It's evident that many of South Florida’s new real estate projects are adopting various shades of “green” — from water-conserving, energy-efficient car dealerships, to environmentally friendly office buildings, to solar-paneled homes and even entire mixed-use developments based on environmental sustainability. But is green building and design a sustainable trend?
Green is shorthand for sustainable design or ecological design. It employs environment-friendly concepts of energy efficiency, water conservation, renewable and recycled resources and sustainability. Green buildings, for example, may use solar panels and recycled materials and be built on rehabilitated brownfields.
“We’re just seeing the beginning of the green trend in South Florida,” says Paul D’Arelli, a shareholder in the Fort Lauderdale office of law firm Greenberg Traurig LLP. “But it’s not a fad because it’s moved from an environmental incentive to a financial incentive. Going green adds to the bottom line of developers and building owners.”
Although it is undeniable that the green movement has made its way to South Florida, it remains unclear whether green is here to stay. Is it sustainable, profitable and probable that green building principles will one day guide most new construction? Or, like snowbirds, is it merely visiting for a season?
The emergence of green building projects begs these and other questions, especially in a region characterized by public indifference, sparse government incentives for eco-design and high land and construction costs. But one truth is certain: Attitudes toward green developments are changing. From the grassroots all the way to the political heights, real estate industry watchers agree that South Florida has awakened to the benefits of green design during the past 18 months.
“At one time, we all thought green building was a fad. Now it is almost becoming, frankly, an obligation,” says Jorge H. Garcia, CEO at Garcia Stromberg Inc., an architecture firm based in Boca Raton. “South Florida municipalities are beginning to look at implementing regulations for sustainable design into building and zoning codes,” continues Garcia, who is assistant chairman of the Urban Land Institute’s (ULI) Southeast Florida/ Caribbean District Council. The ULI is a Washington-based non-profit institute that focuses on responsible land use.

GREENBACKS DRIVING GREEN
There is plenty of motivation for going green. With headlines on the dangers of global warming arousing public consciousness, “green” has become a market differentiator for some companies, products and services. Other firms just want to do the right thing by the environment. But at the end of the day, good old greenbacks drive the trend in South Florida and around the United States — because green buildings can cost less to operate and own.
The average green building offers 30 percent energy savings, 35 percent carbon emissions savings, 30 percent to 50 percent savings on water use and 50 percent to 90 percent waste cost savings, according to the US Green Building Council (USGBC), a Washington non-profit that promotes environmentally responsible building. The USGBC’s Leadership in Energy and Environmental Design Green Building Rating System — known as LEED — is the nationally accepted benchmark for design, construction and operation of green buildings. LEED certification of Certified, Silver, Gold or Platinum ratings is based on a project’s level of sustainability.
Energy savings alone can make a positive impact on costs without any additional upfront building expenses. The USGBC says LEED Certified and Silver buildings, for example, can now be built on the same budget as traditional buildings. More eco-friendly Gold Certified buildings can cost from 3 percent to 5 percent more than traditional buildings, according to Taras Diakiwski, vice president in the West Palm Beach office of The Weitz Company LLC, a construction management firm headquartered in Des Moines, Iowa.
“Developers push some of the cost to tenants. Governments look more at the savings in utility bills,” Diakiwski explains. The extra cost, she says, is not typically on the construction side, but rather in designing green buildings and then acquiring the eco-friendly materials — such as solar panels or low-flow faucets and toilets — that help make energy and water savings possible. The Weitz Company has completed eight LEED-certified projects during the past five years, but Diakiwski is gearing up for a flood of green construction in years ahead. The firm is taking its employees through LEED certification workshops to make sure they are prepared for the opportunity.
The past five years have already seen a steady increase in green projects: The USGBC reported 80 million square feet of LEED projects in 2002. That figure climbed to 642 million in 2006.
Two years ago, William H. Holly, president of Miami-based commercial real estate developer and broker Holly Real Estate Inc., started talking up Miami Green, Miami’s first LEED-certified office building. The 120,000-square-foot, 13-story office-condo broke ground in October 2006 and will be open for business in 2008. “[Then,] I told people green development wasn’t a fad. I told people it was going to revolutionize corporate real estate,” Holly says. “Green is a trend, yes, but it’s not a fad. Trying to keep up with the rapid developments in the green movement — specifically new materials — is the biggest challenge.”
Loretta H. Cockrum is unfazed by that challenge. Cockrum, CEO of Miami-based Foram Group Inc., is charging ahead with a 1.5-million-square-foot LEED-precertified development in Miami, called Brickell Financial Centre. The precertification, technically called “LEED for Core and Shell Precertification,” is the USGBC’s formal recognition of a building whose developers aim for final LEED certification. It gives developers the ability to market the building as officially “green” to potential tenants and investors. The two-tower development broke ground in April and should open in 2009 with offices and a hotel.
“This is a natural step for a developer who plans to hold property because it lowers the cost of ownership over time,” Cockrum says. “I can’t see us doing new developments that aren’t green.” Just how much does she expect it to lower her ownership costs? “We won’t know the answer to that until we have actually operated the property for a few years and compare it to a comparable property developed at the same time with similar materials,” Cockrum acknowledges.
The green certification has already brought the project more attention. “The more we get into this the more publicity we are getting. People are convinced this is the right thing to do and are calling us, wanting to lease space in the towers," she says.
Even conversions are going green, although few will have actual LEED certification. N.R. Investments Inc., a North Miami Beach-based developer, recently debuted its eco-friendly office-condo conversion. Located in Miami Gardens, the four-story, 58,700-square-foot Park Centre is undergoing a $2 million renovation that incorporates green materials, such as recycled quartz tiles, low emission carpeting and natural wall coverings. “We saw Al Gore’s movie on the environment last year and we decided to apply environmentally friendly practices to our projects from now on,” says Nir Shoshani, principal of N.R. Investments. “We’ll take steps to make all of our future projects as eco-friendly as possible.” Shoshani declined to comment on how much cost the environmentally friendly materials added to the project.

A NATIONAL FIRST IN SOUTH FLORIDA
Green building has spread far beyond offices, and some of the groundbreaking projects in the US are taking place in South Florida. The nation’s first LEED Gold Certified auto dealership broke ground this summer in Miami. Tamiami Automotive Group Inc. is building a new location for what will be Tamiami Chrysler/Jeep/Dodge on a brownfield, a former Superfund site that was previously home to a lumberyard. When completed, the 400,000-square-foot facility will incorporate water conservation and energy management systems, and a design that relies on natural light.
Carlos Planas, chairman of Tamiami Automotive Group, says it cost $2 million more — just 5 percent of the $40 million construction budget — to build the site to LEED Gold specifications. With lower utility bills, he expects to break even on that extra cost within seven years and then realize ongoing savings. “When the architect told me how much more it would cost, I said ‘go ahead’ within 10 seconds,” Planas recalls. “The decision has been good for our business, but our motivation was to do the right thing for the community and the environment.” The project has its admitted challenges, though. The site itself was the first and perhaps largest. Because he is building the new dealership on contaminated land, Planas had to jump through remediation hoops to ensure its ongoing safety, but using a Superfund site helped with the LEED certification.
Planas’ business may also benefit from the eco-friendly design. Greenberg Traurig’s D’Arelli, who is also a LEED Accredited Professional (trained to steward the integrated design and LEED certification process), points to USGBC studies that show children who attend “green” schools perform 20 percent better on tests, green hospitals document earlier patient discharge, and green factories can lead to higher production rates. In offices, those studies show that high-performance lighting improves worker productivity 6.7 percent and individual temperature control offers a 3.6 percent increase. Shoppers in green retail buildings spend more per square foot.
Developers of a project in Plantation hope to realize some of those broad benefits. Plantation-based US Capital Holdings LLC, which owns Plantation Fashion Mall, hopes to turn that property into a LEED-certified mixed-use redevelopment called 321 North. The project, coming out of the dirt on the 33-acre site of the obsolescent Fashion Mall, is one of 238 in a USGBC pilot program called LEED Neighborhood Development. That program looks to integrate the principles of smart growth, urbanism and green building into the first national standard for neighborhood design. 321 North will have open-air retail and restaurants, Class-A office space in two new office buildings and 400 to 600 residential units. The $350 million project has green features such as highly efficient mechanical and plumbing systems and energy-efficient glazing, paints and finishes that enhance indoor air quality. The developers plan to incorporate green-ways, open spaces, an onsite filtration pond and a heavily vegetated parking structure that will help mitigate heat.
“The developers see green as something they need to do,” says Jonathan W. Cardello, the architect on 321 North and a principal of ADD Inc., a Miami-based architecture and design firm. “The construction costs aren’t as high as people once thought and cost savings are notable. That gives them an advantage over other developers on the operations side.”
USGBC selected two other South Florida mixed-use projects for its pilot program: Biscayne Landing in Miami and Sheridan Stationside in Hollywood.

AN ‘UNRIPE’ CONCEPT?
Few would deny the green movement in South Florida, but some admit the concept is not yet fully ripe. For one, there are too few real estate and construction companies equipped to execute environmentally friendly projects, says Greenberg Traurig’s D’Arelli, who is working on entitlement issues for US Capital Holdings at 321 North.
“There are technical aspects to green development. You have to have the right team members and specialized consultants who can advise on alternative energy systems,” architect Cardello adds. “Our marketplace for green experts is still growing and that will take time, but it will happen.”
Even as the expertise grows in the region, some real estate brokers question whether tenants have an interest in green buildings. There is not a strong demand in the rental market for these facilities, at least not yet, according to Thomas J. Capocefalo, managing director with the South Florida office of Studley Inc., a commercial real estate services firm. “Green building is a great idea, but most of our clients aren’t sure they want to pay the extra costs,” he says. “We may see the market demand in two years or so, but we’re not hearing it today.”
Lenders and insurers also may not be willing to take on the additional costs of green building, says Steven B. Lesser, a shareholder and construction lawyer with Fort Lauderdale-based law firm Becker & Poliakoff PA. He notes that Florida offers an X-factor in the lending and insurance aspects of green developments: hurricanes. “The insurance industry faces greater risks with green buildings because it costs more to repair them,” he argues. “A lender may not want the loan because it may be too risky to sell if they have to take it back.”
But those developers already working on green projects say they have not had problems. “It has not been an issue for investors or lenders. They both believe it is the right thing to do for the future,” Cockrum says of her company’s Brickell Financial Centre LEED project.
Insurers just want clients to have the proper coverage, whether the building is green or not, according to Alejandro Soto, president of the Alexandria, Va.-based Independent Insurance Agents & Brokers of America Inc. and president of Miami-based insurance firm InSource Inc. “There’s no pejorative designation on green buildings from our point of view,” Soto assures.
So far, there seem to be plenty of willing green investors, too. Liberty Property Trust, a Malvern, Pa.-based real estate investment trust that owns and manages nearly 2 million square feet of office and industrial space in South Florida, is jumping on the green bandwagon. The REIT is pursuing LEED certification for a 100,000-square-foot Class-A office building currently under construction in Boca Raton, and has various other green projects in the works. “Green is a good investment,” says Robert Goldschmidt, senior vice president and regional director for Liberty Property Trust, although he is unsure whether the building will cost the same or more to build. He says Liberty is committed to LEED certification on all of its buildings going forward because of the total ownership savings.

A SPEED BUMP
The green momentum did hit a speed bump when the residential real estate market took a downturn. Michael M. Houston, president of the Florida Green Building Coalition Inc., a non-profit that promotes a statewide green building program, reports several major builders with plans for thousands of green homes have put projects on hold. “We may be stalled for a couple of years,” Houston says. “The bright side is this will give manufacturers time to develop higher-quality materials, but the downside is the lower demand will keep the price of the materials higher.”
Some specialty green residential buildings have gone forward, though. Frank McKinney, CEO of Frank McKinney & Company Inc. (based in Delray Beach), broke ground in July on a green mansion, which he is building on spec (not for a specific buyer) in Manalapan. The 15,000-square-foot home is to be the first of its size certified by the USGBC and the Florida Green Building Council. He hopes to sell it for $29 million when he completes it in 2009.
McKinney is taking a risk trying to get the certification and, ultimately, to sell the mansion. Only 90 homes in the US have achieved green certification since the residential program launched two years ago. None of them cost nearly as much to develop as this one, which includes enough solar panels to cover a basketball court and a water system that collects enough runoff water to fill the average swimming pool every 14 days.
“Somebody will fall in love with the artistry and interior features of this house,” McKinney says. “The fact that it’s green, the fact that their electricity bill will be a few hundred dollars a month, the fact that the indoor air quality in the house will be three to four times greater than the Mayo Clinic — that’s just a bonus.”
On the other end of the spectrum, Carlisle Development is building a green affordable housing project, Tallman Pines in Deerfield Beach. Matthew S. Greer, the company’s chief operating officer, approached CEO Boggio with the idea, telling him that although green building was in its early stages and might not be as effective as it could be, Carlisle Development should be involved in it. Boggio concurs, saying, “It’s the right thing in all kinds of real estate development. It’s the right thing for South Florida.”
But Boggio is uncertain how much more it will cost to develop Tallman Pines to LEED standards. “The truth is nobody knows yet, and we don’t know. We’re all kind of doing these things for the first time,” he says. “But when I hear people say it doesn’t cost any more — that’s just wrong. ... It definitely costs more. I’ve heard 10 percent. We think it’s going to be less than 10 percent.” Like other developers, Boggio predicts that savings will come over the long term in reduced operating costs — particularly attractive in for-rent or for-sale housing directed at those with little money to spare.
Along with two phases of Tallman Pines, Carlisle Development, which specializes in affordable housing, plans a LEED-certified project in Miami-Dade County that will include housing for the homeless. “We are going to try [to build LEED-certified] where we can and if we can convince our governmental partners, we are going to try and do it in every development,” Boggio says.

MAINSTREAMING GREEN
There has been some political movement to mandate sustainable design practices. It gained momentum in July when Gov. Charlie Crist signed a series of executive orders to create the strictest environmental regulations on energy and construction in Florida’s history. One of the orders will see the Florida Building Commission revise the state building code to increase energy efficiency on all new construction by at least 15 percent from the 2007 energy code. And, all new government buildings must be LEED-certified. “You are going to begin to see this as part of the building code in the future and this is going to be embraced by all development teams as we move forward,” architect Cardello predicts.
At the local level, South Florida mayors are encouraging green design — and some are even insisting on it. Miami 21, that city’s growth blueprint, requires new construction of more than 50,000 square feet to be LEED Silver Certified. The Planning Advisory Board approved Miami 21 for the eastern portion of Miami in April, although timelines for adopting the blue-print in other areas of the city have not yet been determined.
“We can pass laws from a bully pulpit, but we are seeing the business sector begin to volunteer to design green buildings,” Miami Mayor Manuel A. Diaz says. “South Florida should be at the forefront of green design.”
Other cities are joining the green movement, and it typically starts in public-sector buildings looking for the long-term cost savings LEED promises. In Broward County, the South Regional/Broward Community College Library in Pembroke Pines is the county’s first green building. The two-story, boxed-shape structure is awaiting its final LEED rating, but architect Dan Ayers, a project manager for Broward County’s Construction Management Division, expects the library to earn some level of official certification.
“We are conscious of the energy and water shortages, so we took it upon our-selves to try to meet the USGBC standards,” Ayers explains, noting that it cost a mere $42,000 more — just .03 per-cent of construction costs — to build a LEED certified building rather than a traditional building. Green features include windows placed to maximize natural light and minimize glare, a white roof to reflect heat from the sun, as well as structural and mechanical systems designed to preserve energy — and keep operating costs low.
Even without regulation, and with new green construction slowing until the real estate market rebounds, plenty of facilities are making simple green adaptations. The Breakers Palm Beach, a Five Diamond luxury resort in Palm Beach, recently earned Green Lodging Certification from the Florida Department of Environmental Protection for its efforts. The resort uses energy-efficient light bulbs, “smart” thermostats that connect to an energy management system, low-flow faucets and toilets and a reverse osmosis plant that converts undrinkable water to irrigation water for the golf course.
“There aren’t many government incentives to go green,” says Rick Hawkins, the Breakers’ director of materials management. “But I fully expect industries to move ahead anyway, because going green is financially viable. At the end of the day, everybody is in business to make a dollar.”
Carlisle Development’s Boggio also believes issues such as a possible shortage of drinking water and clean air, along with increasing electrical costs, will drive more green building in South Florida. “I hear it more now coming from every different direction,” he says. “It’s going to catch on in South Florida. I think it’s going to be, in some ways, better and easier in South Florida because our climate allows us to do things that other people can’t do.”
So just how much can a few green buildings do? To have a serious impact on the environment, a mere 3 percent to 5 percent of new construction needs to be energy-efficient, according to R. Neal Elliott, industrial program director for the American Council for an Energy Efficiency Economy. That Washington-based non-profit is dedicated to advancing energy efficiency for both environmental and economic reasons. Of course, he adds, “The more you can move toward energy efficiency, the bigger the impact.
In spite of the cost of building energy-efficient buildings, there is opportunity to lock in savings for generations.”
— Additional reporting by Yeleny Suarez


LEED CERTIFICATIONS AND WHAT THEY MEAN:
The US Green Building Council certifies new construction as “green” under its Leadership in Energy and Environmental Design (LEED) Green Building Rating System. Its system is the nationally accepted benchmark for design, construction and operation of eco-friendly buildings.
Fees for LEED certification of design and construction can range from $1,750 for a building smaller than 50,000 square feet, up to $22,500 for a building larger than 500,000 square feet.
The council uses a checklist and point system. The system looks at a broad range of “sustainability factors that reduce energy consumption in both construction and usage. These include items such as the location of the project (projects near mass transit, for instance, get more points), whether it has bicycle storage, whether it uses water-efficient landscaping or what level of toxins its materials emit (for example, a project would get points for low-emitting paint). Use of natural light, renewable energy sources such as wind and solar power or energy-efficient heating and cooling systems also bring points, as do construction plans that minimize waste and maximize recycling of old materials.
The more points a building has, the higher its level of certification. The highest rating is 69 points. — Oriane Lluch

CERTIFICATION LEVELS:
Certified: 26-32 points
Silver: 33-38 points
Gold: 39-51 points
Platinum: 52-69 points
Source: US Green Building Council


THE SAVINGS
Average sayings from a green building:
»Energy 30%
»Carbon Emissions 35%
»Water Use* 30-50%
»Waste Costs* 50-90%
*Range
Source: US Green Building Council