As published in Scotsman Guide's Commercial Edition, August 2012.
The recent recession has pressured commercial real estate developers and owners to cut costs, and with that comes motivation to consider the benefits and efficiencies of adopting higher environmental standards. The U.S. Green Building Council’s (USGBC’s) Marc Heisterkamp spoke with us about the market appetite for green initiatives and what commercial mortgage brokers need to know when looking at a property’s operations.
What’s the role of the USGBC?
We focus on cost-effective, market-driven approaches to change the way we design, build and ultimately operate real estate — specifically for commercial real estate owners and property owners. They are a key market for us, [and] we see tremendous business-case reasons to go green. We are focused, particularly now, on the operations of existing real estate and providing programs such as LEED [Leadership in Energy and Environmental Design]. We continue to work with developers on how they design and construct buildings, and see a lot of positive efforts in this area.
What are the financial incentives for going green?
That is often the first question people ask: Are there tax credits? Are there government incentives to do this? There are in some cases. They differ by location; a lot of them are through cities, counties or states providing different types of tax credits, density bonuses, expedited permitting, etc. But we see lots of other financial reasons — that are market-driven — that owners are pursuing green buildings and LEED.
How much investment needs to be put in before seeing benefits?
There are lots of buildings in the commercial office market in particular that have low- and no-cost measures from the energy side that can be implemented. Taking steps such as doing a simple energy audit can often uncover the little things — such as heating and cooling systems running simultaneously, fans installed incorrectly or other things of that nature — that otherwise would go unnoticed and waste energy.
How receptive is the market to green initiatives?
There definitely has been a shift in thinking. The same building owners [who are] having to tighten their belts are trying to do two things: Keep their tenant base in the building, and lower operating costs. Green building can help with both, if they are taking on low-cost [or] no-cost measures to reduce operating costs.
What should brokers consider when financing or refinancing these deals?
They need to understand how energy efficiency and other green-building factors impact the operating costs, and make sure they are properly accounted for when looking to finance or refinance buildings. There is such a strong focus on the operations of existing buildings. That is not necessarily always where mortgage brokers play a role, but they will, particularly if we are looking at refinancing commercial properties in the future.
Rania Oteify is an associate editor at Scotsman Guide. Reach her at (800) 297-6061 or email@example.com.