Low Green Certification Numbers Hint At Half-Hearted Sustainability Efforts

NYC's office market is the biggest in the country by a significant margin. But, when it comes to ensuring office buildings are environmentally friendly, the Big Apple's decidedly average.

Only 41 NYC buildings are LEED Certified or in the process of being certified, according to a report by TheSquareFoot, out of more than 4,000 buildings evaluated. 

Compare that to New York's main competition in the US—DC has 108 LEED-certified properties, Chicago has 48, San Francisco has 45 and Seattle has 68. Do NYC developers just not care as much about sustainability?

Not exactly, HAKS SVP Paul Hoffmann says. Considering all of the energy codes and required inspections, the city and the Department of Buildings are going the extra mile in making the city green, especially considering the damage increased flooding and climate change could cause. But the extra mile required for LEED Certification comes down to simple cost-benefit analysis. 

“Developers have to ask themselves ‘does this certification really attract that many people to make it worth the time and effort?” Paul says.

Empire State Realty Trust CEO Tony Malkin (right, with Hogan Lovells partner Mark Eagan) certainly doesn’t think so, dismissing the certification in his characteristically blunt fashion, saying it was just a plaque given for having a lobby waterfall or bike rack. 

His own system, Tenant Star, was not only used to make the Empire State Building more efficient, but was even made into law with the Energy Efficiency Improvement Act. It’s now part of the Energy Star program, which Tony says tenants “care way more about” and “makes a much better case that your building is healthier.“

NYC still doesn’t compare to DC in this program (303 buildings compared to DC’s 686), but it better shows how developers are going green, which, Tony says, is required for landlords to keep their competitive edge.

Still, TheSquareFoot analyzed more than 4,000 properties. If 303 of those buildings are Energy Star-certified, that still means fewer than 7% of all office buildings in NYC have Energy Star or LEED certifications. Considering 7% of all NYC office stock is new since 2000, that's an unimpressive number.

Rudin Management VP John Gilbert describes the LEED certification as more of a “measuring stick” that only considers the building's core, which he says most developers are already developing to the highest of LEED standards. What’s more important, he says, is how the buildings are being operated. 

Rudin uses a system called NANTUM, which helps landlords monitor and learn from a building’s energy consumption, and creates predictive pathways of office traffic. Engineers, John says, can use this data to control the speed of HVAC fans at different times of the day. 

“We’ve been able to save 50 cents per SF across our portfolio and one megawatt a day at 345 Park Ave (pictured) using NANTUM,” he says. “LEED does nothing to measure how much you’re doing to save energy.”

TheSquareFoot CEO Jonathan Wasserstrum (pictured, left, with his brother Eric) says this is half-true. The LEED program does have certification for operation, but this wasn’t factored into his firm’s report.

TheSquareFoot chose only to look at Core and Shell LEED certifications, as the company felt it was the best representation of the city’s sustainability. If the other certifications were counted, you could have multiple offices within a building that are certified while the building as a whole isn’t.

Having worked in both DC and NYC, Jonathan says he wasn’t particularly surprised by the report's results. The gap, he says, is twofold: not only does NYC have older office stock, but DC had a building boom at the height of LEED’s popularity.

Jonathan says he really doesn’t have a “dog in the fight” in which certification to strive for, but praises Tony’s work on the Empire State Building.

“Not only was it one of the earlier retrofits, but it was an iconic property," he says, "something that would be perfect to be the green initiative’s flag bearer."

Regardless of the certification, Jonathan says going green is vital, not just to help Mother Nature. Pointing to L&L Holding Co’s 114 Fifth Ave (pictured)—which was retrofitted and has attracted Millennial media standouts Gawker and Mashable—Jonathan says sustainability is “clearly something tenants want and are willing to pay extra for.”

And with socially conscious Millennials playing a bigger role in real estate decisions, he adds, green buildings will be at the top of the list during their search.

“It’s also just in their best interests as a whole,” he says. “A polluted city isn’t good for business.”