One area of the property insurance market which has seen an increase in green building policy endorsements over the past year is the builder’s risk market. This article will take a look at exactly what builder’s risk is meant to insure, and then review some of the available green building endorsements to such policies that are currently available.

Because the risks for property damage, loss, or destruction are quite different for a building under construction versus a building that’s already been built, standard property insurance policies will not provide coverage for damage to or destruction of the former. This is because the owner’s insurable interest is constantly changing; title to material and equipment may change daily, and the overall value of the actual project itself increases from zero as the building itself takes shape, which makes it more or less impossible for the insurer to determine the appropriate premium. Enter builder’s risk insurance, which generally refers to a property insurance policy that will remain in place while the project is under construction. Unless specified by endorsement or otherwise, once the project is completed, builder’s risk coverage terminates, and the owner will need to make sure that a standard property insurance policy is in place to cover accidental losses, damages, or even total destruction of the building or property in question. Determining exactly when that termination takes place can be tricky, and is a good reason to review both the terms and conditions of the construction contract, as well as the terms of the policy and law of the controlling jurisdiction.

Considering the purchase of various endorsements is important because standard commercial builder’s risk coverage will insure only one thing: the building under construction, and not associated soft costs (such as those incurred with third-party green building certification). Standard builder’s risk policies will cover damage or losses to the building’s foundations, scaffolding, construction forms, other temporary structures at the project site, fixtures, machinery and equipment used to service the building and intended to become part of it, and materials and supplies at the site which will also become part of the building. Typical endorsements include those for “floater” coverage; i.e., damage to equipment used to build the project, or materials and supplies in transit from point of manufacture or supply to the project site, as well as the costs and expenses that the owner may incur if completion of the project is delayed.

According to the most recent Marsh survey (from December of 2008), several insurers now offer specific green building endorsements to traditional builder’s risk policies which owners and their contractors should consider carefully on green construction projects of any size. Fireman’s Fund, for example, offers a “Delay of Occupancy or Use – Green Amendment” to its builder’s risk product. The endorsement provides coverage for the soft green building-related costs that an owner may incur after a covered loss, such as the recycling of construction debris, flushing out the reconstructed space with clean air, commissioning repaired or reconstructed building systems, and re-registering the project with USGBC to continue pursuit of LEED certification. In addition, the policy may provide coverage for the owner’s loss of net earnings from alternative energy or water efficient installations if those systems were operational prior to the loss. Travelers, Zurich and Ace now offer similar endorsements to their builder’s risk policies as well.

As new construction starts (hopefully) increase as the economy slowly lurches around, look for more comprehensive endorsements to builder’s risk policies from a broader range of insurers to emerge; as always, we’ll be keeping an eye on such trends and follow up here at GRELJ accordingly. In the interim, if anyone out there has purchased any of the available endorsements, I’d be interested in getting your feedback in the comments.

Source: http://www.greenrealestatelaw.com/2010/05/what-is-builders-risk-insurance-and-should-i-purchase-it-for-my-green-construction-project/

This year, the Pentagon’s Quadrennial Defense Review-a strategy document that lays out the Pentagon’s vision for its missions and force structure every four years-identified climate change as both a potential source of conflict and a factor in military operations. But the Pentagon building itself, located in Arlington County, Virginia, is currently undergoing a big green renovation.

The iconic building was constructed on a swamp wasteland in 16 months and completed on January 15, 1943 at an approximate cost of $83 million. Efficiency was a priority even then. The building consolidated 17 buildings of the War Department to cover 29 acres-the largest ground area of any office building in the world. But despite the 17.5 miles of corridors, it takes just seven minutes to walk between any two points in the building.

The building was designated a National Historic Landmark in 1992 and had never undergone a major renovation until the Pentagon Renovation and Construction Program Office, or PENREN, began modernizing the 6.5 million square foot structure a year later. The renovation is currently 80 percent complete and expected to be completed three years ahead of schedule in 2011. So far, five renovation projects are LEED certified and the Pentagon Library and Conference Center is LEED silver.

The renovation is occurring in five sections or “wedges” that encompass different types of renovations, and it is guided by the Environmental Protection Agency’s Environmentally Preferable Purchasing, or EPP program, which determines environmentally preferable products for the projects.

Wedge 1 renovations included blast-resistant windows, removal of hazardous debris and materials, and energy efficient infrastructure design. Part of this section was destroyed on 9/11, but the blast brought new opportunities for environmentally friendly products and materials to be installed such as wood from sustainably managed forests, low-water use plumbing fixtures, low VOC paints and sealants, mineral wool insulation, energy efficient lighting, and packaging, labeling, and instructions made from recycled material.

Water conservation, energy efficiency, and use of recycled content are also concerns. The Wedges 2-5 project, for example, has diverted 50 percent of its construction waste from landfills through salvage and recycling and the LEED-certified Remote Delivery Facility, or RDF, is covered with a green roof that can be an alternative location for ceremonial activities.

Insulated windows and advanced energy control systems at the Pentagon will also cut the building’s monthly $1.1 million electric bill. The Department of Defense awarded LED manufacturer Cree a contract to supply more than 4,200 recessed LED lights for Wedge 5. Cree’s LR24-recessed LED lights would offer a 22 percent energy reduction compared with traditional fluorescent lights, reducing the Pentagon’s carbon dioxide emissions by 140 tons per year.

The Pentagon has found other more efficient ways to use energy, too. When the original coal-fired heating and refrigeration plant stopped working in the mid-1980s it cost $200,000 a month. The New Heating and Refrigeration Plant, or NHRP, first installed in 1996, is computer controlled to be 30 percent more efficient than its obsolete predecessor, uses natural gas as its main fuel source, and does not disrupt the historical architectural features of the building.

Additionally, NHRP is now one of the most advanced solar energy systems in the country with 12 advanced features that use solar energy instead of fossil fuels, including a solar thermal tile air heating roof system, photovoltaics beneath solar thermal tiles that generate electricity and heat, and rainwater recovery from the solar roof to supply the indirect evaporative cooling stages.

But these are only some of the many green Pentagon renovations-a full list of PENREN projects can be found here. When the project is complete in 2011, the Pentagon’s 25,000 military and civilian personnel will not only work in one of the biggest office buildings in the world, but one of the most energy efficient and environmentally sustainable.

Source: http://www.usgbc.org/News/USGBCInTheNewsDetails.aspx?ID=4334

LEED program expands from single buildings to big developments

Green buildings are so 2000s.

The next big thing for the 2010s? Green neighborhoods.

After five years in the hopper, the group that ushered in popular “LEED” standards to certify and foster environmentally friendly buildings is expanding, along with two partner organizations, to promote green subdivisions and mixed-use projects.

They call it LEED-ND, which stands for Leadership in Energy and Environmental Design for Neighborhood Development.

“The environmental gains are much larger when you capture them at a point when a neighborhood is planned and designed,” says Portland planner Eliot Allen, a principal at Criterion Planners who was instrumental in crafting the new rating system. “Instead of a single building at a time, you’re capturing hundreds of buildings at once.”

“I think it’s certainly going to help make greener developments,” says Eric Ridenour, an architect and urban designer with SERA Architects in Portland.

Buildings are one of the single-largest sources of greenhouse gas emissions in the United States. LEED design standards can dramatically improve energy efficiency and other building performance measures, cutting carbon emissions that cause global warming.

Created by the U.S. Green Building Council, LEED provides a voluntary system that encourages developers to shoot for higher standards. Developers who put more features into a building can gain a standard, silver, gold or platinum rating. Providing an independent certification of a building’s green features means tenants, lenders and others don’t have to rely on the claims of a developer.

The system has been so successful that the city of Portland and other jurisdictions now require LEED standards for new public buildings. Private developers seek out LEED certification because it lends a cachet to their project, helping them fill their buildings faster and charge higher rents.

From buildings to neighborhoods
After seeing the success of LEED for single buildings, the U.S. Green Building Council set out in 2004 to expand the concept to whole neighborhoods, working with the Natural Resources Defense Council and the Congress for New Urbanism. Their goal is to foster neighborhoods that have a gentler impact on the environment, that reduce carbon emissions and that meet broader social and quality-of-life goals, such as housing affordability and locating jobs near homes.

“The best ideas from across the country have been distilled into a single system,” Allen says.

Instead of just a geeky review of a building, he says, LEED-ND addresses families and their back yards. Developers can score higher in the new ratings system by preserving wetlands, enabling community gardens and farmers markets, and meeting other goals.

The three organizations, along with consultants like Allen, have been fine-tuning the new rating system, and are field-testing it by evaluating several dozen pilot projects using the new certification standards.

Portland role
Portland, a national leader in the move to green buildings, also is making outsized contributions to LEED-ND.

Portland’s vibrant walkable neighborhoods were a role model for some of the precepts of LEED-ND, says Sophie Lambert, director of the U.S. Green Building Council’s LEED for Neighborhood Development program in Washington, D.C.

Eliot Tower, an 18-story condo tower near the downtown Portland cultural district, was the first guinea pig to go through the certification process.

It’s one of five pilot projects in Portland. The others are Ladd Tower, a 23-story apartment building in the cultural district; Helensview, a 4.5-acre subdivision of 40 homes and 12 condos near Northeast Killingsworth Street and 64th Avenue; Hoyt Yards, a 34-acre complex in the Pearl District; and the Central District in South Waterfront, a 35-acre site.

Only Washington, D.C., with 10 pilot projects, has more than Portland. There’s also five pilot projects in Los Angeles.

Different from eco districts
The budding LEED-ND system was one of the inspirations for Portland’s pursuit of “eco districts,” says Rob Bennett, director of the Portland + Oregon Sustainability Institute. Eco districts, also in their infancy, are modeled after pioneering efforts in

Sweden, Vancouver, B.C., and elsewhere to redevelop worn-down sections of town with environmentally friendly transportation, energy, sewage and other features.

LEED-ND standards are more of a “how-to” set of guidelines. They could emerge as a way to set standards for an eco district and independently certify a district has met the stiff standards.

Eco districts also are seen as primarily redevelopments, Bennett says, while LEED-ND is best suited to new developments that are framed in master plans.

Allen says the LEED-ND could work in redevelopments as well, such as abandoned industrial “brownfields,” where the cost of cleaning up pollution is a barrier to reuse of the land. Getting a LEED-ND label could enable a brownfield development project to attract more financing, Allen says.

Studies have demonstrated that LEED-certified buildings attract higher rents and fill up faster, Ridenour says. Some even reduce employee absentee rates, by providing more passive sunlight that makes the buildings a more pleasant place to work.

LEED-ND organizers recently launched training sessions so a developer, architect or other professional can obtain credentials as a LEED-ND specialist. Some 400 people applied within the first couple days, Allen says.

Source: http://www.usgbc.org/News/USGBCInTheNewsDetails.aspx?ID=4336

If you thought 2009 was a year that green took over, then think again. Over the next 10 years, the green industry is predicted to experience growth in the neighborhood of 1.5 trillion dollars. Green will continue to shape the foods we eat, the products we buy, and the way we get around — and increasingly the jobs we have.

According to the Pew Charitable Trusts, by 2007, more than 68,200 businesses across the country accounted for more than 770,000 jobs in clean energy, “despite a lack of sustained government support in the past decade.” This is expected to increase with fresh help from the Obama administration. In 2008 alone, private investors directed $5.9 billion into American businesses in this sector, a 48% increase over 2007. This rate should continue to accelerate.

Here are five green careers that are not entirely new, but are now being completely reinvented. If you want to keep a competitive advantage in the workforce, one must learn how these top-growing jobs are “going green.” These fields, according the Bureau of Labor Statistics (BLS), are expected to see a growth from 6% to nearly 30%.

Mechanical Engineer
$59,000 to $94,000 median salary range, according to the BLS. Mechanical engineering will have many opportunities in the future. However, you don’t have to wait to start in green areas of this field. Nearly all energy areas, including wind and solar, need these engineers.

You will need a four-year engineering degree to start. If you have your degree, there are three great websites that can help you work green: the American Wind Energy Association, the Solar Energy Industries Association and the American Solar Energy Society.

Environmental Engineer
$56,000 to $94,000 median salary range (BLS). One of the hardest hit fields in the recent recession has been engineering, due to contractions in the auto industry and infrastructure spending. Fortunately, this profession has numerous applications in the green field.

Environmental engineers are expected to see a 30% increase in jobs over the next ten years. They will be vital in the wind and solar fields. In addition, environmental engineer technicians and civil engineers should see a 25% growth.

If you are looking for a job in this field, a great place to start is the American Academy of Environmental Engineers. You may also want to plug yourself into the Association of Energy Engineers, which offers training for engineers to become energy auditors.

Environmental Educator
$47,000 to $50,000 median salary range (BLS). The teaching field is expected to expand by almost 20% in the coming years. What’s exciting is that weaving green practices into the classroom is becoming much more commonplace. Many schools are on the forefront of using clean energy. And science teachers are in the most demand.

Beyond the basics like environmental science, many community colleges have expanded offerings in courses like solar panel installation and energy efficient building; universities have expanded environmental policy and politics offerings, often developing entirely new departments and curricula; and graduate programs are routinely offering advanced courses in a range of subjects, like corporate sustainability. There are even green MBA programs. All of these new positions need teachers to fill them.

Becoming a teacher involves a college diploma and generally a teaching certificate. If you are an out-of-work professional you may want to consider getting a teaching certificate. While the full degree may cost you around $8 to $20 thousand a year, a teaching certificate may cost around half.

In order to really save money, you might want to consider community college first. This will allow you to take general education classes at a much more affordable price. Don’t forget that there are plenty of student loans available through the federal government. A guidance counselor will be able to point you in the right direction.

Heating and Cooling Installer
$15 to $25/hour (BLS). If you are looking for a great green job and are not interested in the college route, then heating and cooling could be the field for you. It is expected to see more than 28% growth in the coming years. Being able to install an extremely efficient solar water heater can not only put more money in your pocket, it will save the customer money in the long term and help them go green. Installers are able to put some of the most cutting edge energy-saving products to use right away.

Another reason for the strong growth is the increasing emphasis on green building, supported by the United States Green Building Council and the federal and state and local governments. Heating and cooling play a big role in energy saving.

For a more specialized training, look into geothermal. One particular training provider in this area is the GeoExchange, which can help you find the programs to get started today!

Arborist
$9 to $14/hour (BLS). If you want to get a green job outdoors then this may be the career for you. There are many variations of this job. Tree trimmers, pruners, and landscapers are expected to see more than 26% growth. Green arborists help protect plants from disease and pests with less-toxic, environmentally friendly techniques. They can also work to minimize harmful runoff, protect watersheds, and shade property, which leads to less energy demands for cooling.

A good place to start learning about the career is the Arbor Day Foundation.

Finding a green job is getting easier every day. If these don’t work for you, make sure to check out nearly 100 more at Green Careers Guide.

Source: http://www.usgbc.org/News/USGBCInTheNewsDetails.aspx?ID=4299

PriceWaterHouseCoopers released its Korpacz survey today. The investors surveyed for the report anticipate that the commercial real estate sector is expected to remain in recession until 2012.

Part of the reason is an expectation that office space demand will remain lax, fueling additional weakness in rents. In major markets such as San Francisco, investors surveyed expected rents to drop by as much as 20%. In other markets, rents were expected to contract by 10%+.

You may purchase a copy of the report here.

Source: http://www.squarefeetblog.com/commercial-real-estate-blog/2009/09/15/commercial-real-estate-recession-to-keep-going/

Nationally, the total value of distressed commercial real estate in August 2009 is $114.2 billion, including properties in distress, foreclosure, and lender REO, according to data from Real Capital Analytics. This is an increase of 17%, or $16.8 billion, since our June report. This rate of growth has slowed from earlier in the year – in the first half of 2009 the total value was doubling every three months. It is our experience from working with clients that this reflects the temper of many lenders to work with borrowers in extending debt obligations, with or without credit enhancement. Retail properties continue to represent the largest segment, at $32.7 billion in August compared to $29.7 billion in June.

Delta Associates, an East-Coast provider of research and valuation services, has been publishing a report on distressed commercial real estate, and they recently published their third report last month. We’re inundated these days with news about distress and trouble, but the report is a pretty quick way of getting a quantified snapshot of whats going on. It seems most of the research is based on data from RealPoint.

I’ve embedded the report below. You can also download it here.

Source: http://www.squarefeetblog.com/commercial-real-estate-blog/2009/09/10/distressed-commercial-real-estate-report/

Businesses in Silicon Valley are looking for “magic space.”

And to that end, a new theme has emerged in Silicon Valley. Small is the new big, and commercial real estate brokers are busy leasing space less than 10,000 square feet. Silicon Valley is downsizing.

For biotech companies it is defined as 5,000 to 10,000 square feet. It’s their next move from incubator status to an ability to grow, and they aren’t the only ones.

Landlords are dividing space rather than waiting for one company to take an entire floor or building. Businesses are leasing less manufacturing space as well, and the most recent statistics bare out this trend.

Coupled with the smaller theme is the continued drop in rents for commercial space and landlords easing up on leasing terms. Smaller space, lower rents and shorter leases is the new mantra in the valley, and the stories that are found in this week’s section look at what it means.

Source: http://sanjose.bizjournals.com/sanjose/stories/2009/08/31/focus8.html

Just yesterday, architecture firm RMJM announced plans for a $1 billion, landmark green project for the Atasehir district of Istanbul, Turkey. The Varyap Meridian development is slated for a new residential and business district — and just might transform into a new financial district for Turkey. Of course, the buildings will each seek LEED certification, and if obtained, it could be the first green development of its kind in the country.

Th 372,000 square meter development will sit on a site of 107,000 square meters and includes a 60-story tower, 1,500 residential units, a five-star hotel, offices, conference facilities, parking facilities, and landscaped public areas.

As massive as the project is, it’s planned to be completed in 2011.

The buildings will have unprecedented, panoramic views while minimizing the solar heat gain. And according to Building Design + Construction, some of the following green technology will be used: “rainwater collection sites and facilities to optimize water usage and reduce energy consumption, wind turbine technology, cooling water pools that enhance the external landscape, and a co-generation plant that will produce electricity for the development.”

Image Rendering credits: RMJM.

Source: http://www.jetsongreen.com/2009/08/rmjm-green-project-planned-atasehir-istanbul.html

If you are looking for green building projects resulting directly from the American Recovery and Reinvestment Act, then the General Services Administration is the agency for you. The GSA received $5.5 billion to support its High Performance and Sustainable Buildings program. Previously, I had reported that the GSA was requiring LEED certification and preferred LEED silver certification. Turns out, those requirements have changed:

As a means of evaluating and measuring our green building achievements, all GSA new construction projects and substantial renovations must achieve Silver certification through the Leadership in Energy and Environmental Design (LEED®) Green Building Rating System of the U.S. Green Building Council. Projects are encouraged to exceed LEED® Silver and achieve LEED® Gold.

Back in April, we reported on an initial list of ARRA projects published by the GSA. Since then, very little information was available regarding these projects. Bisnow recently reported on the first GSA ARRA project award that I have seen:

[C]ongrats again to sponsor Grunley Construction for landing a renovation contract for the Mary E. Switzer Building at 330 C St., SW. Having completed Phase I in 2008, GSA put Grunley back to work using Recovery Act funding. The project includes: interior construction removal (including Hazmat); a “green roof system”; renovated elevators; and, three 2-story atriums, like the one above. Work is underway, due in July 2011. Designed by HNTB, it’s aiming LEED Silver.

The Grunley-GSA contract is just the tip of the iceberg. ENR recently reviewed tremendous progress made by the GSA in awarding ARRA projects:

After taking about six weeks just to produce its list of stimulus projects, GSA has shifted into overdrive. It has awarded contracts totaling nearly $1.1 billion for projects involving about 120 buildings. Twenty of those projects account for more than $940 million of that total.

Most of those funding commitments came in a burst of awards announced since early July, according to Anthony Costa, acting commissioner of GSA’s Public Buildings Service. “At least 20 of the 120 projects are already under construction,” he told the House Transportation and Infrastructure Committee at a July 31 hearing. “The rest will begin soon.”

Even more GSA recovery-act work is on the way. Costa says the agency plans to award another $1 billion in ARRA contracts by Dec. 31, with the goal of having 91% of the $5.5 billion under contract by Sept. 30, 2010.

Of course, it’s nearly impossible to report on stimulus projects without highlighting the fact that bids are much lower than anticipated. In the case of GSA ARRA projects, bids are coming in 10 to 15 percent below government estimates. I have serious concerns about bids coming in below government estimates, which I will discuss in more detail next week.

Links:

GSA Sustainable Design Program (GSA)
Grunley! (Bisnow)
New GSA Contracts Starting to Surge (ENR)

Source: http://www.greenbuildinglawupdate.com/2009/08/articles/codes-and-regulations/gsa-awards-over-1-billion-in-green-stimulus-projects/

If the workplace is any indication, you could almost believe corporate America really cares about the environment.

Goldman Sachs (GS, news, msgs), Hearst, IBM Corp. (IBM, news, msgs), JPMorgan Chase (JPM, news, msgs) and Toyota Motor (TM, news, msgs) all have made the move into “green” buildings.

Bank of America (BAC, news, msgs) plans to build a 52-story eco-skyscraper near New York’s Times Square, and Accenture (ACN, news, msgs) has leased green office space throughout the country.

Sustainable construction is one of the fastest-growing segments of the already-red-hot commercial-building industry. An estimated 5% of all new U.S. commercial construction received the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) certification last year. And by 2010, 10% of all new commercial construction will be sustainable, according to McGraw-Hill’s (MHP, news, msgs) 2006 Smart Market report. (The green trend in home construction is still in its infancy, although that’s bound to change.)

Existing construction is getting an eco-lift too. Developers such as Hines and the Durst Organization, and some real-estate investment trusts (REITs), are snapping up half-empty office buildings and renovating them according to green standards. That can often bring 3% higher rents and a 7.5% increase in a building’s value, according to the McGraw-Hill report.

On average, green buildings save 10% of utility costs each year — and sometimes much more. Genzyme’s (GENZ, news, msgs) corporate headquarters in Cambridge, Mass., spends 42% less on energy and uses 34% less water than a similar traditional building would. Even more important, as sustainable materials and technology improve, green construction will become more cost-effective, says Charles Lockwood, an environmental and real-estate consultant in Southern California and New York.

So how do individual investors get in on this latest real-estate boom? The easiest opportunities may lie in REITs that have made a substantial commitment to new or renovated green buildings. In a sign of just how hot this phenomenon is, however, two of the biggest, greenest REITs, Arden Realty and Equity Office Properties Trust, have been swallowed up by GE Real Estate and Blackstone Group, respectively.

But there are still promising names out there. Liberty Property Trust (LRY, news, msgs) has 21 green buildings in its portfolio of about 700 properties and says that number will rise quickly as the trust renovates more of its existing properties and takes on more new green projects. Liberty has enjoyed the nice run-up that all REITs had in the past year thanks to the strong commercial-building market. But Fauzia Rashid, a co-manager of Fred Alger Management’s Spectra Green Fund (SPEGX), expects Liberty’s green investment will help it continue to perform well even if commercial building starts to slow down.

For investors who get a bit woozy at the thought of betting solely on the vagaries of the commercial-real-estate market, a mutual fund with green-building holdings might be the safer way to go. The Spectra Green Fund, unlike many of its socially conscious counterparts, has consistently outperformed the Russell 3000 for the past three years.

The fund, which among other things invests in clean-energy stocks, is putting a small percentage of its assets in green REITs. Rashid also likes to invest in the building segment through the back door, focusing on the supply and equipment manufacturers that green builders rely on, such as Johnson Controls (JCI, news, msgs), the maker of devices that measure and monitor energy output. At about $96 a share, Johnson Controls has jumped in the neighborhood of 40% in the past year. And that’s a nice neighborhood to be in.

Source: http://articles.moneycentral.msn.com/Investing/RealEstate/GrabTheGreenRealEstateBoom.aspx?page=all