April 9, 2014
Written by Christian Park; Edited by Kim Kuettel
What was once the shutter box of a Circuit City in Portland, OR has been redeveloped by Kaiser Permanente (KP) into a LEED© Gold healthcare facility…a symbolic transformation in the future of healthcare buildings.
The Affordable Care Act (ACA) changes healthcare in many obvious, and even contentiously argued ways. One change not touted on the nightly pundit podium is the ACA’s affect, both methodically and physically, on healthcare facility development.
The ACA expects to add 32 million Americans to the healthcare roster, many of whom have been underutilizing healthcare—if they have been using it at all. This bump in user-ship unleashes construction demand that has been pent up from the recession, creating a sudden sense of urgency for developers to get creative in meeting the infrastructure requirements to support Obamacare and our aging population.
How will the ACA change healthcare facility development?
(Re)Development growth can be seen across all types of medical spaces, from the large campus to the small single service facility, and there is a prescriptive methodology to it. According to Chris Bodnar of Healthcare Capital Markets Group, there is “more merger and acquisition activity” in healthcare in the ACA age, not only to realize economies of scale in a time of dropping reimbursement rates, but also to be strategic in mapping service locations. By teaming up, healthcare groups can distribute neighborhood services that feed a central hub or campus.
This development, shaped by real estate and construction cost, creates a healthcare real estate trend: The suburbs are primed for new construction and campus expansion, but in cities where buildable land is costly and limited, medical groups are repurposing available commercial building stock. With the rise in demand, it is often faster and more affordable to redevelop a space than to build new (source).
Cutting costs beyond recycling building stock by going green
The Circuit City-turned-hospital is a sign of the times; a healthcare facility in a growing urban metropolis that takes advantage of available commercial space. It’s also a testament to the increasing valuation healthcare groups put on green, high performance buildings.
As a design-contributor and test pilot to the LEED for Healthcare system, Kaiser has shown its confidence in the value of high performance buildings. Kaiser also adopted a plan in 2012 that all new major building projects would pursue LEED Gold, a sizable commitment to the Kaiser pipeline with $30 billion slated for new, green construction over the next 10 years.
Many might still think that pursuing LEED comes with a steep price tag. Yet according to a study conducted by design firm Perkins+Will and the Center for Maximum Potential Building Systems, pursuing LEED only adds an average of 1.24% (and .67% for healthcare facilities over 100,000 sq. ft.) to total construction costs. To the savvy CRE professional that looks beyond first costs to lifecycle costs, this slight rise in price is a drop in the bucket considering the potential for energy efficiency savings.
In a rapidly changing industry Kaiser isn’t the only group to realize the value (and return!) of high performance buildings, with energy as the main financial incentive.
Healthcare facilities can reduce net operating expenses and increase real estate value by incorporating energy efficiency into facility design and operations. For example, the Sherman Hospital in Elgin Ill. installed a geothermal energy system that saves an estimated $1 million annually on energy costs and eliminated the facility’s need for cooling towers, decreasing its water consumption by 72%. The Tiburcio Vasquez Health Center, currently under construction in San Leandro, Calif., has implemented energy efficient lighting and HVAC systems that will lower its energy bills by 77%.
Tiburcio Vasquez Health Center. Rendering: Choi + Robles Architecture, LLP
FMI, a real estate investment firm, predicts that 2014 will see $44 billion in Healthcare construction, three times the amount forecasted for lodging. With this much capital going into healthcare facilities, and Bay Area energy and natural gas rates increasing an average of 5 and 16 percent respectively per year, energy reduction strategies should be a top priority for owners and design teams.
Opportunities for healthcare facility efficiencies
A vast array of tools and approaches exist to aide healthcare facility developers achieve the value of a high performance building:
- Electrical system monitoring tools can not only control lighting, but turn off heavy-use machines when unused.
- Daylighting analysis can foster design improvements that increase natural light and reduce lighting energy usage. Daylighting also provides occupant comfort and health benefits like reduced in-patient recovery time and reduced employee sick time.
- Whole systems design thinking can take advantage of overlooked efficiency opportunities, such as installing high performance windows to reduce the demand for HVAC power.
- In existing buildings, energy audits can reveal prescriptive measures to reduce net operating expenses, such as HVAC upgrades.
- Perhaps most importantly, performing Life Cycle Cost Analysis on all of these measures can determine first cost vs. ongoing cost reductions to determine the profitability of energy efficiency measures over time.
Certifications, like LEED, can not only add value to your building and its inhabitants, but can also aid in the entitlement process and have other unexpected benefits. For example, the LEED Platinum Dell Children’s Hospital in Austin Texas, has a nurse turnover rate 10-13% below the national average, which the hospital attributes to its superior indoor environmental quality. This has a very tangible value when considering the $70,000 it can cost to train and recruit new staff.
The healthcare boom unleashed by the ACA is the perfect opportunity to synthesize healthcare and green building. After all, doesn’t it make sense that healthier indoor environments could lead to healthier people? And considering the availability of talented retrofit design and construction teams, isn’t the most sustainable building one that is already there?
Across the country there are thousands of empty boxes, waiting to be repurposed and re-visioned into the healthcare facility of the future. What better way to bring down the cost and improve the quality of healthcare than by finding efficiencies that are right in front of us.
Interested in learning more about high performance healthcare facilities? Get in touch with us!
March 11, 2014
Net Zero Energy is happening—both driven by California’s mandate that all commercial new construction must meet net zero energy standards by 2030 and also by building owners/developers and design teams that are committed to creating healthier, more desirable spaces.
In celebration of winning the AIA Architecture at Zero Award for a net zero energy multifamily design, EBS and our partners at Herman Coliver Locus (HCL) Architecture hosted a panel to discuss the specific strategies, benefits, challenges and outcomes of pursuing net zero energy in multifamily and commercial buildings. We also provided the audience with the 10 questions they can ask design teams to determine how they’ll meet high performance building / net zero energy goals.
With a room full of developers—some optimistic and interested, some perhaps a little skeptical—EBS, HCL and Carneghi-Blum & Partners, Inc. appraisal company sat down to explain how net zero energy is no longer a deep pockets initiative but a reality that should be advanced upon as to not fall behind the development curve.
Benefits: Why should developers pursue NZE?
Net zero energy (NZE)—also known as zero net energy (ZNE)—means a building that produces as much energy as it consumes. This doesn’t mean lining the roof, walls and parking lot with solar panels. It means making the building efficient enough to only need renewable energy for the remaining consumption needs. Pursuing net zero energy creates value in multiple ways, from maintaining your competitive advantage, to improving the financial value of your assets, mitigating market risk, and promoting the health and wellbeing of your company and others.
Get ahead of the game
All California new construction must meet NZE by 2030, yet according to the New Buildings Institute there are only 10 verified California NZE projects. The Golden State is known for pushing environmental standards that percolate across the country. Given the myriad benefits and increasing viability of NZE buildings, we are betting that this high performance building standard will be no different. Like any new skill, there is a learning curve to designing and developing a cost effective NZE building. Development teams that wait to gain this valuable expertise will find themselves at a competitive—and costly—disadvantage when this initiative becomes law.
Life cycle operational & maintenance savings
To development teams, NZE often translates to dollar signs. We’ll address costs later in the blog, but overall, incorporating efficiency into a project will save money over its life cycle in equipment, energy and maintenance costs. NZE is achieved by incorporating synergistic packages of passive and active designs and technologies that complement the unique location, climate and use of the building. By spending time to analyze the interaction of building systems and conducting life cycle cost analyses of efficiency upgrades, savings can be realized in equipment size, and energy costs and maintenance. As an example, strategic glazing selection could result in the reduction of HVAC equipment and lighting power density.
Developing a building is risky business. Getting through entitlements, contracting the right design/construction teams and securing tenants are all factors that weigh on developers. NZE and high performance buildings help mitigate all of these factors.
From our experience, we find that developers who clearly state that they want to contribute to the community with a higher performing building are able to develop a relationship with the jurisdiction and the community, helping expedite entitlements.
NZE buildings require a design/construction team that espouses the values necessary to achieve such high performance levels. Developers pursuing NZE should feel confident that they will be supported by a highly motivated and capable team that is willing to go the extra mile for quality. For the panel, we developed a list of 10 questions to ask your design/construction team in determining if they’re the right fit for your NZE/high performance building project. You can fill out the form below to download the PDF version.
Finally, if there’s a down market or utility costs rise, developers with an energy efficient building will find themselves with the most attractive option for tenants.
Health, culture and societal benefits
By utilizing passive resources to make buildings more efficient, such as natural daylight and ventilation, the building inherently becomes a healthier and more satisfying place to live, work or play. Supporting the net zero energy movement makes a statement about a developer’s ideals around the environment and community health. At the end of the day, it boils down to what types of buildings a developer wants to create, as well as what type of culture a developer wishes to uphold within its own organization.
Strategies for achieving NZE: Process is key
If you’ve ever heard a conversation about net zero energy, you’ve probably noticed the word “process” in almost every sentence. Cost effectively achieving NZE requires a different delivery process than traditional buildings. For example, teams must begin planning for NZE no later than the programming stage, therefore the majority of the project team must be involved early. In addition, considerations for aesthetics, cost, sustainability and market conditions are used to drive the project in a unified manner.
Effective NZE projects are a careful combination of rethinking business as usual, utilizing all free resources (natural daylight and ventilation), reducing waste, maximizing efficiency, integrating all systems, and then adding onsite or offsite renewable energy to make up for the remaining energy consumption. Business model tweaks can also help developers smoothly transition into this new way of working, including green leases, utility sub-metering, positive cash flow HOAs, green market tailoring, incentive capturing, and reduced-adversarial partnerships with jurisdictions.
The proper balance of high performance goals, equipment technology and project specific strategies is particular to each project, so it’s really the process (rather than a checklist of items) that will achieve the desired results.
Below is an image of EBS’ high performance building process. If you have questions about specific strategies that might increase the performance of your project, get in touch with us.
Cost: Achieving net zero energy without breaking the bank
As mentioned, NZE does require more upfront resources than traditional projects due to the early involvement and collaboration of the design/construction team. It is important to understand, however, that this is not a cost increase but a cost shift, as this initial soft cost will result in reduced operational costs and greater return on investment over the lifetime of a building. Money will be saved from fewer redundancies and changes during construction, as well as reduced energy and maintenance costs over the building’s lifecycle.
For the non-renewables portion of the project, we see a soft cost increase of 1-4% of total construction cost, with a potential 5-15% construction cost decrease, and a significant operations cost reduction. It’s our philosophy that sustainable buildings don’t only mean sustainable for the environment or the community, but they also should be sustainable for the owner/developer’s bottom line. If pursuing sustainability results in more financial burden than reward, then it’s not a sustainable building.
Developers can avoid losing money in the process of the learning curve by hiring teams that are experienced with NZE or high performing buildings. Designers need to understand the process, and developers need to know the right questions to ask when interviewing the team.
We’ve compiled 10 questions that you can ask your design team in determining net zero energy / high performance building viability. Fill out the below form to download our PDF flyer.
Questions about net zero energy or higher performance buildings? Get in touch with us!
February 12, 2014
(Jake Arlein with EBS contributed a wealth of expertise to this article)
The good news: It finally rained in California! The bad news: the Department of Water Resources claims California would need heavy rain and snowfall every other day from now until May to catch up to average annual precipitation totals. The California drought is still on.
With the Department also announcing to cut off the public water supply to 25 million residents, and some predicting the state to lose $5 billion dollars in farming revenues in 2014, we need sizable solutions to alleviate water shortages and avoid serious health and economic repercussions.
Buildings present significant opportunities for water conservation, as buildings use 25 percent of global water consumption. Yet while local, state and federal governments have ratcheted up building energy efficiency codes over the years, water consumption mandates have remained largely untouched since the EPA set baseline consumption standards in 1993.
Governor Jerry’s Brown’s late-to-the-game drought declaration further evidences that the government has fallen asleep at the water wheel.
(image source: Ted Rall / For The LA Times)
Despite the lack of regulatory incentive, market drivers such as LEED and progressive municipalities like San Francisco are tackling the problem by setting water standards and efficiency opportunities of their own. And why not? With national water rates rising an average of 9% per year since 2008, water conservation presents a major financial incentive.
Saving water in buildings is easy and cost effective through plumbing fixture retrofits, which we’ll dive into in a minute. Graywater (greywater) systems—recycling water from lavatory sinks and showers to be reused in non-potable applications (toilets, irrigation, cooling towers)—present another growing opportunity. But the real commercial building water efficiency opportunity lies in blackwater systems — recycling water from toilets, urinals, and kitchen sinks for reuse in non-potable applications.
The real opportunity lies in blackwater.
There. We said it.
So why not graywater? Graywater is a good first step to water reuse, and it’s an excellent opportunity for residential water efficiency where consumption from showers and sinks is high. In commercial buildings, however, toilets and urinals are the significantly larger culprits. The only way to get to net zero water in commercial buildings is with blackwater reuse. (Blackwater diagram: Aquacell)
Installing a blackwater reuse system doesn’t cost much more than a graywater system when considering the internal rate of return—especially in San Francisco where all new construction is already required to install double piping for future water reuse capabilities. (San Francisco is one of the first and only U.S. cities to pass codes for blackwater permitting and dedicated reclaimed water piping. The city is already leading the blackwater charge in its own municipal buildings.)
And because blackwater can supply 100% of toilet and urinal flushing and 60% of total non-potable building water, it reaps a much quicker payback than graywater systems (we’ve calculated a 7 year payback for a proposed commercial skyscraper blackwater system in San Francisco). Graywater systems in commercial buildings are still economically and environmentally beneficial. But if you’re already thinking about graywater, consider blackwater as a significantly stronger commercial real estate investment and water conservation impact.
Finally, for those still feeling queasy about blackwater reuse, it’s important to understand that it undergoes rigorous filtration, disinfection and biological treatment. Depending on where your water comes from or how old your plumbing is, blackwater may even be cleaner than your potable water. As extra precaution, however, San Francisco mandates that signage be posted to alert building occupants to not drink the…toilet water.
Other methods for water conservation: fixtures, catchment, eco-districts
Blackwater systems definitely take some time and planning. System maintenance for filters, pumps and treating stations are all factors that must be planned and supported for a safe, effective system. So while you consider your future blackwater system, efficient fixtures are what you can do NOW to lower water consumption. Efficient fixtures such as toilets and faucets significantly reduce usage, and therefore water bills. Saving water also saves energy, creating a two-sided utility savings measure that makes for a highly effective real estate investment.
Low-flow and dual flush toilets and pint urinals can reduce water consumption in toilets and urinals up to 40%. In California, rebates can be obtained for upgrading 3.5 gallons per flush (gpf) toilets to 1.28 gpf, which can yield a simple payback in 2-4 years.
Most kitchen sinks can be converted to high efficiency 1.5 gallon per minute (gpm) faucets by attaching a $5 aerator. (If your faucet looks like this, you can put a water efficiency aerator on it). With efficiencies gained up to 60% with aerators, you could save enough water to earn your $5 back within a day.
If you’re building a new construction project, autosensing faucets are also a great investment for water efficiency. With all of these upgrades, of course, it’s important to make sure the building’s pipes are in good order. A leaking pipe would send all these water efficiency investments straight down the drain……..
Additional opportunities for water conservation include rainwater and stormwater reuse systems, which collect water from the roofs and surrounding hardscapes of buildings and reuse the water for non-potable purposes. San Francisco mandates that all new construction reduce stormwater runoff by 25% below pre-development runoff levels—a measure that both prevents flooding and promotes water reuse.
Eco-districts are also gaining ground as a more progressive opportunity for both water and energy conservation. Eco-districts are neighborhood scale public-private partnerships that have a central water and power plant to share water and energy more efficiently within a smaller community. Eco-districts merit their own blog post (and we’ll work on that), but should be understood for their growing popularity and impact on the environment as well as the community.
How will YOU alleviate the water shortage?
What’s most important while considering how to respond to the drought is to be open to solutions. After all, Singapore has already taken the plunge by converting sewage blackwater to potable drinking water for years. It’s not out of the question that California and other drought-prone U.S. states could come to that.
Interested in learning more about how you can save water and money in your commercial building? Get in touch with us!
January 28, 2014
Today, Obayashi and Webcor announced that Obayashi’s Technical Research Institute Techno Station in Tokyo, Japan, received the third highest LEED EBOM platinum rating out of 6,199 projects worldwide.
Webcor Builders, an Obayashi Group subsidiary, managed the LEED EBOM certification process, contracting EBS to assist with the credit requirements and documentation. The companies used iLiv Technologies’ All-In cloud-based collaboration tool to collect and share data, maintain communication, and track project tasks over the course of the certification process.
Beyond the incredible LEED achievement, what makes this project so unique is that the nature of the TRI Techno Station is to research and develop cutting edge sustainable building designs and technologies. These technologies are tested on the Techno Station to determine their effectiveness and viability for implementation in Obayashi’s global construction projects. As one of the largest construction firms in the world, the designs and technologies refined in the Techno Station have the potential to significantly affect global building energy usage.
There are dozens of technology firsts within the building that help the Techno Station reduce its carbon emissions by 55% lower than the baseline of similar buildings, and achieve an ENERGY STAR rating of 93—meaning it’s more efficient than 93% of buildings worldwide. Our engineers were blown away by the innovative techniques and systems used in the building, and getting that excited about an energy audit isn’t something you see very often (traveling to Japan to conduct the energy audit didn’t hurt either)!
See our project page for more sustainability achievements and technology features, and see the full press release for more information about the LEED EBOM certification news.
You can also see our previous blog post about some interesting sustainability nuances in Japan, and how the country as a whole provides a solid foundation for pushing the limits of sustainability.
Photo Credit: Kudo
Questions? Comments? Please get in touch with us!