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Square Feet
Seeing the Investor Value in Being Green
By ALISON GREGOR
Published: March 2, 2010
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Constructing or renovating a building to make it environmentally sustainable can be a daunting task for any owner, but Jamestown Properties, a German commercial real estate investment company, has decided it will go “green” in nearly its entire $4 billion portfolio of buildings, all located in the United States.
Erik S. Lesser for The New York Times
Katharine Kelley and Matt M. Bronfman at a bike-share station at Jamestown’s office building at 999 Peachtree Street in Atlanta.
Ángel Franco/The New York Times
The building at 1250 Broadway is getting a “green” overhaul.
The overhaul involves fixes as simple as installing low-flow water fixtures and as complex as revamping heating, ventilation and air-conditioning systems. Jamestown expects to recoup costs through energy savings, the ability to charge higher rents and higher resale values.
Jamestown, an acquisition and management firm based in Cologne, Germany, and Atlanta, has invested $12 billion in commercial properties in the United States since 1983 through private equity funds for German investors. Matt M. Bronfman, the company’s managing director and chief operations officer, said Jamestown’s executives believed that real estate holdings, new and existing, would be increasingly valued by their sustainability and environmental impact.
“We come at things from a bit of a European perspective, and Europe is far ahead of the United States in the environmental movement,” Mr. Bronfman said. Sustainability “will become a key factor to the point where, if you haven’t taken environmental measures, you will have trouble, whether it’s leasing your office building or what have you,” he added. The company said it would spend $3 million to $10 million to retrofit all of its properties.
Jamestown invests through private equity funds. There may be several dozen public and private green building funds worldwide, said Gary Pivo, director of the Responsible Property Investing Center at the University of Arizona and a professor of urban planning and natural resources. Prominent ones include the Investa Commercial Property Fund, based in Australia, and the Rose Smart Growth Investment Fund I, based in New York. “There are an increasing number of private funds that are incorporating green buildings and energy-efficient buildings and other principles of sustainability into their property selections and their portfolios,” Mr. Pivo said. “But there are not very many that are committed exclusively to green buildings.”
In December 2008, Jamestown acquired Green Street Properties, a development and consulting firm in Atlanta that focused on environmental sustainability. It will continue to operate as a subsidiary of Jamestown.
Jamestown “saw us as a way of accelerating the greening of their brand and portfolio,” said Katharine Kelley, who retained her position as president and chief executive of Green Street. “One of the first things we did after joining forces was to start work immediately on a number of existing buildings in Jamestown’s portfolio.”
One building where the conversion is virtually complete is 999 Peachtree Street, a 621,000-square-foot office building with street-level retail space in midtown Atlanta, acquired through the Jamestown Co-Invest IV fund in 2007 for $127 million.
Jamestown has obtained gold certification from the United States Green Building Council with various strategies, like starting bicycle sharing and carpooling programs, and adding a Zipcar station. Energy-efficient lighting saves 476,000 kilowatt hours a year, and the building recycles paper and uses sustainable Post-it notes and file folders.
Tenants in the building, including ERS Global and Flad Architects, follow sustainable practices, said Michael Phillips, Jamestown’s creative director. “I would say we look kindly on tenant build-outs or interior choices that are green,” Mr. Phillips said. “But I don’t think it’s a requirement.”
The goal with 999 Peachtree is to hold it for the duration of the closed-end Co-Invest IV fund, which is seven to 10 years, benefiting from reduced operating costs that may also attract tenants who will pay a bit more, Mr. Phillips said.
Rents for green offices have been shown to be about 2 percent higher than rents for comparable buildings nearby, according to a study done by John M. Quigley, an economist and professor of public policy at the University of California, Berkeley, and two other researchers.
When the fund closes, Jamestown will sell 999 Peachtree, but it is difficult to tell how much the building’s conversion and certification will add to its valuation, Mr. Phillips said. Since green building funds have been around only for a half-dozen years or so, few if any of their assets have sold, he said.
“It depends on who buys the investment at the end,” Mr. Phillips said. “An insurance company or pension fund typically wants to buy buildings that offer the most modern technology. Green technology is considered the most progressive.
“At the moment,” he continued, “the advantages of being green might be less about a premium, and more about offering a wider pool of buyers.”
Other buildings that Jamestown is retrofitting for environmental sustainability include 1250 Broadway, near 31st Street, and Chelsea Market, at 75 Ninth Avenue between 15th and 16th Streets in Manhattan.
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Page 2 of 2)While 1250 Broadway is poised to obtain a gold certification from the Green Building Council, Chelsea Market, a collection of 17 buildings cobbled together, is quite old and doesn’t make a good candidate for certification, Ms. Kelley said.
“You have to customize a green solution depending on the specific project, and its investment profile, and where it is in the market cycle,” she said.
Jamestown has performed an energy audit at 1250 Broadway, a 770,000-square-foot office building built in 1968, that has led to a 15 percent reduction in annual energy consumption and carbon emissions.
“It’s things as mundane as adjusting fan speeds or repairing or upgrading controls, or even some more expensive items like cleaning the chiller cores,” Ms. Kelley said.
Jamestown is also setting up programs to replace cleaning chemicals with environmentally safe products and retrain the custodial staff.
“We’re putting aerators on the faucets, and changing out the water closets in the bathrooms and looking at perimeter office lighting,” Ms. Kelley said. “There’s a whole laundry list of topics.”
Within a year, Jamestown will recoup the $350,000 it has invested in converting the 39-story building through increased efficiencies, she said.
The plans for Chelsea Market, a 1.1 million-square-foot retail and office property, call for a rooftop market garden.
Mr. Pivo said there had been no empirical studies showing the effectiveness of green building funds, which are still only a fraction of the entire universe of property funds, in achieving environmental ends, though he said they should prove beneficial.
“There is at least a theoretical probability that when enough investors commit to selecting for greener or more sustainable investments,” he said, “that that will lower the cost of capital for corporations and developers who are working in the greener and more sustainable area.”
Jon Boggiano, a principal partner in Everblue Energy, a company in Charlotte, N.C., that offers training in sustainable building principles, said green building funds could overcome one of the biggest problems in sustainable building — a lack of capital.
Most of the truly sustainable buildings, he said, cost more upfront and are developed by government, universities or as corporate headquarters. “Those owners are looking at the lifetime costs of the facility, whereas most commercial developers look at the first cost and don’t really care about future utility payments or impacts because they will sell the building and not have to pay those bills.”
“Unless the capital that’s buying buildings is willing to pay for true sustainability,” Mr. Boggiano said, “developers are going to go for cheaper costs. So if a fund is willing to say that green is going to be one of our criteria, and they’re willing to invest in those front costs, that actually is the best way to have an impact.”
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Work Smart: Three Ways to Use Google Wave in Your Business
By: Gina TrapaniMarch 1, 2010
Google Wave is an exciting new tool that combines the best features from email, instant messenger, forums, and wiki’s into a single interface. In Wave, a group of people can simultaneously edit the same document in their web browser in real-time. That means that you can watch your co-workers’ cursors type keystroke-by-keystroke on your screen as they work. Wave is flashy and full of potential—but what can you actually use it for?
Right now your organization’s documentation most likely lives in files saved on a shared network drive. Your co-workers copy and edit these documents, email them around as attachments, discuss them during meetings and over IM. Multiple versions proliferate; if one person is editing the file on the shared drive, another cannot because the file is locked. There’s no easy way to see who changed what, or figure out where the most recent version is located. Lengthy email threads fracture collaborative work the same way–with every reply, multiple copies proliferate, and it’s not always easy to see the most current state of the conversation.
Google Wave helps solve these problems. In Google Wave a document is a single, hosted conversation–called a lowercase “wave”–that participants can edit simultaneously in real-time. Participants can chat back and forth as well as co-edit the same text in a wave, and they can also search and playback changes to a wave over time.
Right now the Google Wave Preview is invitation-only, and it’s not close to finished. Still, there are three basic Wave use cases for your business.
First, Wave is a killer app for taking meeting notes. A dozen people taking notes in a single document is much more efficient than each person taking his or her individual notes. In Wave, you can add inline questions or comments that refer to individual points, creating an efficient backchannel: meeting attendees can respond to one another without interrupting the presenter, and latecomers can easily catch up on what they missed.
Second, Wave hosts in-depth conversations with remote co-workers who aren’t in the same conference room or office better than email or IM. You know those long emails with lists of bullet points and questions that get CC’ed to 20 people and garner dozens of fractured responses that clutter inboxes? Wave turns those kinds of discussions—the ones that require point-by-point replies—into a single hosted document that anyone can join in at any time.
Finally, Wave can serve as a light company intranet, where documentation can live and grow, and include rich content like maps, video clips, images, and polls. For example, a planning wave for the company picnic might use a poll to see who’s attending, include a list of food items participants can volunteer to bring, a map with directions to the park, and after the event, photos of the attendees everyone can comment on.
Whether or not Google Wave will get widely adopted remains to be seen. But whether it’s Wave or another web 2.0 application, real-time collaboration in a living workspace like Wave will replace those dead documents on your network’s shared drives eventually.
To request an invitation to Google Wave, visit wave.google.com. To learn more, check out my book, The Complete Guide to Google Wave, which is free to read online at http://completewaveguide.com.
