It may not be enough to be LEED certified these days.
Other building standards, like WELL certification, seem to be on the rise. WELL monitors building conditions like air, water and light quality, as well as access to exercise opportunities and healthy foods. During a panel discussion held by New York University’s Schack Institute of Real Estate, industry leaders talked about how tenants are increasingly looking for these and other certifications when deciding where to lease.
“WELL as a building standard takes the focus that LEED has, which is on building design, construction and operations, and puts it into the context of the human experience,” said Dana Robbins Schneider, managing director and head of JLL’s energy and sustainability projects group in the northeast. “So, [it’s] much more of a yoga, crunchy-granola, millennial-driven view on things.”
JLL said in September that it’s pursuing WELL certification at its New York office at 28 Liberty Street. Joyce Mihalik, vice president of integrated design services at Forest Realty Trust, noted that the REIT is also likely certifying a property in Washington D.C. However, she said, fees for the program are currently “outrageous.” She said the certification can currently cost in the hundreds of thousands of dollars, depending on the size of the building.
The panelists said LEED — a program started in 1994 that rates buildings based on energy efficiency — is still relevant.
“You’ll still occasionally come across a developer who will say, ‘why do I need that plaque on the wall?'” Mihalik said. “For us, it’s not just a plaque.”
The interests of tenants and investors tend to guide what certifications and monitoring systems gain traction. Daniel Egan, vice president of sustainability and utilities at Vornado Realty Trust, recounted that one of the company’s biggest tenants, a law firm, delivered an ultimatum a few years ago: Either secure LEED certification or the company wouldn’t renew its lease at one of Vornado’s properties. Now, Vornado owns and manages 30 million square feet of LEED-certified space.
“If your a large real estate company, and this is one of your largest tenants asking for this, you really only need to hear that once. You don’t want to hear it again,” he said.