Monday , 26 September 2016
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ULI Panel: Sustainability Built Into the Future of American Real Estate

(By Bruce Nichols, Realty News Report Contributor)

HOUSTON – Real estate markets are on the cusp of a generational change as younger buyers, renters and investors demand environmental sustainability, and satisfying them will require both market responsiveness and better government policy, a panel agreed at the Urban Land Institute meeting in Houston.

“This whole generation, (sustainability) is what they talk about,” said Philip Payne, CEO of Gingko Residential, a multi-family housing developer in Charlotte, N.C. For the industry, “this is not a moral discussion. This is a business discussion.”

He was part of a panel on The Future of Energy & the Impacts on Real Estate at the 2015 ULI Spring Meeting.

Developers already are responding. Builders of office buildings, apartments and condominiums are improving energy efficiency and tapping into or investigating alternative energy sources such as solar arrays, wind turbines or even fuel cells.

Much of this can be accomplished by market-based solutions, panel members said. For example, it may soon make economic sense for skyscraper curtain walls to come infused with invisible, nano-sized solar panels to provide part of a building’s power.

Builders of apartments and condominiums are improving energy efficiency with insulation, appliances and lighting, and cities are adopting laws encouraging such measures. Energy Star ratings and LEED stickers (Leadership in Environmental and Energy Design) have selling power, panel members said.

“It’s a proxy for quality,” said panel moderator Chrissa Pagitsas, director of the multifamily green initiative for Fannie Mae.

But in many areas utilities are a barrier to installing alternative energy equipment, especially for smaller developers. Even developers as big as Hines – which recently built a “net zero” building in San Diego as a pilot project – run into problems.

“We took our model around the country and found that three-quarters of our buildings could not implement because the utilities would not allow us to spin the meter backwards,” said Gary Holtzer, global sustainability officer and a senior managing director at Hines.

He was referring to fuel cells, which cannot be turned on and off and need to sell power back to the utility to recoup some of the cost.

The question of distributed generation came up as part of both sustainability and community resilience after natural disaster or terrorist attack. Distributed generation involves buildings equipped with power supplies independent of an electric utility and able to continue operating when the grid goes down.

Michael Skelly, founder and president of Clean Line Energy, an alternative energy producer, said he agrees utilities need government encouragement to allow “green” development, but he did not agree that everyone “going off the grid” is practical.

He noted innovative entrepreneur Elon Musk had recently announced a new kind of battery that would allow homeowners to store solar or wind power for use when conditions aren’t favorable for generation, but he said they will still need the grid.

“Renewable energy is by definition low grade, so you really need big systems to gather it up and move it around,” Skelly said. “That means we’re going to need a grid under a whole variety of energy production scenarios.”

Formerly a journalist with Reuters, Bruce Nichols previously served as  Houston Bureau Chief for United Press International and the Dallas Morning News.

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