National and Local Real Estate Trends Go "Green"

By Jeff Bennett

Green is here to stay, even though many real estate industry professionals have viewed notions of "sustainability" and "green" with caution and skepticism. "What does 'sustainability' mean?" "How much is this going to cost me?" "Will I ever get a return on my investment?" "Won't this lead to more regulations?"

BOMA International is a world wide association of building owners and managers dedicated to improving the commercial real estate industry through education, advocacy, and research. The March/April 2007 issue of BOMA Magazine observes that:

"An informal survey of BOMA's membership taken last fall shows that BOMA is already going green: 72 percent of respondents agree that global warming is a serious problem, 67 percent believe that within the next five years tenant demand will be a strong enough driver to influence their company's decision to 'go green,' and 61 percent believe that green buildings enhance their corporate image."

BOMA recently launched its Green Resource Energy and Environment Network (G.R.E.E.N.) program to help its members understand the benefits of "green" building construction and operational practices, promote energy efficiency and management, and implement "green" building design.

BOMA International's board has identified energy and sustainability as primary policy issues. It encourages real estate owners and managers to take an active role in implementing responsible consumption practices that are environmentally and economically sustainable. But, BOMA opposes government regulations which would mandate green building compliance unless corresponding and commensurate incentives are available.

The National Association of Industrial and Office Properties (NAIOP) is the nation's leading trade association for professionals in industrial, office, and mixed-use commercial real estate. Its website observes that

"Green building and development projects will increase 30 percent per year during the next five years, making them one of the major development trends in our industry."

NAIOP has developed a Green Resource Center for its members. It contains a list of publications and industry links which focus on green issues related to building design and construction, site selection, project scheduling, and the financial matters. (See: http://www.naiop.org/greenresource/index.cfm).

Like BOMA International, NAIOP is committed to practices and policies that reward voluntary energy conservation and fossil fuel reduction.

A recent issue of the Journal of Property Management observes that the number of LEED-certified new construction projects in the United States and Canada have risen sharply — from 38 in 2000 to 485 in 2006 — as conserving energy and "going green" have become an industry buzz. (Note: LEED stands for Leadership in Energy and Environmental Design and provides a nationally accepted rating system for the design, construction, and operation of green buildings).

The Institute for Real Estate Management (IREM) supports "positive incentives for conservation activities such as energy tax credits and an increased emphasis on energy efficient technology by the nation's building industry." It also supports legislation that encourages voluntary energy efficient improvements to buildings (tax credits for energy efficiency expenditures, tax deductions for energy management devices). As is the case with BOMA and NAIOP, IREM opposes standards that would mandate building energy conservation.

Locally, private developers and property owners have embraced the LEED rating system implemented by the U.S. Green Building Council. This is evidenced by LEED certifications for The Henry and the Armory Building in Gerding/Edlen Development Company's Brewery Blocks project, the new REI facility in the Pearl, the 200 Market Building, the Toyota Portland Vehicle Distribution Center, and the Jean Vollum Natural Capital Center in Portland.

The $2.2 billion South Waterfront project has embraced so many "green" components that it is already gaining national attention as an example of sustainable development. See http://www.usatoday.com/news/nation/2006-07-26-green-construction_x.htm.

As most building owners know, tenant improvements are the largest area of commercial construction activity in the country. In an effort to help owners decrease building operating expenses and improve worker health and productivity in relation to tenant improvement projects, the City of Portland's Office of Sustainable Development has published an eco-friendly Tenant Improvement Guide. It is available online at http://www.portlandonline.com/osd/index.cfm?a=121802&c=42168.

The commercial real estate industry is embracing "green," "sustainability," and "eco-friendliness" both in practice and by involvement in issues that these movements raise and promote. Real estate professionals need to keep up with these issues, the ways they are addressed, and the ways they become part of our law.

This article is intended to inform the reader of general legal principles applicable to the subject area. It is not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.

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