The total incremental cost for the sustainable retrofit of the Empire State Building, which began this year, is projected to be $13.2 million. At the retrofit’s conclusion, in 2013, the building will qualify for LEED Existing Building Gold, with an Energy Star rating of 90, putting it in the top 10 percent of buildings in the U.S.
With annual energy savings of $4.4 million per year, the payback period is three years, with 55 percent of the energy savings to be harvested by the end of 2010. Rather than one silver bullet, a multifaceted energy-savings approach is being used, which ranges from retrofitting the chiller plant to upgrading all of the building’s windows to improve the thermal resistance of the glass, which will cut the solar heat gain by more than half. Getting tenants on board is also crucial to the blueprint, said Fred Posniak, senior vice president of W&H Properties, the building’s owner. A larger number of tenants in the building will be submetered and will have access to online energy and benchmarking information.
SOMETIMES, HOWEVER, THE payback equation is not always as clear cut. The decision to go for LEED Gold on the $50 million rehab at 545 Madison Avenue, at 55th and Madison, was in part launched to make a statement of the building’s quality, said David Sigman, senior vice president of LCOR, the building’s owner.
The building, built in 1955, was retrofitted to be more energy efficient as part of a total rehab, Mr. Sigman said. Completed in the fall of 2008, it gained some LEED points for its urban location and proximity to mass transit.
Mr. Sigman said, however, that it is still too early to determine the building’s total energy efficiency, since it is only 25 percent occupied. But there is value in going for Gold, he said.
“It’s in a prime location and it’s a prime renovation,” Mr. Sigman said. “We wanted to have an outside imprimatur of quality.”
LCOR’s experience is not that unusual, according to Christopher Mills, senior vice president at Plaza Construction. New York City’s building codes are so strict that LEED certification is largely attainable, he said. “If you’re building a new, high-end condominium, achieving LEED Silver is not a stretch,” Mr. Mills said.
Costs for LEED have also come more in line in part due to the near halt in new construction projects in the city. “Five years ago, subcontractors could pick and choose the projects they worked on, and there was a ‘fear factor,’ as some subcontractors weren’t that familiar with [green building] techniques,” he said.
But, with the dearth of construction projects today, subcontractors will now fight over these jobs, Mr. Mills said.
Also, government and utility company incentives have also made going green more cost-effective. NYSERDA incentives helped pay consultant fees on the 545 Madison project, and Mr. Black of Reckson argues that because of the credit crunch, these government incentives can make a huge difference.
Green building consultant Mychele Lord, principal of Lord Green Real Estate Strategies, argues that today’s cost structure makes this an opportune time for building owners to institute energy-saving retrofits.
“You can do it slow and expensive, or you can do it fast and cheap,” Ms. Lord said. She argues, though, that any retrofit’s end result should be LEED certification or Energy Star rating attainment. “The real value is in the exit strategy,” she said. “You say you own a green building, but what does that mean? You want to have the third-party certification. You own a LEED building-well, there aren’t that many of those around.”
GREEN BUILDING EXPENSES could fall further if these projects are undertaken “more holistically,” Mr. Mills of Plaza Construction said. He notes that some office buildings are required to keep a tank of
A key part of the cost equation is whether green buildings will attract tenants who will pay a premium to rent office space there. Billy Cohen, executive vice president and principal of Newmark Knight Frank, the leasing agent for the Empire State Building, said he believes the building will attract corporations with a major focus on sustainability.
If a corporation has sustainability as an important part of its marketing message, it may “pay a little extra” for the space, Mr. Bolin of Syska Hennessy said.
But Reckson’s Jason Black believes that, ultimately, tenant buy-in should not be the deciding factor in whether to go green. “We believe this is the right thing to do,” he said.