Is LEED Relevant in Development?

Seal of Approval- Nearly 15 years after it was introduced, LEED is still the dominant green standard. But is that a good thing?

By Margot Carmichael Lester

As energy and operating costs increase and the public’s awareness of global warming grows, green development has achieved top-of-mind status for tenants, buyers, and municipalities alike. But not all green projects are created equal. Some developers actually employ sustainable practices, whereas others simply pay lip service to “environmental virtue”—much like the bag of chips that claims to be “light” despite containing 20 grams of fat per serving.

Such ambiguity makes green rating systems such as the U.S. Green Building Council’s Leadership in Energy and Environmental Design (commonly called LEED) essential as a quantifiable measure of a project’s green factor. “There are definitely some companies that are green-washing,” admits Eric Clifton, vice president of sustainable development for Newland Communities, a privately owned company in San Diego seeking LEED certification for two of its master planned communities. “You’ve got to know who’s making a genuine effort, and LEED is the only measurable term in development today.”

The LEED program provides a detailed guide to sustainable development for both commercial and residential construction. It has expanded in the past 15 years to offer eight programs, including its most recent addition, LEED Health-care. The program, to be unveiled later this year, applies to inpatient care facilities, licensed outpatient care facilities, and licensed long-term care facilities.

Today, LEED is the industry’s dominant green standard, but some experts question how long the program will continue to maintain its relevance. “LEED is certainly not the end-all in this very fast-growing industry,” notes Matthew Linden, owner of ConsciousBuild, which develops sustainable luxury homes in San Luis Obispo, Calif.

MEANINGFUL MEASUREMENT

Though LEED is just one system among a growing number of local and national green certification programs, the standard continues to carry clout in the industry. Indeed, newly unveiled programs from the National Association of Home Builders and local organizations have failed to slow LEED’s momentum.

“LEED certification is really a measuring stick—a third-party verifi cation that the sustainable goals and aspirations have been accomplished,” says Reese Rowland, a principal and project designer for Polk Stanley Rowland Curzon Porter Architects. The Little Rock, Ark.-based firm designed the LEED Platinum-certified headquarters for Heifer International, the global sustainable communities charity. “LEED shows a level of commitment that is quantifiable—meaning that if you are truly willing to be sustainable, you should be able to prove it,” Rowland adds.

That’s important as tenants and owners increasingly seek out green commercial space. “Tenants now look for LEED certification,” says Dan Slack, founding partner and president of Calamos Real Estate, a Naperville, Ill.-based real estate investment and development company. Its CityGate Centre mixed-use project includes the first LEED Silver-certified office property in suburban Chicago. “They pay attention to details, want more than green-washing, and are willing to pay for it. Tenants aren’t asking if you are LEED-certified, but at what level.”

Quantifiable measures also resonate in the residential marketplace. “There is a benefit to telling a family that they are moving into a unit that has low-emitting materials, and that the construction of their home was considerate to the environment,” adds Ken Naylor, senior developer at Coconut Grove, Fla.-based Carlisle Development Group. The company develops, leases, and manages 7,000 affordable housing units throughout Florida and has three multifamily projects seeking LEED certification.

HIGH HURDLES

Not everyone’s a LEED fan, however. Just ask Seattle planner and architect Myles Huddart of TCA Architecture-Planning. “While the standards established are adequate for now, the amount of research, coordination, and documentation required to achieve LEED certification is simply not worth the effort,” he concedes. “Many hours are spent to simply get to the point where you can apply for certification. When and if you gain certification, you basically have a building that you can use as a marketing tool, which has some value. Oh, and you get a plaque.”

LaVelle Ward, president and CEO of Chicago-based LaVelle Organization, a diversified real estate investment and development company operating in 32 states, adds that the standards aren’t always financially feasible. “Developments constructed to meet the standards of the LEED Green Building Rating System require certain materials which can drive the budget up on projects in areas where growth isn’t occurring fast enough to warrant the extra costs,” he says.

Indeed, building to LEED standards often adds more to the bottom line, a bitter pill given already-high construction and land costs.

“[LEED] adds between 2 percent and 10 percent, depending on how heavily green the local codes already are, the building type, site plan constraints, and the level of certification you’re seeking,” Naylor explains. “Some LEED-related upgrades have no cost premium. Others have costs which can be recouped through lower operating costs, such as water or energy-conserving fixtures and appliances. And some LEED-related expenses have a cost premium without a direct mechanism for recouping. The payback period varies depending on the fixtures selected, projected utility expenses, and the developer’s cost of capital.”

To get past the sticker-shock, Slack and his team used a double bottom line approach when planning and budgeting the CityGate project. “We looked at two bottom lines—one economic and one environmental—and made design decisions that would give us the best return on our investment in energy efficiency and environmental sensitivity,” he explains.

But not all sustainable materials are pricey. At Tallman Pines, a community of single-family and multifamily homes in Deerfield Beach, Fla., Carlisle discovered an alternative material for the parking lot that actually saved money: crushed concrete from a nearby demolition project instead of locally mined lime rock. “The crushed concrete was delivered for half the price of lime rock,” Naylor says. “We’re recycling concrete, eliminating the need to strip-mine a finite resource, reducing gasoline burned in delivery, and creating a more durable product.”

CHANGING TIMES

To keep up with the ever-changing green landscape, LEED will need to incorporate new technologies and techniques while jettisoning outmoded ones. “The USGBC has to strike a delicate balance between raising the bar just fast enough to promote continued progress while encouraging increased participation in voluntary green-building initiatives,” Naylor says.

Volunteer technical advisory groups (TAGs) help the organization develop and refine the LEED rating system, says Ashley Katz, communications coordinator for the U.S. Green Building Council in Washington, D.C. TAGs provide “a consistent source of sound technical advice to the various LEED committees and staff with respect to products, tools, and services,” she explains.

Such forward-thinking will likely help LEED remain a top contender in the green building marketplace.

“I feel that there will be more public demand for sustainable structures, and supply always follows demand,” Rowland says. “Economic downturns and energy crunches will demand that we develop buildings that conserve resources. LEED will have a proven track record of success that will have a great impact on development in the future.”

Fair Game - Employ this advice to help determine if LEED still works for you.

■ Evaluate the LEED point system.

Finding the right combination of LEED standards that’s right for both your project and pocketbook requires careful consideration. “Ask your architect about the cost and the benefit of each point,” says Robbie Ferris, president and CEO of First floor K-12 Solutions, a Raleigh, N.C.-based company that designs LEED-certified schools. “You will learn a lot and have a better building.”

■ Plan ahead.

“If LEED is defined as an objective from the start, the cost premiums could be minimized or eliminated,” says Deborah Kuo, director of real estate for Exelon Business Services Co., a provider of energy services. Its Chicago-based headquarters is the largest office space in the world to receive LEED-CI (Commercial Interiors) Platinum certification.

■ Educate the market.

“We know green buildings benefit productivity, employee retainage, and the bottom line, but we have to explain that to customers,” says Sharon Coleman, director of real estate development for Seattle’s Vulcan Real Estate, which manages a $1.6 billion portfolio with projects that have received or are seeking LEED certification. Its South Lake Union development participates in the LEED-ND pilot program for neighborhoods. And the firm uses LEED as a marketing tool at its sales and information center.