O'Brien & Company has had the privilege of working with Vulcan Real Estate (for nearly a decade on LEED building projects in the South Lake Union District, as well as providing organizational support of various kinds.) Lori Mason Curran, Real Estate Investment Strategy Director and Brandon Morgan, Real Estate Development Manager, talked by phone with me recently to discuss the development company's leadership role in the region and how they got to where they are today.
EDITOR: Would you characterize Vulcan's leadership trajectory as cautious at first, gaining traction with each success? Brandon: Actually no. In some ways, the opposite is true. We started out of the gate in 2001 with a commitment to sustainability, way before we had any empirical data, and way before green building had taken hold in commercial real estate. In a way we were acting on faith that it was the right thing to do not only environmentally but financially. Now that we have that data, and the market has shifted to embrace green building, what we are doing seems less risky. The challenge these days is reaching further and further, and trying to achieve higher building performance and remain innovative in our approach. Lori: I would agree. From the beginning we embraced the concept of the triple bottom line; but now we have actual performance we can point to, both in terms of environmental benefit and return on investment.
So the triple bottom line was an underlying development strategy for Vulcan from the beginning? Lori: Always. I think it’s important to know that Vulcan’s real estate division was charged with making money to support our company’s other initiatives and philanthropies — so we couldn't just accept a lower return on investment than made sense. Our real estate investments had to be financially feasible, good for the community, and good for the environment. There were times when we chose to invest more upfront to get that return.
How much more? Brandon: Recent studies have shown that a building with enough sustainable features to achieve LEED Certified or LEED Silver does not have an appreciable up-front cost premium at all. Based on our own building experience, we concur with those findings. To achieve LEED Gold, it only requires about a 3% cost premium. The key, however, is to decide on what you are going to commit to include in your project, early in project design. Changing it just before or during construction is almost always going to result in a cost premium.
So are you wedded to the LEED standard? Lori: Well we have used the standard for most of our buildings. LEED is now widely recognized in the market. It's in the vocabulary of developers, lenders, and now, even our tenants. So it's a great tool. In a few cases, where we didn't certify, we still felt it was important to incorporate sustainable features in the project — and we were able to do so.
How are your LEED buildings performing? We're very happy with our buildings. We're especially proud of the office building at Alley 24. Out of a possible score of 100 using the Energy Star Portfolio Manager (ESPM) it scores a 98. It actually met the Architecture 2030 Challenge in 2008 — which is interesting because 2030 wasn't even on the horizon when we were planning that project. Which tells you something about how we've approached our development. We've really been blazing trails with each project. For example, Seattle Biomedical was the first LEED Core & Shell pilot project to receive certification in the country, the first LEED Certified laboratory building in Seattle, and the first LEED Certified speculative building in the state. Our Alcyone project was the first market-rate multi-family project to be LEED Certified in Washington. Our Rosetta Building was the first LEED EB 2.0 certification in Washington, and the first bio-tech project in the state to achieve LEED EB certification.
And I understand that more recently you've been mining LEED Gold? Lori, laughing: Yes, we're saying Gold is the new Silver! Our Westlake Terry and 2201 Westlake projects both achieved LEED Gold, the first Gold projects in Seattle in their project types (private new construction for the first and multi-unit construction for the second). We are also aiming for Gold on seven of the 11 buildings we're developing for Amazon.
Besides making that strong early commitment to sustainability, what else do you think contributed to this success? Brandon: A very important contributor has been having the right people on board. We have great leadership in Ada Healey, and project staff who "drank the Kool-Aid” of sustainability long ago. So we're all on the same page as far as the mission is concerned. And then it's been important to get everyone educated and experienced in sustainable principles. We don't think it works well to have a single "green guy" in which all the knowledge resides, but rather to have a team with a broad base of knowledge in a collaborative environment. Most of our development managers are trained either through direct project experience or with LEED accreditation. So we have a very strong, knowledgeable and committed team. We also continue to bring in outside consultants for special knowledge and to help us think outside of the box – which is really important to us.
It's great that in-house education is something Vulcan is willing to invest in. But I'm especially impressed that Vulcan has always been willing to help educate the larger industry. Brandon: It's something we're proud of. We started doing this right from the beginning, with the Seattle Biomedical project. With that project we submitted the actual numbers for the cost of LEED features as part of our submittal for LEED certification (and earned an innovation credit for doing so). Around the same time, we also sponsored development of the Resource Guide for Sustainable Development in an Urban Development , a case study based on our South Lake Union properties and prepared by the Urban Environmental Institute. We continue to participate in educational forums, publish articles, and unique projects that demonstrate key features of sustainability, such as the Swale on Yale where we are collaborating with Seattle Public Utilities. Lori's is working with the Appraisal Institute to put together an accreditation course on green valuation.
With all this leadership, Vulcan now has earned a great deal of "cred" in the field of sustainable real estate development. How do you plan on capitalizing on that as you go forward? Brandon: By doing what we've been doing all along, because it works. We will continue to invest in building sustainable "firsts" that make sense. Right now we're looking at participating in the LEED for Homes Pilot for mid-rise (multi-family) program on our next residential project. We will continue to invest in education — internally and for the larger community. And we will continue to participate in forward-thinking discussions of ideas that will contribute to sustainable solutions. Currently we are participating with like-minded developers, managers, designers, consultants, and city officials in a think tank focused on outlining a voluntary program for high energy efficiency in the Seattle urban core for new and existing buildings. The goal would be high energy efficiency at the district or neighborhood level.
So your opinion is being sought out? Yes, and we are grateful for that. It gives us the opportunity to share what we we've learned, and to continue learning ourselves.
Vulcan Real Estate manages a diverse development portfolio including nearly 60 acres in Seattle's South Lake Union district. This interview was conducted by Kathleen O'Brien, President of O'Brien & Company, a nationally recognized sustainable building consultancy,and Editor of Building Capacity Blog. Photo of Alley 24 by Lara Swimmer Photography.
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