Manhattan Commercial Green Building Survey with Spotlight on Green Rehabs

2007

Oct

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This week’s issue of Crain’s New York Business includes the paper’s most recent Real Estate Report, which focuses on green building projects in New York City’s commercial and residential sectors. gbNYC has previously discussed many of the new commercial projects presented in the article, titled Eco-towers on the rise, including 7 WTC and the other green Ground Zero towers, Hearst Tower, Bank of America Tower, and Goldman Sachs’ new headquarters which is under construction in Battery Park City. However, the piece includes an insightful overview of green rehabilitation projects underway in Manhattan (two of which we’ve written about before - the Mercantile Exchange and 545 Madison Avenue) that deserves specific mention.

Doug Gatlin, USGBC’s Director of LEED for Existing Buildings, tells Crain’s that “[i]t has only been over the last six months that we’ve had a ton of interest from [commercial] landlords rehabbing existing buildings . . . . This is being driven by a corporate need to act quickly and address climate change issues.” Crain’s reports that LCOR, which owns LEED Gold hopeful 545 Madison, expects to fetch between $100 to $165 per square foot (top dollar for the property’s Plaza District location at East 55th Street) when the seventeen-story tower opens next May after $47 million in renovations. Still, LCOR senior vice president David Sigman notes that “[g]reen is never going to replace location, location, location, but it gives you a marketing advantage.” Check out our previous post on 545 Madison for specific details on the property’s green design features.

Crain’s also reports on another green rehab project in Midtown which has been difficult to locate details about. Morgan Stanley is spending $147 million to renovate twenty-three story, 575,000 square foot 522 Fifth Avenue (between 43rd and 44th Streets) which it leased from Broadway Partners back in June of 2006. The company is installing a $2.5 million thermal storage system that should save it $600,000 annually on energy costs. The project will seek an unspecified LEED rating. The property itself dates from 1895 and had been occupied by J.P. Morgan since 1919.

It’s significant that Crain’s is devoting substantial attention to green building across different sectors of the city’s construction industry. As mainstream media continues to track sustainable trends with more consistency, green awareness will increase and owners will see more demand for sustainable properties. Indeed, as Crain's notes with respect to green rehabs, there are a limited number of new green office buildings coming on the market. Accordingly, owners see an opportunity to rehabilitate existing buildings- despite a perceived cost premium- thanks to the potential for higher rents and tenant retention rates, as well as the marketing advantages from demonstrating a corporate commitment to sustainability.