The Economics of Eco-Friendly Land Development

Is a “green” property developer an oxymoron? Not in the case of Jonathan F. P. Rose. As president of Jonathan Rose Companies LLC, a network of land-use planning and development firms, Rose designs and executes socially conscious real estate projects that promote community-based development and Smart Growth. A firm believer in environmental responsibility, Rose insists sustainable elements imbue every aspect of a development, from the choice of site and building systems to the use of recycled materials and local suppliers.

Rose’s efforts have not gone unnoticed. In 1999, the AIA named his Denver Dry Goods Building one of the U.S.’s 10 most environmentally responsible developments; in 2001, he received the Northeast Sustainable Energy Association’s Green Building Award for the Burnham Building in Irvington, New York. Rose’s current project, the Highlands’ Garden Village in Denver, is no less exemplary: Built on the site of an abandoned amusement park, the Village is a transit-linked, mixed-income development that balances open space with housing, office, and retail buildings.

On the occasion of Green Cross International’s 10th Anniversary awards in New York, where Rose was being honored as a green building pioneer, editor Julie Taraska spoke with him about the economics and practical realities of eco-friendly property development.

Julie Taraska: In today’s market, does incorporating green features increase the monetary value of a property?
Jonathan Rose: There are many different ways to answer this question. In a single-family home, I believe that it does. There are no proven facts, but we have found that when we build green homes, they sell much quicker than the rest of the market, and they sell for higher prices.

Problem is, we include in [our calculation] not only the environmental qualities of the building, but also being in the right location, having gardens all around—the whole feeling of a place. So we’re selling both community and green. You can’t disaggregate them, but I think they go together anyway.

As for whether people will pay higher rents to be in green office buildings: If you demonstrate to them that their operating costs will be lower, yes, they will pay more. People say that other than [operating costs], you can’t prove [any extra benefits], but in fact a green building typical has better light, fresher air, and a better feeling.

When you are selling to clients, is it essentially still a bottom-line cost?
For some people it’s cost, for others, it’s value. In fact all of our work—and we’re doing about $600 million in work, both for ourselves and others—is green work. The cost difference, by the way, between building a green and not-green building is minor: the [former] is not much more expensive.

Has the U.S. Green Building Council’s LEED [Leadership in Energy and Environmental Design] system helped encourage developers to build green?
What’s interesting about LEED is that it had tremendous momentum when it started. I’m beginning to see frustration about LEED. I’m started to see people using LEED scoring to set objectives, but in many cases, the point system does not align with the needs of a building. It is my sense that it had better become more responsive and flexible soon, or you will see alternative systems emerging.

I’ll give you an example. In many cases, 60% of the energy used by a building systemically is by the people getting to the building. So putting buildings in downtowns like New York City, walkable downtown locations, next to places like Grand Central, are hugely more beneficial than adding a little extra insulation. But LEED doesn’t value it that way.

How did you get involved in green building?
Even as a child, I was very interested in the environment and in building community, so I’ve been trying to do green buildings for many, many years, and in part, having to wait for materials, design, and regulations to catch up.

For example, many years ago I master-planned a project in Brooklyn called the Atlantic Center. We had recycling built in, passive solar, and we actually reduced the number of parking spaces, not increased them. There was no infrastructure—not even intellectual infrastructure—to do these things at that time.

Are there certain geographic areas in the country that seem more amenable to green and environmental developments?
Clearly, you see things on the major cities on the coasts, and in places like Denver and Boulder, Colorado, in Texas, and in Madison, Wisconsin—all of which have been very responsive.

But right now we’re building a very green office building in Little Rock, Arkansas. Already we’ve seen it beginning to influence the way buildings are being constructed and designed in Little Rock and [our structure] is not even finished—built—yet.

There are so many people of good will who want to do better for the environment. They just need a model, and the more models there are [of green building], the more the concept will spread.

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