Canada for existing commercial buildings. BOMA runs two programs, Go Green and Go Green Plus, with Go Green Plus being a more in-depth version adding the use of web based assessment tools. Go Green is comparable to LEED EB, as the focus is on the ‘greening’ of the operations and maintenance of existing buildings. Unlike LEED certified buildings though, all BOMA Go Green certified buildings are adhering to the same mandatory requirements. There are no tiered certification levels. BOMA Go Green is a certification program that allows the performance of a commercial building to be continually measured such that the performance of said building can be improved and maintained consistently within the different environmental requirements. The requirements fall into five categories; Resource Consumption, Waste Reduction & Recycling, Building Materials, Interior Environment, and Tenant Awareness. Category
Topics Covered
Resource Consumption
Energy Use and Water Use
Waste Reduction and Recycling
Construction Waste and Recycling
Building Materials
Hazardous Materials, Material Selection, and Ozone Depleting Substances
Interior Environment
Indoor Air Quality and HVAC Maintenance
Tenant Awareness
Communication Program
It is important to remember that LEED standards are continually changing, but once a building is LEED certified it remains so forever, regardless of the upkeep by landlords and tenants. When you are looking to build, buy, or rent a LEED building it is important to understand why the building is LEED rated and what financial, social, and environmental benefits are being passed onto your organization and community. Right Now Hot Topics in Commercial Real Estate
Vol. 1 - September 2008
Right Now
Hot Topics in Commercial Real Estate
Vol. 1 - September 2008
As you can see both LEED and BOMA Go Green place an emphasis on the same topics, but most landlords of existing buildings typically select the BOMA Go Green certification as the process to qualify for certification is considered to be much less complex and less costly, but as equally recognized by the public. Another notable feature is that the BOMA Go Green certificate can be lost at any time if the requirements are not maintained. Although LEED may have higher standards and touch on many more points, BOMA Go Green is often applauded for its consistency and for being a more obtainable stepping stone to reducing environmental impacts and improving work environments. Some would say, “Some change is better then no change”. What to Expect in the Future Every year we can expect a greater percentage of new construction to be LEED certified as awareness continues to increase and the cost associated with building to LEED standards gradually decreases at all certification levels. We also expect rapid growth in the BOMA Go Green program, particularly with BOMA Go Green Plus. Already governments in cities like San Francisco, Seattle, New York, and even Dubai have initiated talks regarding all future developments meeting LEED standards. Some cities are going as far as to say that nothing less then LEED Gold is acceptable. In Canada, several new government projects like the new construction of Strathcona County’s Community Centre and the redevelopment of Alberta’s Federal Building are expected to be LEED Gold. Perhaps a sign that federal or provincial governments in Canada may step up to the plate and impose their own legislation on future construction.
We also expect to see a growing use of green leases that introduce new environmental clauses. These green leases will encourage cooperation between landlords and tenants in the ‘greening’ and proper use of buildings and clarify the distribution of costs and savings when one party undertakes performance improving renovations. Soon green leases will be common place for landlords and tenants of buildings that are LEED and BOMA Go Green certified. It is important to remember that these certifications are only as good as the tenants that occupy the buildings. Ultimately it is the responsibility of the companies and their employees to maximize their efficiency once the tools and guidelines are in place to maintain a ‘green’ environment. If you have any questions about LEED and BOMA Go Green properties in Canada please contact your nearest DTZ Barnicke representative and they will be happy to tell you more about ‘green’ properties in your area and help you best match your needs to an environmentally sustainable building. Visit the following sites for more information: www.CaGBC.org www.BOMAgogreen.com www.dtzbarnicke.com
LEED and BOMA Go Green Certified Office and Industrial Buildings by Province‡
LEED*
BOMA
BC
AB
Certified
1
5
Silver
5
5
SK
MB
ON
QC
NB
NS
PEI
NF
6
Gold
10
Platinum
1
2
Go Green/Plus
105
81
1
3
1
1
4
1
1
1 6
14
143
174
7
1
* Only includes office and industrial buildings. ‡ Data as of September 2, 2008
Contact Lesley Yule, M.Sc.Pl. National Director of Research Tel: (416) 863 1215 Email: lesley.yule@dtzbarnicke.com DTZ Barnicke Limited 2500 - 401 Bay Street Toronto Ontario, Canada, M5H 2Y4
www.dtzbarnicke.com
Disclaimer and confidentiality clause This report should not be relied upon as a basis for entering into transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, DTZ Barnicke can take no responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to DTZ Barnicke. © DTZ Barnicke Limted, Real Estate Brokerage 2008