Health, productivity and savings: Sustainable office tower attracts discerning tenants

Posted on Oct 20, 2014
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The Old Stock Exchange building, circa 1929. When completed in late 2015, The Exchange will be Canada’s first LEED® Platinum conversion of an historic building. (Photo: CNW Group/Credit Suisse Real Estate Asset Management)

When Franz Gehriger talks about sustainable buildings, he is quick to emphasize health and wellness as being just as important as economic benefits such as energy and water cost savings. Until recently, the idea of an office interior being part of a healthy environment including fresh air, neutral lighting, high-efficiency heating and cooling and recycled water was quite rare. This is no longer the case. Today, the move towards sustainable development includes the demand for all of these features as a matter of cost savings and corporate social responsibility.

PR Associates spoke with Mr. Gehriger to discover what is happening with sustainable office development in Vancouver and around the world.

Originally from Switzerland, Gehriger is the CEO of Swiss Real Estate Services Ltd. (SwissReal), a Vancouver-based real estate services firm. SwissReal is currently retrofitting the old stock exchange heritage building and adding a new 31-story tower at 475 Howe Street. The new $200 million project is on target for LEED® Platinum certification.

LEED (Leadership in Energy and Environmental Design) has recently become the new benchmark for office building construction. The LEED rating system is based on a 40 – 100 scale. Buildings are measured against site sustainability, water efficiency, energy and atmosphere, materials and resource, indoor environmental quality, and the innovation and design process. Buildings that pass the stringent measurement guidelines are certified as LEED silver, gold or platinum.

Built in 1929, the façade of the original Exchange building will remain the same. When completed in the spring of 2017, the interior will be completely refurbished as a new tower that will not only reclaim the first eleven floors, but also rise a further twenty stories.

Although The Exchange will be Vancouver’s first certified LEED Platinum building, the trend toward sustainable building is fast growing across the country. According to a recent article in The Financial Post, “Toronto now has 96 LEED certified offices, a 95% jump from the number buildings meeting the criteria in 2013. Of those 96 offices, two-third have a received a gold or platinum rating.” Furthermore, there is growing demand by discerning tenants. “It’s not a government-driven exercise but something tenants are demanding landlords supply to keep employees happy.”

The Old Stock Exchange building, circa 1929. When completed in late 2015, The Exchange will be Canada’s first LEED® Platinum conversion of an historic building. (Photo: CNW Group/Credit Suisse Real Estate Asset Management)

While speaking with Mr. Gehriger, it was immediately apparent that he would like to see this trend continue to grow. “There is an evolution taking place in the construction business,” Gehriger said while pointing to a building plan. “It will no longer be acceptable or cost efficient for high rise office towers to recirculate bad air, use fluorescent lighting, or heat office space with inefficient and wasteful technology.” Gehriger agrees that demanding tenants are expecting more for their lease.

The Exchange Building is being designed to meet and exceed the expectations from its tenants. To achieve this goal, Gehriger and SwissReal are working with the architect, Harry Gugger whose background has everything to do with sleek design and clever use of space. Based in Switzerland, Gugger developed the Pinstripe Principle, which involves using vertical aluminum shades, or louvers, to provide passive solar protection and maintain a constant interior temperature regardless of the angle of the sun. Gugger, who has been at the heart of international developments that include the CaixaForum in Madrid and the Tate Modern Extension in London, is focused on creating “architectural expression” as well as “meaningful energy management.”

Listening to Gehriger list the numerous advantages of sustainable building development is almost like hearing a prophet outline the future for urban design and use. The need for universal change and the benefits of LEED certified buildings such as The Exchange are clear.

“Why should we continue employing inefficient and non- sustainable building standards from the past?” PonderedGehriger. “The design and function of most twentieth-century office towers excluded the most important areas that keep us healthy and productive. Today, we have the technology to design and build large office spaces that circulate
100 percent fresh air while, reducing carbon emissions and energy consumption. Sustainable buildings make use of energy efficient LED lighting, harvest rain water, and radiant heating and cooling that will allow occupants to adjust the temperature in each office space.”

These features are becoming more sought after by tenants. Gehriger is clear that although cost savings from using less energy is good, the savings in human resources has far greater potential. According to the National Institute of Building Sciences (NIBS), employee salaries account for approximately 90 percent of typical office expenditures.

As a LEED® Platinum building, The Exchange will reduce CO2 emissions by 85%, decrease energy consumption by 50% and lower energy costs by 35%. Photograph by: The Exchange.

The significant savings from sustainable building development seem obvious. When asked what is preventing developers from constructing more of these buildings, Gehriger believes it is the perception of higher costs.

Although the upfront investment required to achieve LEED Platinum certification is more than constructing conventional buildings, the cost premium is not as high as most developers may think,” A recent report by the World Green Building Council, confirms this and notes the continual reduction of construction costs for sustainable office buildings. “The integration of program management and environmental strategies into the development process tend to reduce costs.”

Government has a role to play in the reduction of initial costs of constructing green buildings through rebates and tax incentives, policy including rebates and tax incentives. The University of British Columbia’s (UBC) 2010 study, The Role of Government in Creating Green Buildings, argues, “a barrier exists between business and government despite both pursuing similar goals.” Canada lags behind European nations and the United States in developing green building policy all levels of government. Federal sustainable development policies currently focus on emissions standards such as the introduction of a carbon tax or using of other coercive methods to force developers to adopt greener technology. A more suitable policy mechanism could see financial incentives for developers to build green.

The UBC report cites an example of the Municipality of Saanich, a forward thinking community near Victoria, BC where developers were offered rebates for building or renovating homes and small businesses that reduce and save energy. The United States uses incentive-based measures including tax deductions for energy efficient buildings, bond funds, reduced fees and rebates among others that are generating interest among developers.

In order to turn the tide towards sustainable building construction, Canadian developers need to work with local, provincial and federal governments to create incentive systems encouraging developers to choose sustainable construction and development. They also need to begin a conversation with business emphasizing lower employee costs and better day-to-day working conditions, energy and water savings, and a reduced carbon footprint.

The Exchange raises the bar for office buildings that balance economic, environmental and human resource needs. It will lead the way for future sustainable building development in Canada.

In addition to SwissReal, development of The Exchange is provided by European investment bank, Credit Suisse. Leasing arrangements are being managed by Bill Coulter at CBRE Group Inc., the world’s largest commercial real estate service. CBRE has extensive operations across China where the agency has been assisting developers achieve LEED certification for buildings in Shanghai, Guangzhou and Shenzhen.

Edward Munro is a Communications & Sustainability Consultant with PR Associates, a Vancouver-based public relations and communication firm.

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