CEO Commentary on Sustainability
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Has your commitment to sustainability had to take a back seat over the past year?
WOOD Sustainable building and operations is not the latest trend, it’s a smart way of doing business that permeates our thinking for the long term. Federal Realty recently completed construction on 300 Santana Row, a Silver-level LEED certified mixed-use building in San Jose, California; we are converting restaurant grease into bio fuel at Bethesda Row in Bethesda, Maryland; and offering tenants the option to “Green Box” their space, providing more environmentally friendly materials throughout our portfolio.
WAINSHAL In our business, the slowdown has had two environmentally opposing effects. One is that we’re taking a generation of clunkers out of the sky, which is a good thing. The other is that aerospace companies have been hit so hard that the next generation of aircraft is probably five to ten years further off. There’s just not enough money to develop it.
NARAYAN We’re actually increasing our sustainability efforts, using them for cost reduction. Energy efficiency is a big cost factor for us, so so we’re taking advantage of all the utility-sponsored and other rebate programs out there.
RICHTER In the construction industry, sustainability has become a requirement. LEED buildings are so much more competitive than non-LEED buildings. We managed construction of the tallest LEED building in the U.S. If there’s a building next to it that’s not LEED-certified, it’s not going to do as well. So as long as you’re in a competitive kind of a business you have to continue to upgrade your sustainability initiatives. In the public sector it’s here to stay. In the private sector, they’ll find over the long term that non-sustainable projects are going to be more expensive to maintain and thus less competitive.
NARAYAN I would add that consumers are requesting it. Greater research has been done in our business – people are willing to pay more for a hotel that’s certified in some form in terms of the environment.
MILZCIK Even though personally I may not like government intervention in the marketplace, it opens opportunities for us. For example, Stage 3 noise requirements for aircraft occurred in 2000. A huge baby boom of aircraft developed because of that. Perfectly good airplanes had to be scrapped and replaced. A similar thing happened with diesel engine regulations just a few years ago. Every time the government forces obsolescence it offers an opportunity for us.
FRITSCH At Highwoods, we remain committed to identifying opportunities that will further our efforts of providing high-quality, energy-efficient, sustainable buildings for our customers, while offering the best investment for our shareholders. Our largest customer is the federal government, and we have built and continue to build LEED-certified buildings for them, as well as for non-government entities. Outside of the government sector, what we’ve seen in these tough times is that many businesses are putting aside their desire to relocate to a LEED-certified building. Moving is expensive and it would be difficult for any business leader to stand in front of his or her employees and say, “we eliminated the 401K match, we’re no longer covering dependent health care, and there won’t be a cost-of-living increase this year, but oh, by the way, we’re incurring the costs of moving to a new location because it’s LEED certified.”
