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Older Buildings Renovating to ‘Green’ Initiative

Older Buildings Renovating to ‘Green’ Initiative

10/10/2007
Andrew Johnson, The Arizona Republic

Going “green” isn’t easy. That’s especially true if you’re a property owner or manager trying to retrofit an existing building. Not only can the process take lots of time and money, but it can also be difficult to convince tenants to buy into the idea.

Just ask Diana Rivers, a real estate manager with commercial brokerage firm CB Richard Ellis. She oversees Phoenix Plaza, a Midtown office complex at 2929 N. Central Ave.

Rivers and her team have been making internal and external changes to the property – which includes two 20-story towers, a four-story retail center and an 11-story parking garage – since 2004.

Among other things, the company has upgraded light fixtures and bulbs, installed lighting sensors to remodeled space and added “smart” sensors to the irrigation system on the property.

During the first half of the year, the building’s energy usage dropped by about 1.1 million kilowatt hours, or by about $84,000, as a result of the changes. Rivers said the company expects to double that amount by the end of the year.

And while most tenants have responded positively to the initiatives, Rivers said, a few office dwellers have opposed some of them because they say they create a nuisance to their businesses.The situation highlights one of the main obstacles that Rivers and other managers and owners encounter when making properties more eco-friendly.

They say “going green” makes sense because of the energy savings and the long-term economic benefits. And with environmental issues gracing news reports, being eco-friendly also helps from a business marketing perspective. But despite the benefits, getting everyone on board can be a tough sell.

LEED certification

In recent years, there has been much attention given to the steps developers can take to lessen a new building’s impact on the environment. But the movement also has inspired owners and manager of existing properties to update older buildings and make them more efficient.

Property owners who want to retrofit older complexes, often use standards set by the U.S. Green Building Council, which oversees the Leadership in Energy and Environmental Design, or LEED, program.

To get LEED certification, buildings must meet standards for on-site chemical use, air quality, energy and water efficiency, recycling and others.

Rivers said she wants the Phoenix Plaza to obtain LEED certification. The property is already one of only 49 in Arizona to have obtained an Energy Star, a distinction given by the U.S. Environmental Protection Agency and U.S. Department of Energy to buildings that take meets criteria for reducing energy consumption.

But getting the property LEED certified isn’t necessarily easy. It’s both expensive and time consuming.

In fact, an online database maintained by the U.S. Green Building Council shows there are just 24 buildings in Arizona that are LEED-certified.

Still, Rivers and others like the idea of making the properties more efficient, as well as doing something good for the environment.

Development firm Lincoln Property Co. also plans to go through the process to obtain LEED certification for Paradise Village Office Park.

The firm bought the 268,000-square-foot building through a joint venture with Sterling American Property Inc. in May, and has since taken steps to make it more energy efficient.

“It hasn’t quite (caught) up with the way that buildings get built today,” said Dennis Boles, development manager in Lincoln Property Co.’s Phoenix office. “Things are getting near the end of their life, so we’re coming in and taking a look at how do we improve the building and make it a better place . . . aesthetically and environmentally and efficiency-wise.”

That includes replacing toilet fixtures, which Boles estimates will reduce the building’s annual water consumption from about 3.8 million gallons to 1.5 million gallons, “which is enough to cover an entire football field,” he said.

Most of the building’s approximately 80 tenants have been open to the changes, and that’s primarily because it requires not out-of-pocket expense.

“It’s not an additional cost to them,” Boles said, noting that the changes are part of a $1 million renovation project underway at the 20-year-old building.

Tenant impact

While the work associated with making a building more energy efficient may cause consternation for some tenants, others say working in an eco-friendly environment fits with their business mission.

That’s true for Phoenix-based Sprouts Farmers Market, which houses its corporate headquarters at Paradise Village Office Park.

“Being a natural foods retailer, we’re always striving for ways that we can complement a lifestyle that goes along with healthy living,” said Patti Milligan, director of nutrition and public relations for the company.

In addition, customers “kind of expect it, to be honest,” she said.

Joel Nomkin, managing partner of Perkins Coie Brown & Bain P.A. law firm, agrees.

“In this day and age, it is more than a responsible decision to make every effort to protect the environment. It is a necessity,” said Nomkin, whose firm is one of the largest tenants in Phoenix Plaza.

Still, some tenants balk at the eco-friendly improvements because they are either time consuming or because they don’t reap direct cost savings from them in their lease rates.

For example, electricity and water expenses are often built into a tenant’s lease contract, so they do not necessarily save money even if building management is able to do so by making the property more energy efficient.

That can make it difficult, Rivers said, to get some tenants to participate in the recycling initiatives her team has introduced.

She did point out, however, that the changes do have an impact, because if energy costs increase, tenants have to pay overage charges to accommodate the difference between the current rate and what the rate was at the time they signed their lease.

A reduction in energy consumption can help minimize those charges, which is something Rivers tries to point out to tenants.

Rivers also tries to appeal to tenants’ social awareness – as she did when she provided everyone with recycling bins.

“It is an effort to recycle on this property for our tenants,” Rivers said. “When I wanted to roll this out we had to position it in such a way that we wanted folks to participate because it was their social responsibility.”

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