The Urban Land Institute (ULI), is an organization of community builders and members who develop and redevelop neighborhoods, business districts, and communities across the U.S. and around the world. Comprised of thousands of property owners, investors, architects, lawyers, planners, contractors, professors, and others allied to the industry, the ULI convenes each November for its annual fall meeting. This year, San Francisco was the host city. Over 6,000 people attended, in spite of difficult market conditions.
Much of this year's meeting focused on the impact of the great recession, lack of financing options, and what lies ahead when the recovery takes hold. And, of course, there was a portion dedicated to green and sustainability. Would there have been more devoted to this aspect of real estate if the economy was stronger? Hard to say.
"Emerging Trends in Real Estate," published by the ULI and PricewaterhouseCoopers, is released each year at the fall meeting. The 2010 edition, authored by Jonathan D. Miller of MillerRyan LLC, may give an indication of where green and sustainability rank in the current food chain. According the study, which draws on more than 900 interviews and surveys, "Since the industry ices most development activity, momentum for eco-friendly, energy-saving buildings stalls." One leading institutional investor said, "The recession makes it less of a priority and nobody has extra money to spend retrofitting." However this is just a momentary slowdown, like much of the economy. The report goes on to say that "most interviewees expect developers to seek LEED certification" for most future projects. "Tenants want reductions in energy costs and big companies need cover for their corporate responsibility statements." Also, "Investors realize that 'a green story' helps lease space faster even if "tenants won't pay for it." Climate change is less at the forefront of the decision making and more due to the fact that office tenants are gravitating to buildings with systems that foster healthier workplace environments. Simply put, "Tenants will demand these systems once they experience the difference" as mentioned by another response to the study.
On the ownership front, there is a real possibility that the building will garner a bigger price in five to ten years when the property is ready for sale.
The costs for retrofitting can be prohibitive, but considering the alternative, an empty building and a property that is unable to be leased or sold, it appears that once the economy starts humming along once again, green and sustainable practices are going to be the way of doing business.
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