Green Building Finance and Investment Forum

Green Building Finance and Investment Forum

The Green Building Finance and Investment Forum held on February 20-22 in San Francisco reinforced market trends which I have recently seen accelerating relative to the institutionalization of green building requirements. This was emphasized by several major entities represented at the program including the State of California, AIG, JP Morgan Chase and RREEF, among other such institutions, which indicated that not incorporating sustainability requirements into new projects was essentially “building in obsolesce.” Several speakers cited tenants, both public and private, which are increasingly requiring LEED® (Leadership in Energy and Environmental Design) certification or, at a minimum, progress towards LEED, as a pre-condition to considering a building for occupancy. Given the relatively small number of new buildings brought online each year, these institutional investors are now looking to “green their existing portfolios” so that they are competitively positioned as existing tenant leases roll over to position the properties for maximum retention and attraction of new tenants.
 
Significant discussion focused on the emergence of LEED-EB (Existing Buildings) as the likely benchmark to be utilized as a goal for bringing such buildings up to “green speed.” Several architectural and engineering firms present at the program are now offering “LEED-EB Due Diligence” services for building owners, buyers or lenders so that the time and capital investment necessary to bring a building to LEED-EB status can be rapidly determined.
 
A discussion of existing incentives from federal and state agencies as well as non-governmental organizations revealed an increasing number of such programs which, when bundled together, could have a significant effect in terms of providing an economic impact on a project’s overall financing.
 
The most significant problem identified repeatedly throughout the program was the need for reliable benchmarking data in terms of energy consumption and overall sustainability of existing buildings so that properties could be viewed on relative terms with regard to their overall competitiveness or lack thereof in the marketplace.
 
Several speakers spoke about the increasing likelihood of some type of “carbon finance regime” being adopted in the United States in the near-term given the upcoming presidential election and the stated positions of the remaining candidates on this issue. Such a scheme would increase the operating cost of a building and should be incorporated into new projects now and for long-term leases which are being considered.
 
Many attendees expressed enthusiasm for their overall experience at the program and their interest in attending next year’s event. For more information about this year's program, visit www.infocastinc.com/building.
 
Several of the issues addressed at the conference will be covered in greater detail in my upcoming pamphlet, entitled Green Buildings and Sustainable Development, which will be published soon by LexisNexis.