This week, Tom Bisacquino discusses NAIOP's stance on green building.
Can you give our readers some background on what NAIOP is and what the organization does?
NAIOP is a trade association with over 17,000 members throughout the United States, Canada, and Mexico. We have 55 chapters of the organization: 52 U.S. chapters and three Canadian chapters. We also have an affiliate in Mexico called The Association of Mexican Private Industrial Parks (AMPIP), and their membership mirrors the NAIOP membership in the U.S. and Canada. Our members are primarily involved in the development, ownership, and investment of most commercial real estate product types. We started in office and industrial. Our members are now doing a lot of mixed-use development, so they're involved in a lot of retail and multi-family as it pertains to mixed-use.
As a trade association, we educate our members through a variety of programs, webinars, conferences, and seminars. We do industry research, and we also represent our members from a legislative standpoint on the federal, state, and local levels. Issues that we're dealing with, as far as our members are concerned, are tax, environmental, and land use issues. We're very much at the forefront of representing our members on green and sustainable development issues as well, which branches into the whole energy debate.
It seems like the green building market is changing rather rapidly. Can you talk about some of the changes you have seen over the past year and your predictions for the future?
In the last 24 months, there has been a huge exhilaration in the green market. This has happened for a few reasons. Like any other product type, as things mature and become more prevalent, the cost of that technology drops. There's no difference with green technologies. Even as recently as three or four years ago, there was a five to 10 percent premium to go green. The question is: will the tenant ultimately pay for that? Is someone going to pay 10 percent higher rent because a building is using sustainable technologies? As those technologies have matured, the cost has dropped significantly. People are now looking at maybe a two percent premium, and in some cases, the cost is equal to conventional construction. You're also looking at the continually rising cost of energy. The business case for being green and employing energy savings methodologies has become so strong that you can't ignore it.
I think that there's no question that our industry and our members embrace green and sustainable building. It's the right thing to do. It also makes a building more high-performance, which means it's going to be more energy efficient and will save the occupant(s) money. In many cases, these building have longer life-spans as well. When you get into the financial markets, you're starting to see preferential lending standards for sustainable and high-performance buildings. So, you're really seeing the full-circle. I would go as far as to suggest that if you're not building green today, you're really not building Class-A. The future definition of a Class-A building, particularly an office, is going to be a sustainable, high-performance building.
Everybody loves LEED. They seem to be the strongest green certifying organization going right now in the United States. Do you see any other organizations on the horizon that could be on par with the USGBC?
They certainly have that space to themselves right now. There's one other group called Green Building Initiative (GBI). They do a green rating system called Green Globes that kind of tracks with USGBC's LEED. It was big in Canada. The home builders brought GBI into the U.S. for residential, but I think they've kind of stepped away from it because the National Association of Home Builders (NAHB) has their own brand new system that they've launch in the last six or nine months. GBI was more on the residential side than on the commercial side. Right now, USGBC is pretty much the only player on the commercial side. They're huge, and they're international in scope. One of the things that we've been impressed with from the USGBC is that they are not afraid to change. They are very willing to change and keep modifying and honing their certification. Their goal is to impact the development of green buildings. That's what they want, and they understand that in order to achieve that, they need to work with the people who are doing it. I like their approach. They're all about partnering and incentives. They understand that if there are enough incentives put in place, the developers will choose to go green. They're not into mandating anything. So we're very much simpatico with them on that approach. I think that before you get to the point where people are going to try to legislate this and mandate it, I think the market will accept it because it's a smart business decision.
Builders are already employing biodegradable materials in areas such as flooring, but many construction materials still end up in landfills. When do you think builders will "up the ante," so to speak, and make completely waste-free, sustainable buildings?
In our green policy, which we've worked very hard on in the last year, it articulates how we think that you need to do everything you can that's cost-effective and look at it from the building's inception, development, and usage, to the building's ultimate demise. We as an organization believe that you have to look at the entire life-cycle of a building. You really need to think it through from the site prep of the building, the uses, operation, all the way to what are you going to do with that material afterward. We're already very much in support of the whole life-cycle approach to construction.
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