Union Square’s Silver Linings

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The findings have implications for the stock of lesser quality buildings as well, the study concludes.

240 Stockton San Francisco The Registry real estate 2Sustainability was certainly a factor in the decision of the latest tenant to take new space at 240 Stockton: Heath-Newton LLP, a law firm specializing in family and marriage practice, recently agreed to lease the 4,000-square-foot ninth floor. Doing a LEED build-out was a natural next step for Heath-Newton, an existing tenant on the third floor. The firm became part of San Francisco’s Green Business program earlier this year and sees the greening of its offices as aligned with its corporate values and focus on family, lesbian, gay, bisexual and transgender law.

With an 85 percent leased building owned by a family foundation that places environmental sustainability at the core of its value system, Hill said she has the luxury of waiting for the right tenants. The same policy at Bently Reserve has rendered “a really high-quality, focused building,” she said. “We have tenants coming to us with ideas about being more proactive in composting, tenants that present different behaviors that help the building run more efficiently.”

Yet, a green label isn’t enough to entice tenants. “I wish it were true, but it’s not,” said Benjamin Osgood, senior vice president in commercial leasing at Dunhill Partners West, and the chair of the San Francisco branch of the U.S. Green Building Council. “The top attractions for tech tenants are a building’s cool factor and access to public transportation. There’s very little demand for LEED space from tech clients.”

Smart landlords seeking to attract tech tenants are building out tenant spaces to green standards “because green is cool,” Osgood said. “But I do not think a LEED certification is enough to attract a tech tenant on its own.”

LEED also is not as consistently synonymous with sustainability as its promoters probably would like. A recent article by Sam Roudman in “The New Republic” noted the three-year old Bank of America Tower in New York, the first-ever LEED Platinum skyscraper, had been identified as Manhattan’s “biggest energy hog” in a citywide energy audit published last year. The audit found that the building used two times the energy per square foot as the Empire State Building, a building that is not LEED certified and is just 20 years younger than 240 Stockton.

San Francisco has adopted similar audit and benchmarking provisions as New York for its office buildings, and the city and state are implementing disclosure requirements.

Even the Maastricht-Berkeley study found that green ratings don’t necessarily mean low energy use: only a 0.26 correlation (1.00 being a direct relationship) between LEED scores and energy use per square foot was found among the buildings in the study. A 2009 study for the National Research Council Canada found some 18 percent to 30 percent (depending on the energy measurement used) of LEED buildings used more energy than their unrated counterparts, leading the researchers to conclude that “the measured energy performance of LEED buildings had little correlation with the certification level for the buildings.’’

The LEED program used at 240 Stockton, the Existing Building Operations and Maintenance, or EBOM, differs from the more widely known program for new buildings that has been the focus of much of the criticism, EBS’ Arlein said. “EBOM is an ongoing process. You get initial certification, but that’s not where it stops, which is unique for the LEED-rating system.”

“During the performance period you have to continually track all the changes put in place, and you have to re-certify the building every five years. That is really where the value of the EBOM process comes into play. You don’t just make changes and forget about it,” he said.

The city of San Francisco also recognizes the unique stature of a LEED EBOM certification in its ordinances.

Bently expects to implement the LEED tenant build-out requirements in its other commercial properties in San Francisco and the greater Bay Area, including Belvedere Place, a 100,000-square-foot office property in Mill Valley, and Bently Reserve, where two tenants remain grandfathered in non-LEED spaces. The company eventually wants to roll out the tenant-certification requirements to its properties in Southern California, France, Argentina, South Korea and Singapore.

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Photography by Laura Kudritzki

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