Some of the nation’s most successful commercial real estate developers are seeing long-term benefits from making their buildings green and sustainable.

After more than a decade of experience with LEED® and ENERGY STA R®, Hines is one of the world›s leading developers and managers of, and investors in, sustainable real estate.

Hines is a privately owned real estate firm with a presence in more than 100 cities. The Hines portfolio of projects underway, completed, acquired and managed for third parties consists of more than 1,100 properties including skyscrapers, corporate headquarters, mixed-use centers, industrial parks, medical facilities, and master-planned resort and residential communities.

In an exclusive Q & A, Hines’ Global Sustainability Officer, Gary Holtzer, tells us why Hines embraces green building, what it costs to go green and what its plans are for continuing to be a leader in green building into the future.

How does Hines measure return on investment (ROI) on the added capital cost of being green?

This question assumes that there is added capital cost for being green, which is not always the case. There are a great many steps that owners, managers and tenants can take that collectively make a huge impact. Simple behavioral changes cost little to nothing to implement. Through our Hines Green Office (HinesGO) program, we have introduced tenants to actions they can take in their own spaces to behave more sustainably. We are thrilled with the number of tenants who wanted to participate in HinesGO and who wanted to implement sustainable practices in their leased space – they just needed the tools. Over 850 of our tenants have already joined the program and have been certified as HinesGO.

Further, it is critical to understand exactly how our buildings operate, to retro-commission where necessary and to use the energy management tools already available. With some training and encouragement, the building operating engineers and managers become passionate about sustainability, and figure out very cost-efficient ways to pull energy-waste out of the system. If the organization values it, and recognizes and rewards sustainable practices, generally the staff delivers in this area.

Once the so-called low hanging fruit is harvested, there are further steps that can be taken to make buildings more environmentally friendly. These can require an investment, but often many of them have very short pay-backs that can either be passed through as operating expenses because they ultimately reduce tenants’ operating expenses, and save significant rental costs or can be financed through building ownership. Other retrofits can take advantage of incentives from utilities and state and federal programs.

What are the ways that green building benefits your firm and clients who own buildings financially, i.e. higher rents? Or is it more about the demands of tenants for green office space?

There is little question that tenants and tenant-brokers understand that a sustainably managed building is generally more cost efficient as well. Additionally, as tenants incorporate sustainable practices into their own business plans they want their leased premises to support that business plan.

Appraisers, lenders and bankers increasingly see sustainable management as a marker or indicator of a well-managed asset, and will underwrite quicker lease-up time and higher rents. Sustainable practices are increasingly necessary to be considered Class A.

What does it typically add in cost to go LEED gold or platinum? As a percentage of construction costs?

Minimizing costs to achieve LEED certification for new construction is all about integration and early design and construction decisions. We constantly analyze the market as well as what is important to our tenants in relation to sustainable practices. We have found that if the LEED requirements are designed into the earliest design decisions, and embraced by everyone in the process – architects, engineers, construction managers, achieving LEED Certification up to the LEED Silver or Gold level costs less than 1-2% of the construction budget of a typical high-rise office tower.

What R&D does Hines do on new technology and materials? What’s new and exciting on the horizon?

We work very closely with major manufacturers and developers of new construction materials. We are currently testing some new products and expect to see some exciting changes in lighting and glass in the near future.

What is your firm’s view on solar energy for electricity and heating water in your large commercial buildings? Do you put them in new buildings? Where does it work, where not?

Much of the product that Hines builds and manages is in higher density urban or first ring suburban environments where surface area for solar panels is problematic. We continue to examine solar as a potential alternative energy source – and the technology is improving all the time.

What is the overall extent of the sustainability program? As the global sustainability officer, what are your primary responsibilities?

Hines has a long history of responsible investment from its founding in 1957. Gerald Hines, who was trained as an engineer, imprinted efficiency and sustainability on the firm from its earliest days. It is my responsibility to ensure that legacy be continued and that we as a company think about and embrace practices that allows us to conduct business in the cities and towns in which we operate that is respectful of the environment, and delivers the returns to our clients and partners that they expect. We believe and have proven that we can do both.

Story by Andre Shashaty. This article first appeared in the July/August issue of Sustainable Communities magazine. To receive a full-year of Sustainable Communities magazine become a member by clicking here.