Philip Blumberg Blog

California State's $2B Office Portfolio Hits Market

The California Department of General Services has placed 11 state office properties, totaling nearly 7.3 million rentable square feet, on the market. The portfolio, valued in excess of $2 billion, is being brokered by CB Richard Ellis on a sale-leaseback basis to raise funds to keep California's government going according to a GlobeSt.com article. "This sale will allow California to pay off debt, tap equity, and lock in some of the lowest rental rates seen in years," said DGS Acting Director Ron Diedrich. "The short and long-term financial gains will be real to help shore up the state budget in the years to come."

The portfolio properties are among some of California's most energy efficient and environmentally friendly, making the properties attractive to a market that is seeking sustainable green designs. The US Green Buildings Council's Leadership in Energy and Environmental Design (LEED) certification has been achieved on nearly all of the buildings. "What the real estate investment community is looking for in today's market are secure, low-risk investment opportunities -- occupied buildings with long term, credit-worthy tenants, as well as increasingly 'green' product, both of which the State's portfolio offers," said Kevin Shannon, Vice Chairman for CBRE and the lead broker on the sale leaseback assignment. "We are confident that the expansive global marketing campaign we're launching today will attract strong national and international interest in this generational acquisition opportunity."

For more news and information visit Blumberg Capital Partners.

Green Initiative Gets Boost in California with New Bills

Governor Schwarzenegger signed two new bills in California this month advancing the state's solar initiatives and incentives for homeowners and businesses. AB 920, authored by Assembly member Jared Huffman (D-Marin) and sponsored by Environment California, will require utility companies to credit property owners for any extra electricity produced by the customer’s rooftop solar power system. SB 32, introduced by Sen. Gloria Negrete McLeod (D-Chino), goes on to require these same utilities to purchase solar electricity from facilities that produce up to three megawatts and could increase installations on unused spaces such as warehouse roofs. Both of the bills will go into effect on January 1, 2010.

"Watch out. California is about to give Germany a run for the money," said Bernadette Del Chiaro, clean energy advocate with Environment California. "Every warehouse roof, every parking lot, every unused sunny space can now become a mini-power plant generating pollution free solar electricity all while making money for the property owner." Still, some worry that recent economic conditions may have temporarily crumpled a business' ability to finance new green initiatives. "Green building techniques will continue to be important to the developers that are still developing properties," Bill Di Santo, president of Schiller Park, Ill.-based Englewood Construction, told CPE. "But they need to be strategized so that they accomplish the goal of sustainability while also conforming to the budget constraints."

For more news and information visit Blumberg Capital Partners.

BOMA/Chicago unveils Plans for Nation's First Commercial Office Building Smart Grid

The Building Owners and Managers Association of Chicago (BOMA/Chicago) is seeking $92.7 Million in Federal Stimulus Funds under the American Reinvestment and Recovery Act (ARRA) to launch the first commercial office building smart grid program in the US according to a Commercial Property Executive article. The total cost of BOMA/Chicago’s  smart grid program is estimated at $185.4 million and is aimed at delivering a utility-scale, clean, virtual generator through implementation of smart grid technology in more than 260 commercial buildings in downtown Chicago, which could provide as much as 200 megawatts of demand response capability to help lower costs and avoid the need to construct expensive new generation plants.

"In the past, nearly all discussion of demand response and smart grid technology has centered on the utilities delivering grid intelligence. For the first time, our program will demonstrate that demand side resources, such as our commercial buildings, can provide operating reserves, frequency regulation and capacity in wholesale grid markets," said Michael Cornicelli, executive vice president of BOMA/Chicago. "Not only will our program help our members transform their electricity usage and spend, but the smart grid improvements will benefit all energy consumers and society as a whole by lowering energy costs and reducing carbon emissions."

The program calls for upgrading the buildings’ electric metering infrastructure with smart meters that will communicate with a BOMA/Chicago‐run Network Operating Center (NOC) in real time. The NOC will analyze electricity demand in light of grid conditions and electricity market prices, then send suggested response strategies back to the buildings for speedy implementation. Program participation will require significant building-level upgrades, including the installation of variable speed motors, digital controls, and new or upgraded building automation systems, which will enable commercial buildings to compete in markets formerly dominated by large central station generators and simultaneously reduce carbon emissions by approximately 300 million pounds annually.

For more news and information, visit Blumberg Capital Partners.

South Korea $35B Business District Unveiling

Songdo International Business District (IBD) officially opens on August 7, 2009 as a designated Free Economic Zone and the first new sustainable city in the world designed to be an international business district. Songdo IBD hopes to position South Korea as the commercial epicenter of Northeast Asia, attracting multinational and domestic corporations to this new location. The core components of the city, including Central Park, the International Preparatory School, the Convensia Convention Center Hotel, thousands of residential units and a large portion of the retail offerings, will be part of this Phase 1 unveiling according to a CPN article.

Songdo IBD is being developed on 1,500 acres of reclaimed land in South Korea along Incheon's waterfront, 40 miles from Seoul and just 7 miles from Incheon International Airport. Designed by Kohn Pedersen Fox and developed by Gale International and Korea's POSCO E&C, the 100 million square foot master plan includes commercial office space, residences, retail shops, hotels as well as civic and cultural facilities.

For more news and information, visit Blumberg Capital Partners.

New LEED Standards with Performance Monitoring

The U.S. Green Building Council (USGBC) has launched LEED v3, the latest version of the USGBC's program for green building design, construction, operations and maintenance, which will be put into effect next week. All construction projects seeking certification under the Leadership in Energy and Environmental Design, or LEED, will have to adhere to these new standards.

As part of the program's improved oversight, USGBC will collect data from building owners to monitor the property's actual performance, and to help improve future versions of LEED. Under the new guidelines, building owners are required to submit annual data reporting both energy and water usage to qualify for recertification every two years. Scot Horst, senior vice president of LEED, said it "will bring to light external issues such as occupant behavior or unanticipated building usage patterns, all key factors that influence performance."

So what cities are at the fore of LEED development? The Miami Herald took a look at the top ten green U.S. cities this week, analyzing air and water quality, waste and recycling management, percentage of LEED-certified buildings, greenspace, renewable energy sources, and access to green lifestyle choices -- here are there top ten:

1. Portland, Oregon
2. San Francisco, California
3. Boston, Massachusetts
4. Oakland, California
5. Eugene, Oregon
6. Cambridge, Massachusetts
7. Berkeley, California
8. Seattle, Washington
9. Chicago, Illinois
10. Austin, Texas

For more news and information, visit Blumberg Capital Partners.

Sears Tower Getting Green Retrofit

The Sears Tower will be getting a $350 million retrofit, bringing the world's third tallest building to new heights of energy efficiency, exceeding its current LEED standing. The strategy, designed by Chicago-based Adrian Smith + Gordon Gill Architecture, will cut the building's electric consumption by 80% and water use by 40% according to a CoStar article. "The Sears Tower energy sustainability and environmental education project presents a tremendous opportunity for inspiring building owners and the public to aspire to the highest standards of energy-efficiency," said Charles Jackson, Illinois Environmental Council executive director.

Plans for the makeover include the addition of solar panels on the 90th floor roof to heat water, wind turbines that can be maneuvered to best capture the currents blowing through Chicago, a project to replace 16,000 tinted single-lane windows with energy efficient windows to create a "thermal break", revamping elevators to conserve energy and refitting bathrooms to reduce water use. More information on the sustainability plans for the building can be read here.

For more news and information, visit Blumberg Capital Partners.

LightsOutHouston - CRE Buildings Go Smart

Just in time for Earth Week 2009, Houston, TX is marking its second year of the LightsOutHouston initiative, a commitment to become the "Energy Conservation Capital" by turning off the lights. Top property owners and their tenants, in conjunction with the Greater Houston Partnership, the City of Houston, Central Houston, Inc. and CenterPoint Energy, have joined the program to establish a sustained reduction in the use of non-essential electricity in commercial buildings.

In addition to signing sign a pledge of their commitment to energy conservation, participating buildings will "go dark" for the weekend, beginning at 10pm on Friday evening. Security lighting, any obstruction lighting, emergency lighting and lights in occupied offices will remain lit. The 2008 LightsOutHouston avoided 43,000 tons of CO2, which is equal to taking about 7,500 passenger vehicles off the road. The electricity saved is enough to power 4,600 average Texas homes for a year. If participating owners and tenants put this practice into action year-round it could mean a potential savings of $8 million in electric bills, according to a Houston Business Journal article.

For more news and information, visit Blumberg Capital Partners.

Empire State Building Makes Moves to Go Green

In the midst of a $500 million building makeover, the Empire State Building had decided to add a $20 million green project to the improvements being made in the historic skyscraper. Jones Lang LaSalle's "Empire State Building, Leadership in American Progress in Stability" initiative was conceived in a collaborative effort to create a new methodology for incorporating large-scale efficiency retrofits into existing structures, according to a CPN article.

The renovations, set to begin this summer, are expected to reduce the skyscraper’s energy use by 38 percent a year by 2013, at an annual savings of $4.4 million. "People associate greening with expense and compromise," said Anthony E. Malkin, president of Wien & Malkin, which supervises the building on behalf of the owners. "We’re trying to prove: no compromise and payback."

"The current economic environment has put constraints on spending in general, so people have to prioritize," explained Raymond Quartararo, international director and program lead for JLL. "But even in these times, people are going to look very hard at this. We're going to come out of the repressed market and people are going to be looking at what to do. Their long-term requirement will be how to build value in an asset, and this is a key part of that. Sustainability has gone from being something that is nice to have, to something that is necessary."

For more news and information, visit Blumberg Capital Partners.