When it comes to analyzing the environmental impact of corporate office space, Sally Wilson, AIA, brings several viewpoints to the table. After years as a partner in a Washington, D.C.–based architecture firm, she transitioned into real estate, where she is now a senior vice president and the global director of environmental strategy at CB Richard Ellis (CBRE). In 2010, the company had 2.9 billion square feet of commercial property and corporate facilities in its management portfolio.
Wilson, 52, is the brokerage giant’s representative with the USGBC, is a director on the board of the Green Building Certification Institute, served three years on the LEED Core and Shell steering committee, and was the first licensed broker to be designated as a LEED Accredited Professional. She recently spoke with eco-structure on the process of tackling an environmental footprint from the perspective of tenant, broker, and manager.
How has the broadening awareness of sustainability in the built environment impacted the brokerage community in the past five to 10 years?
The brokerage side can’t ignore it. In the past couple of years, there has really been an increased awareness on the agency side, which typically represents landlords. The other side of the business is the tenant side, and tenant brokers working with corporations and the GSA [the U.S. General Services Administration] have had a strong awareness for a while because of mandates in those realms.
One thing to look at in creating a portrait of America is that in 2010, roughly 70 percent of the S&P 500 filed for 2009 with the Carbon Disclosure Project (CDP, www.cdproject.net), which addresses carbon accounting, environmental commitments, and programs to reduce carbon emissions. More and more of corporate America is disclosing that [information].
We file with the CDP and have about 370 offices globally, so it’s a big job to get your arms around what that means. You have to be able to measure your utilities, understand your utility sources, and the carbon intensity of the utility. If you think about having about 370 leases, not all of which are submetered, it becomes a very complicated process.
All of the stuff that’s happening regarding carbon right now leads to the concept that the greatest way you can reduce your footprint is by managing your facilities better and making them more efficient. It’s about investing in efficiency, going to high-performing buildings, and using alternative energy sources. A company’s greatest opportunity to manage its carbon footprint better is through real estate.
CBRE enacted an environmental stewardship policy on May 31, 2007 for its offices. What has this meant over the past four years?
In 2007, we went through our entire portfolio to identify the holes in gathering data, and then put an action plan in place to bring us up to speed. We consolidated offices. We looked at leasing time lines to figure out how to get into better facilities. If we could move, we built a LEED-certified facility or highly energy-efficient space depending on location, cost, and size. Simultaneously, we developed internal operations policies regarding day-to-day things like doublesided printing, turning off computers at certain times, [or] changing incandescent bulbs to compact fluorescent bulbs. [It was] a list of green things to do in the office to reduce energy and waste. (For more details on CBRE’s sustainable initiatives, visit cbre.com/usa/sustainability/sustainability.)
What’s been the biggest challenge?
The biggest challenge is the economy and being able to invest in upgrades in our offices to reduce our footprint. Another challenge is that we have so many corporate leases. Digging down to get accurate utility-usage figures has been really hard to do as not all of the offices have meters. One may have a meter, while another’s use might be mixed in with the entire building. Our offices are anywhere from 800 square feet in size to 200,000 square feet. There are a lot of variables.
Economics is also an issue on the owner side. You can get people to do low-cost or no-cost solutions, but over the past few years, it’s been hard to get them to think about deeper upgrades.
Another current challenge for us that will remain in the foreseeable future relates to how energy is regulated in the U.S. When you look at our footprint, which may include 180 offices in the country, we have landlords buying power from up to 180 different utility entities. In addition, states have different laws regarding renewable energy and carbon-intensity levels.
If you think about CBRE being a big property manager buying energy, if we had regulation whereby we could aggregate the 3.74 million square feet of space we lease, we could create a renewable-energy market. We can’t right now because of the state of the grid and regulation, and that’s a real challenge. If you think about CBRE and other major property owners like Jones Lang LaSalle, Cushman & Wakefield, and Newmark Knight Frank using our scale together, we could create a market pretty quickly.
Do you think that will happen in the future?
I think that’s a long way off. It’s a very political hot potato.
CBRE previously announced the goal of reaching carbon neutrality by the end of 2010. What is the status of this?
We’re on track. It’s been difficult given the operational complexity and geographic diversity of the company. We have our best practices and standards in place to get an accurate measurement for 2010, but can’t get final measurement until we have all the operating expenses and things like that from the landlords, which we just received in March. We’re working on finalizing our footprint and already know we’ll have to buy carbon offsets to reach our goal. We’ve negotiated carbon-offset projects that we think are both socially responsible and in line with internationally accepted standards in the carbon market. Some of the projects involved conservation initiatives, landfill methane-emissions mitigation, and sustainable economic investments.
Our plan is to finalize our measurements and put in the [carbon offset] requirements, and we’re likely to make an announcement about achieving the target in June.
Given the state of the real estate market over the past few years, do you think properties focused on efficiency have fared better? Is it a selling point?
Definitely. Something that’s really interesting is that three years ago, in 2008, we were in the heat of understanding footprint management, understanding the practices and policies to put in place, and engaging our clients about building operations and maintenance, Energy Star, and the like. All of our clients said “That’s great, but I’m trading my building next month and I’m not going to put a cent into it.” When the capital markets were going crazy, people were buying and selling all the time and no one was investing in the buildings.
The good news for energy efficiency is the market stopped, so building owners are sitting on their properties. They have to retain tenants—and tenants are downsizing. It’s become a tenant’s market with the increase in vacancies, and buildings are having to invest in energy efficiency and other amenities as marketing pieces. At the same time, stimulus money that was available also helped fuel investment.
I’m often asked if LEED-certified buildings get more rent. If I invest in this, will I make more? In some markets, you may get a little bit more. But with higher rent, you also have higher real estate taxes, so there are trade-offs. Not to get too much into the weeds, but what we’ve seen is that in markets like Washington, D.C., if you do a LEED Gold building, you can get more foot traffic, proposals, leases, and tenants. If you can lease that space faster because of that, [then] that is your real economic value. If you have a regular building that no one is coming to see, and it takes you a year longer to lease it than if you had a LEED-certified building, [then] you’ve lost that money. The real value is in the lease-up time and interest in the building.