Are you one who rolls your eyes when NBC, MSNBC, Univision, CNBC, M-O-U-S-E all put a little green logo at the corner of their screens once a year during their "week focused on environmental issues?"
Eyes then glaze over as news stories or syposiums talk about LEEDs certification and "environmentally responsible" or "green buildings?"
Yep. I know it well. Have seen it often. But if you are an investor/owner who thinks this is so much "hooey," think again. Its not about whether you as an owner believe the hype, or whether you think it is alot of Chicken Little-ish wah-wah. Its about what your tenants, and their customers, and your future tenants believe. AND WANT.
As the old saying goes, "perception is reality." And the base of clients out there for leaseholds isn't getting any older. But as more and more Gen-Xers, Gen-Yers and the like come into more funds, start building businesses and catch the entrepreneur bug, they are increasingly looking for lease space that is "green-friendly." You already knew these generations of future clients -- whether they be tenants next week or buyers next year -- already exploit technology like no one's business. But they are more in touch with -- and advocates for -- green building standards, sustainable community planning, energy efficiency, and the like. They are consumers, whether of electronics, food, or clothing, and they are gravitating toward firms with green policies.
-- If given the choice between two office spaces in two different buildings, with all other factors being equal (rent per square foot, TI, rent bumps, etc.), the prospective tenant -- by a large margin -- will choose the "green building."
-- Though there are added costs to "green" building design, or retrofitting, above traditional construction methods, "sustainable" buildings routinely demand and get a premium per square foot rate.
-- "Sustainable" building design frequently reduces operating costs. And the one most intangible argument: For a Tenant who wants to "go green," they feel they are a part of something important, and socially responsible.
Again, if you don't buy in to the discussion, that's fine. But your future Tenants want it. Don't take my word for it. News today from New York is that LinkedIn, the world's leading social networking tool for business has decided to lease the entire 25th floor in New York City's Empire State Building. Why? Partly because the owners are completing a "green makeover" of the building that cost $550 million. A popular networking tool utilized worldwide by business people of all ages (but with a demographic that skews young), LinkedIn is only one example. Google is doing the same in Mountain View, Calif. Here in Central Ohio, the brand new Franklin County Courts building was designed from the ground up to be green.
Going "green" attracts business, also. Numerous automobile dealers across the U.S. have installed "windmills" adjacent to their businesses. Whether those wind machines are hooked into the grid remains to be seen. But for younger auto buyers, most of whom are environmentally conscious, the windmill is not just a highly visible landmark to be used to give people directions. There is a subtle "sell" here from the retailer, signalling to the world that the business is a supporter of alternate forms of energy. And for a young car buyer trying to decide where to check out new or used rides, the environmentally conscious tend to lean to businesses they perceive as thinking as they do.
Again, it is entirely irrelevant what you and I think. What is vitally important is what a growing -- and economically powerful -- percentage of Tenants and future investors want. More importantly, "green" is what they are absolutely enthused about and willing to pay for.