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The Future Is Green

Date

March 3, 2008

Read Time

3 minutes

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Green is in. Al Gore won the Nobel Peace Prize. The Bush administration, which was criticized for not doing enough to stop global warming, is entering its last year. Looking to the future, all the presidential candidates on the Democratic side (and even John McCain on the Republican side) favor new environmental legislation. It is likely that Federal rules will shift green very soon. Many states are not waiting for the Federal government and are already enacting new environmental legislation. These new laws will impact the real estate industry and its customers.

Green is big business. According to the United States Green Building Council (the not for profit corporation that sets LEED standards (LEED being "Leadership in Energy & Environmental Design")), the annual U.S. market in green building products and services was more than $7 billion in 2005, was almost $12 billion in 2007, and continues to trend upward. The environment is a top tier political issue to many people and companies. Sensing the wave to go green, many companies very much want to appear environmentally friendly. McDonalds, once famous for disposable Styrofoam hamburger containers, just received good publicity for opening a LEED certified restaurant. Even people who are not concerned about carbon dioxide emissions are starting to see money-saving advantages to going green. It is "green" and therefore cool to cut expenses by using low watt light bulbs, encouraging hotel guests to re-use their towels, adjusting thermostats, using water saving fixtures, and so on. For a variety of reasons, building owners are encouraging tenants and guests to go green in 2008.

While much political discussion has centered on carbon offsets, carbon credits, and a "cap and trade" system that is beyond the scope of this article, real estate professionals should understand the LEED certification system. LEED addresses all building types (including tenant improvement work on an office buildout). It is a point-based system. The more LEED-qualified environmentally- friendly things incorporated into a project, the more points awarded. Buildings can be built (and existing buildings can be retrofitted) to a platinum, gold, silver, or certified LEED status. For example, the Merchandise Mart recently earned a LEED silver rating by adding features like motion sensors in all restrooms and low-watt light fixtures. The new Takeda Pharmecutical office building in Deerfield earned a LEED gold rating. That building has a highly reflective roof to keep the sun from overworking the air conditioner and a combination of glass sidelights in perimeter offices and a skylight in the building's central area to allow daylight to light the space rather than light bulbs. In addition, Takeda has a two-year contract with a green energy provider to purchase 50 percent of its energy from a renewable energy grid. Companies get good press by taking these steps.

Illinois recently passed new environmental legislation: (1) mandating efficient light bulbs for state owned buildings over 1,000 feet (excluding historical structures); (2) passing the Illinois Green Neighborhood Grant Act, which provides grants for LEED certified developments; (3) passing a law that will require state agencies to buy Energy Star certified products unless there is a compelling reason not to do so; and (4) passing the Zoning of Wind Turbines & Farms Act to encourage counties to establish standards for wind turbines and wind farms in unincorporated areas.

Clearly there is a big green wave right now. People in the real estate industry (and the professionals with whom they work) should understand and stay ahead of this wave in order to take advantage of it and to gain a competitive advantage attracting tenants and talent.

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Filed under: Real Estate

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