Value Beyond Cost Savings - Green Building Finance Consortium

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Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesD. Underwriting Service Providers1. IntroductionThe quality and capacity of service providers was identified by our sustainableperformance survey respondents as one of the key factors leading to failure orunderperformance, and also a significant opportunity for risk mitigation through retentionof qualified and experienced service providers. 85 Rapid growth of the sustainable propertymarketplace and a disproportionate level of new products, materials, systems andprocesses enhance the opportunity for service provider underperformance when dealingwith sustainable properties.2. The Sustainable Property Services MarketsThe services required to successfully complete a sustainable project will generally differfrom a conventional project in two key ways: 1) the core service providers will havecertain specialized knowledge about sustainability; and 2) the project will likely requireseveral additional specialized services. Specialized services are required on manysustainable projects because they often have systems, features and verificationrequirements that conventional buildings do not have.For the purpose of this section and the broader purposes of the Value Beyond CostSavings: How to Underwrite Sustainable Properties book, we define the service providermarkets broadly, incorporating a full range of real estate and construction/developmentservices as shown in Exhibit VI-2 below. More specialized sustainability related servicesare presented in bold, further emphasizing the importance of properly underwriting theservices team.The issues of service provider quality and capacity will vary significantly by propertytype, market, and the specific type of service. Given the rapid growth in the sustainablemarketplace, some of the specialty consulting services such as daylighting consultants,commissioning agents, and other sustainable specialists are typically the hardest to find.85 The Consortium conducted a survey of experienced sustainable consultants, developers and investors to assess thosesustainable features and processes that had the highest level of failure and underperformance. The results of this surveyand related research are presented in Chapter IV, Sections D and E, which address sustainable process and featureperformance.158
Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesReal Estate ServicesExhibit VI-2Service Provider Markets*Construction-Development Services1. Diversified national real estate service firms 1. LEED consulting2. Real estate consulting 2. Sustainability/strategy consulting3. Appraisal 3. Systems/management consulting4. Commercial property brokerage 4. Commissioning5. Tenant representative brokerage 5. Energy/other performance contracting6. Residential property brokerage 6. Energy modeling/consulting7. Commercial mortgage/equity brokerage 7. Energy audits/assessments8. Residential mortgage brokerage 8. Renewable energy consulting9. Property/asset management 9. Daylighting consulting10. Real estate law 10. Cost estimation11. Real estate tax consulting 11. Construction management/consulting12. Real estate accounting 12. IAQ analysis and consulting13. Planning 13. Urban design14. Property condition due diligence 14. Landscape design and architecture15. Environmental due diligence 15. Project architecture16. Interior design17. General contracting/building18. Specialized sub-contracting (HVAC, roofs,plumbing, electrical, etc.)19. Specialized equipment/ product installer20. Renewable energy contracting21. Engineering: general22. Engineering: electrical23. Engineering: mechanical24. Engineering: civil25. Engineering: soils/geotechnical* “New” sustainable property focused services are highlighted in bold.26. Engineering: other specialties3. Service Provider RisksService provider capacity and quality are linked. When the capacity of experienced serviceproviders is more limited, the quality of service provider options can suffer. Key failuresor underperformance due to service provider capacity and quality problems include:• Project delays that disrupt potential occupants and/or increase costs to the projectdevelopment process.• Insufficient or inadequate commissioning, leading to startup delays andadditional occupant complaints and longer-term costs.• Less experienced service providers may have more difficulty in “buying-in” tothe integrated design process and create team problems due to less sophisticatedcommunications.• Reduced willingness to implement more pioneering or sophisticatedsustainability approaches, which could result in long-term reductions in operatingperformance. What is pioneering or sophisticated to a less experienced service159
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Appendix FSustainable Property Fina
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Appendix GSustainable Property Cost
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Appendix HDiscounted Cash Flow Anal
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Property Type: CBD OfficeSquare Fee
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