This week, while working across China on a series of new development projects, major green economic initiatives are front page news.  Back in the US, domestic development community struggles with financial market challenges, along with the cost/value assessment of new green building technologies and materials. China’s aggressive development expansion marches on with rapid advancement in sustainable building. The pace of this shift in China is fueled by government policy, subsidies and private business growth, based on continued domestic market development. 

Increasing focus on incentives for carbon emission reduction and green energy technologies are not just impacting the direction of industries in China, but rippling across the globe. With the help of government subsidies and a pricing strategy set at below cost, Suntech, China’s biggest solar panel manufacturer, has been gaining global market share while driving down costs. This year they are on track to overtake Germany’s largest supplier, and move into the second place spot globally, behind the US’s First Solar.

Sanlitun Village, Beijing

This week’s headline news quoted China’s director-general of climate change, for the first time giving a time frame for a decline in greenhouse gas emissions – 2050. Green initiatives and consumer preferences from smaller car engines to energy-saving light bulb technology are shifting major markets already.

The exponential shift created by these economic strategies are impacting our work today, and the direction of all of our industries tomorrow.

 

 

During a time when most retail markets across the region remain stagnant, Downtown Miami’s is surprisingly enjoying relative growth. An area widely recognized as the epicenter of where boom turned to bust is turning a corner, and ironically, the downturn is serving as its catalyst. As price discounting continues and demand for urban living remains high, renters and buyers are flooding the Downtown market to take advantage of the killer deals and centralized urban location, in turn, creating a built-in customer base for retail entrepreneurs to capitalize on. In July of this year, Downtown Miami’s Central Business District welcomed four new restaurants, which are the latest to come on line to cater to residents and visitors.

The four new additions – Brickell Irish Pub, Ecco Pizzateca, Mia at Biscayne, and Tré Italian Bistro – join the more than 150 new retail businesses that have opened in Downtown Miami since 2005, and another 25 are slated to open before the end of 2009. Retailers, market analysts, and real estate professionals alike cite the area’s strong commercial base; waterfront location; entertainment and cultural destinations such as The Adrienne Arsht Center for the Performing Arts and the American Airlines Arena; access to public transit; and convenience as Florida’s largest employment center as the primary driving factors behind the surge in residential and retail growth.

In fact, a recent independent Residential Closings & Occupancy Study conducted by Goodkin/Focus Real Estate Advisors in partnership with the DDA, found that more than 62% of the 80 residential buildings that have been built in Downtown Miami since 2003 are occupied by primarily full-time residents. Additionally, the average monthly sales and leasing activity of new units has been averaging approximately 400 units per month; the average monthly sales of new units during the past three months has increased over the three months prior. U.S. Census projections indicate that the Downtown area’s residential base has grown from 40,000 to 60,000 since 2000, with another 10,000 new residents expected to move in over the next six years.

It’s a cyclical evolution – the residential and commercial populations are attracting more retail and businesses to relocate to the district while the emergence of new retail and entertainment options is spurring more residential growth. In similar fashion to how Miami Beach’s Lincoln Road turned the corner in the early 90’s, we’re seeing entrepreneurs look at downtown Miami from a long-term perspective. Business owners are committed to investing in Downtown Miami today because they see the potential in the area tomorrow. And for the first time in years, landlords and property owners are doing their part by seeking out more upscale, service-oriented retailers who are committed to contributing to the area’s new landscape.

By Dr. Peter Kozel
Senior Managing Director
FirstService Williams
New York City

Mounting evidence suggests that the New York City office sector is scraping along the bottom of its cycle and laying the foundation for an improvement in operating performance. The property market itself is offering some of this evidence. Additionally, data from the economy and business sector are providing greater clarity about the dimensions of the contraction in business activity plus what are likely to be the contours of the eventual economic recovery.

Demand for office space evaporated during the first four months of 2009, with leasing volume declining to a monthly rate of just one million square feet, and much of this activity involved 5,000 square foot and 10,000 square foot transactions.

In June and July, however, leasing volume escalated to 2 million square feet in each month, roughly equal to the average monthly total in 2007. An important part of this increase stems from the substantial number of leases signed in those two months for over 50,000 square feet. From approximately mid-June to the end of July, FirstService Williams counted twenty-two lease transactions for 50,000 square feet or more including ten for 100,000 square feet or more. Undoubtedly, there were additional confidential transactions that were not reported.

Some of these large deals were completed by tenants that had been in the market looking for space since 2007. In a few cases, they were close to a deal. But, as rental rates started to decline, they decided to wait. With the average effective rent now down by close to 40% from the peak – and more in some submarkets – these firms must have decided that rents were close enough to a bottom so that a deal struck at this time will not prove to be overpriced six months from now. Additionally, their own business situations must have stabilized to the point that they can gauge how much space they would likely need and what they can carry in occupancy costs.

Since mid-May, net additions to the amount of available space has also slowed from the pace in the previous nine months, down by nearly 50%. The amount of space that is listed as available continues to increase; but what is less clear is whether or not these new listings are really newly available space. The stock of shadow space began to grow in 2008, and some of it has now been shifted to open listing.

In the Midtown North market, availability registered 14.8% at the end of the second quarter of 2009. Our reading of the data points to a peak of 16.8% by the end of 2009 and about the same at the end of 2010. Even though the New York City economy should be on the mend by early 2010 – with modest additions to employment – a little over three million square feet of newly constructed office space will be added to the inventory, keeping the availability high.

So what is the broader economy telling us? The average unemployment rate for the first six months of 2009 in New York at 8.3% remains below the national average of 8.7%. Moreover, the labor force continues to increase in New York City, while it is trending downwards for the nation as a whole.

For the past 24 months, office sector employment is down a total of 5.8% for the U.S. but only 3% for New York City. By contrast, in the 2002/2003 cycle, New York City suffered a 9% cumulative decline but just a 2.4% reduction for the nation. The consensus forecast now looks for the U.S. economy to grow by 2.5% to 3% during the third and fourth quarters of 2009. Since New York City has consistently outperformed the nation during this recession, the city should enjoy a solid bounce in the second half of 2009.

There are plenty of credit problems yet to be worked-out during the next several years. So the recovery will be bumpy. But as the partial sale of 485 Lexington Avenue by SL Green for a 6.2% cap rate indicates, confidence in the New York City office market is beginning to return.

 

This month, I’m excited to share with you the news that the U.S. Green Building Council’s new Washington, D.C., headquarters office has been certified LEED Platinum under the new version of LEED for Commercial Interiors, becoming the first LEED-certified project under a LEED 2009 rating system. 

This past March, USGBC moved into our new office space, but our journey here has been interesting. When I started with the organization in 2003, we were located in a mid-block Class B building in downtown D.C., where we eventually expanded into three separate office suites totaling 11,000 square feet of space. After many years in that space, we had outgrown it, so we built out 25,000 square feet in a LEED Gold building a few blocks away that had undergone a gut rehab the year before USGBC’s occupancy. Our build-out earned Platinum certification under LEED for Commercial Interiors, and we stayed there for two-and-a-half years.  

But the explosive growth of the green building industry led to a similarly dramatic expansion of USGBC’s staff, and in 2008 we recognized that we once again needed a new workspace. As the organization that brings together the world’s leaders in green building science and technology, we recognized our responsibility to have a headquarters that is on the leading edge of innovation and performance. It needed to exemplify LEED and set the bar at new heights. Using the newest version of LEED pushed our new space to achieve the very best building science and technology currently has to offer. The result – a workspace that earned 94 of the 110 possible LEED points, 14 more than the 80 required for Platinum certification – reflects a transforming building market and serves as a living lab, teaching visitors and employees alike the ways that green building is better for occupants, better for business, better for the community and better for the planet.

The new office, located at 2101 L Street in the west end of the downtown D.C. business district, is a shining example of green design.  Our interior suite is located within a Class A building that is owned and managed by Vornado/Charles E. Smith. It was originally built in 1975 and underwent a significant refurbishment that was completed in November 2007. From the onset, it was critical that USGBC find a building and landlord who aligned with our goals and our organizational mission. We’ve always believed that the best results in green design occur when green is worked into the process as early as possible, and our brokerage team from CB Richard Ellis put this into action with a 20-point environmental assessment as part of the RFP process, helping us evaluate buildings not only by location and rental rate, but also by overall environmental performance. As in any real estate decision, a number of factors influenced the ultimate decision, but the lease provisions – like being able to submeter energy use and pay directly – helped considerably by allowing USGBC to benefit directly from the operating savings of smart design decisions.

Vornado/Charles E. Smith has also committed to LEED certification of the ongoing operations of the existing building.  The building already meets all prerequisites such as baseline indoor air quality performance. The landlord also uses green cleaning practices, purchases renewable energy certificates for 50 percent of the building’s energy consumption and provides bicycle storage for tenants.

The interior space itself was designed to be sophisticated, timeless, flexible and simple. The design team  comprised of Envision Design, GHT Limited and James G. Davis Construction designed  and built an open floorplan that leverages the daylighting opportunity provided by a floor-to-ceiling glass curtain wall on the south and east facades of the building. Low workstations and glass-enclosed interior offices provide exterior views for 97 percent of occupants, and a corridor of light carpeting lines the exterior corridors of the space, bringing daylight further into the space through reflection off the carpet and white furniture. The daylight harvesting in the space allows for a drastic reduction in artificial lighting needs, and the Convia lighting system provides not only very specific adjustments in lighting level based on need but also provides detailed measurement and a dashboard to track ongoing performance. Overall, 62 percent of the lighting load is connected to daylight-responsive controls. As designed, the lighting systems and controls put the space at 54 percent below lighting power allowance, according to ASHRAE/IESNA Standard 90.1-2007.

Many other strategies were utilized to achieve Platinum certification. Over 95 percent of construction waste was diverted from the landfill, and overall water use was reduced by 40 percent with Sloan waterless urinals and dual-flush toilets in the restrooms and high-efficiency Bosch appliances in the kitchen. Furniture systems, ceiling tiles, flooring and other materials were selected for their high recycled content, location of manufacturing to reduce transportation impacts, and impact on indoor air quality. Products from USGBC member companies such as Haworth, Knoll, Mohawk and Armstrong showcase how far manufacturers have gotten in greening their products.

The new USGBC headquarters has been a magnificent new home for our growing organization. The project team created a workspace that capitalizes on our employees’ enthusiasm, fostering a healthy, productive, collaborative working environment. When we come into work, we don’t feel stifled by the office – we feel empowered by it. The flexibility in the space will allow for continued growth and, once again, we are able to showcase our offices as exemplary of everything a LEED building is: high-performing, resource-efficient, healthy and productive.  Tours of the space are available upon request; e-mail hqtours@usgbc.org for more information.

 This is not a new concept, but often overlooked in property development strategies, and in the organizational models that drive those development strategies.  As architects, we are experiencing fundamental shifts in practice – from climate change, major technology shifts, energy usage and costs, and the tools with which we practice. It is imperative that we develop deeper understanding of sustainable design principles, and as many jurisdictions and business leaders are instituting environmental, energy, and health related initiatives, we must raise the bar every day on our work. 

When I took on the study of the USGBC’s LEED accreditation program a few years ago, I didn’t expect this US developed system to be directly relevant to the projects I was working on around the world – in fact, at the time all of my work was out of the country. I was just interested in learning more about our approach to sustainable design strategies.  I was so amazed when the first comment from the chairman of a development company in Dubai after a major development strategy presentation was “it must be LEED certified”. 

The basic system is simple – good fundamental design principals that carefully balance and consider the use of energy and environmental resources, along with the health of the people we design for. For anyone who hasn’t gone onto the USGBC website a basic exploration is well worth the time, and to develop an understanding of the basic systems of values is one of the best ways to begin.

At TEDGlobal in Oxford a few weeks ago, I met with a number of brilliant industry changing business leaders who are developing new models – not just the buildings that represent their values, but a complete shift in re-connecting values to business and economic models.  Great innovations are in development and the opportunities to reflect those innovations into the built environment have never been more exciting. Here is an excerpt from the minister of the environment of Sweden on this concept, sustainable resilience – the concept behind great new innovations underway.

  

 

Resilience, for social-ecological systems, is related to

(a) the magnitude of shock that the system can absorb and remain

within a given state, (b) the degree to which the system is capable

of self-organization, and (c) the degree to which the system can

build capacity for learning and adaptation. Management can

destroy or build resilience, depending on how the social-ecological

system organizes itself in response to management actions.

More resilient social-ecological systems are able to absorb

larger shocks without changing in fundamental ways. When

massive transformation is inevitable, resilient systems contain the

components needed for renewal and reorganization. In other

words, they can cope, adapt, or reorganize without sacrificing the

provision of ecosystem services. Resilience is often associated with

 diversity – of species, of human opportunity, and of economicManagement that builds resilience can sustain 

options – that maintains and encourages both adaptation and

learning.

 

social-ecological systems in the face of surprise, unpredictability,

and complexity. Resilience-building management is flexible and

open to learning. It attends to slowly-changing, fundamental

variables that create memory, legacy, diversity, and the capacity to

innovate in both social and ecological components of the system. It

also conserves and nurtures the diverse elements that are necessary

to reorganize and adapt to novel, unexpected, and transformative

circumstances. Thus, it increases the range of surprises with which

a socio-economic system can cope.

A powerful concept to consider in both the design and business strategies we now have the opportunity to develop.

  

© 2012 CPE Blog Suffusion theme by Sayontan Sinha

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