Keeping It Real Estate

You know, I grew up in a household where family members tended to look at a half glass of milk and call it empty. But I'm really upbeat on this issue -- maybe Pollyannishly so. We're quietly involved in pushing a number of sustainable initiatives in our area that do seem to be attracting a lot of attention. The stakes are actually huge. My area accounts for something like 30 percent of the total marshland area on the entire eastern seaboard. How we manage the growth along this coastline is so critical. I do think it helps in terms of credibility that we're a third-generation family business with deep roots in the community and not some fly-by-night "nutcase." We're known for caring deeply about the long-term viability of our community, so that does help.

If you look at U.S. Green Building Council's LEED guidelines or Urban Land Institute's smart-growth guidelines, you'll probably get a fairly comprehensive idea. Basically, it entails selecting where to build and where not to build (no sprawl areas, mostly urban infill); orienting a building so that it takes best advantage of local climatic conditions (angle of the sun, prevailing winds, etc.); creating a building envelope that is energy-efficient; reducing the areas of parking that are impervious pavement; using rain-catchment systems on a roof and cisterns that enable you to reduce reliance on city water sources; etc. And that's just the development piece. It also means being sensitive to the tenants you want to attract and what their business practices are. It means developing property-management practices that are more eco-friendly (fewer toxins in the building). And it also means using suasion as a friendly weapon to encourage others to develop similarly. But at the end of the day, it really means developing a set of practices that are not only ones that we as a company can live by over the long haul, but also a set of practices that "pull" others along with us: vendors, tenants, customers, and, yes, competitors.

We wrestle with this question all the time. When we first started out, our approach was to bring everyone else along with us in terms of learning and growing. Something like 30 outside professionals -- from lawyers to marketers to architects of various stripes -- all became LEED accredited as a result. But not all LEED-accredited professionals are created equally. And we also found that this type of broad-based education meant that our projects were very slow in getting done. So now I think we primarily look for those who share our passion for doing the right thing. BNIM Architects out of Kansas City provides us with a lot of guidance, as does Southface Institute in Atlanta, to name a couple. There are obviously plenty of other very qualified firms. I tend to prefer those who speak rather softly and don't do a lot of self-promotion, but yet are intensely committed to making a difference. Weird as it might sound, when you are interviewing various firms, you know who gets it and who doesn't.

Great question. I'm really no expert here since this is not where we have done business to date. But frankly, I'm rather skeptical. Essentially, we've put infrastructure down in places we never should have in the first place (in my opinion) and the rather sacrosanct nature of individual property rights in the U.S. probably means that we'll repeat the same mistakes. I hope I'm wrong.

If you are trying to invest in sustainable real estate as in a Real Estate Investment Trust, forget it. I can already tell you that you care more about how to develop than the publicly traded companies that are looking for your bucks. If you and your sister are thinking of developing yourselves, big, big applause here. You're putting your own values into play rather than entrusting them to someone else's vision (to paraphrase Paul Hawken). Advice? Go slowly and gradually. The perfect, as they say, is the enemy of the good. Don't feel like your first project has got to be a living building (zero footprint). if you want more details. Happy to oblige.

I'd probably look into some very unsexy things like ducts that might not be insulated properly, plumbing lines that are not properly sealed, or old fixtures that might be converted to low-flow (shower heads, faucets, etc.). Windows would probably be next. It's a great question, but so much of your particular strategy is based on two things: what is the micro-climate where you live, and what are your particular goals -- what matters to you (energy reduction? indoor-air quality? water-use reduction?). This sounds complicated, but it's really not rocket science by any means.

It's a very, very short list at the moment. I believe that Jason McLennan is coming out with a book this fall (publishing house is his own, Ecotone) that highlights some of the key players in the field. I haven't seen it yet, but Jason has a good sense of what's happening out there. Another avenue may be to look to those cities such as Austin, Portland, Atlanta, etc., with residential programs that they are promoting locally with their respective Home Builders Association.

No, but I do think this is going to change, particularly in the aftermath of Katrina. The issue of value has two components: risk and reward. Financial institutions and insurance companies need to be educated and convinced that so-called green buildings -- because of the way they are built and their reduced use of resources -- really carry a lower risk. Similarly, the market needs to be educated that with this reduced risk comes greater market demand (and hence reward). It will take time, but I think it will happen.

There are probably political interests interfering here, if I had to take a 30,000-foot view. If developers had to pay the true cost of sprawl development (rather than have all taxpayers pick up this burden), perhaps the landscape would change.

We're working on that right now, but the short answer is, regrettably, no. We've embarked on a few projects that marry the best practices of the Urban Land Institute with the U.S. Green Building Council, which means mixed-use, sustainable urban infill development with about 20 percent of the residential component devoted to affordable housing. But that's still on the drawing board (Atlanta) and even at that, is a long cry from what we really would like to evolve into.

I think the evidence is more anecdotal than anything. But yes, I do think users/purchasers are indeed willing to pay a premium for sustainable development. Having said that, so few developers have gone this route that the true market demand for this new product is still uncertain. This shouldn't surprise us. If you asked the average person on the street when Sony Walkman first appeared whether demand for this new-to-the-world product outstripped supply, he or she would probably look at you rather puzzled, never having seen such a beast before.

I do get a lot of flak from my colleagues about the degree to which I'm wreaking havoc with our overall environmental footprint (not to mention economic cost). We have purchased green tags to offset all energy costs, but that really is sidestepping the issue. I'm looking into VoIP now to reduce some of the commuting, but to be frank, nothing really substitutes for face-to-face meetings. I need to see the person across from me to get a feel for whether we have a long-term partner or not. I will stop commuting in about a year and a half.