Iconic skyscrapers finding new luster in green energy
In tough market, efficient space attracts tenants
NEW YORK - When owners of the Empire State Building decided to blanket its towering facade this year with thousands of insulating windows, they were only partly interested in saving energy.
They also needed tenants.
After 78 years, Manhattan’s signature office building had lost its sheen as one of the city’s most desirable places to work. To get it back, the owners did what an increasing number of property owners have done - they went green, shelling out $120 million on a variety of environmental improvements, a move would have been considered a huge gamble a few years ago.
Buildings that define city skylines across the country, some national icons, are catching up to the sleek, new structures designed with efficiency in mind, as property owners and managers become convinced that a greener building now makes financial sense.
That’s because in recent years environmental retrofits have begun to pay off for owners and tenants. Higher-profile companies are seeking out efficient office space, and new technology at older buildings has started to translate into higher property values, leases, and occupancy rates.
“In a good market, we’re going to get the best rents for the best tenants,’’ said Anthony E. Malkin, who leads a real estate group that owns the Empire State Building. “In a bad market like we have now, we’re going to get tenants when other buildings won’t.’’
Renovation specialists around the country have been plugging porous walls in numerous old buildings, adding high-tech water systems, and using recycled material in carpets and tile.
One of them is the Christman Building in Lansing, Mich., an 81-year-old Elizabethan Revival office that’s listed on the National Register of Historic Places. While repairing the limestone exterior and preserving unique details like the mica light fixtures, the building owners spent $8.5 million to add water-efficient plumbing and increased the amount of natural light. They also capped the building with a reflective “cool’’ roof.
Chicago’s Sears Tower announced late last month that it will embark on a five-year, $350 million green renovation. The 110-story, staggered skyscraper, which turned 36 this year, will crown its rooftops with solar panels and wind turbines.
When complete, the improvements will cut the tower’s annual electricity use by 80 percent and save 24 million gallons of water, property managers say.
Building owners trumpet their environmental commitment when extensive modifications are made, yet in many cases those changes are being pushed by tenants.
Many high-profile tenants won’t even consider moving into a property without the US Green Building Council’s Leadership in Energy and Environmental Design certification, said Allan Skodowski with Transwestern management group. They may not even know what the certification means, he said, but they still demand it.
“They say ‘We want LEED,’ ’’ he said, “and that’s it.’’
Nine of Transwestern’s properties received certification this year. A combination of energy-efficient light bulbs and other green equipment helped those buildings slash energy consumption. On average, they have seen a 2 percent drop in energy costs, even as electricity rates jumped between 10 and 40 percent, Skodowski said.
A recent analysis by real estate researcher
The CoStar study, which included about 3,000 green-certified offices, found that buildings with the council’s certification enjoyed higher occupancy rates (90.3 percent) than their peers (84.7 percent) in the first three months of 2009.
Certified buildings have fetched higher lease rates for several years. The CoStar report said the buildings rented at an average of $38.86 per square foot in the first quarter of 2009 compared with $29.80 per square foot for their peers.