Building Certifications Add New Dimension
to Property Values


There are a lot of certifications or distinctions that building owners are ascribing to these days, such as LEED, Wired Certification, Walk Score and BOMA. As the demand for sustainable, high-tech and overall better quality buildings increase, these certifications are proving to be more than just a marketing strategy. Many industry execs believe they can add real value to a building’s bottom line.

Building Certifications Add New Dimension<BR>to Property Values LEED LOGO

Leadership in Energy and Environmental Design (LEED)
LEED is perhaps one of the most—if not the most—recognizable green certification program. It was launched to encourage sustainable construction designs that is not only beneficial to the environment, but also the landlord. According to USGC, green elements and practices can increase a property’s value by approximately 4 percent. Also, the ROI is estimated at just seven years. Interesting fact:  between 2015 and 2018, LEED-certified buildings are estimated to save $1.2 billion in energy, $149.5 million in water, $715.2 million in maintenance, and $54.2 million in waste.

KBS has several LEED properties in its portfolio, including 171 17th Street in Atlanta. It is known for being the first LEED Silver Core & Shell-certified building to be constructed in the world, and in 2017, was awarded LEED Platinum certification—the highest designation. Onsite green amenities include EV car charging stations and bike storage.

It’s difficult not to place LEED at the top of the list. However, while the LEED program has an assumed impact on the bottom line, many landlords are already taking (or have taken) important steps toward making their properties more sustainable. Going green is not so much an exception anymore, but a rule. Of course, the level of sustainability is what sets properties apart.

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Wired Certification

Internet is the livelihood of the business world, and the commercial real estate industry is well-versed on the importance of connectivity and digital infrastructure to tenants. It is a major motivator for tenants looking for space (including cost and location).  For this reason, I nominate Wired Certification as one of the most valuable designations.

Wired Certification is the international standard for cutting-edge internet connectivity in office buildings.  According to WiredScore, more than 1,800 properties worldwide are registered for the Wired Certification program. KBS has partnered with WiredScore and has committed to Wired Certification in various markets, including Chicago, San Francisco, San Jose, Philadelphia, Northern New Jersey, Fairfax, Dallas, and metro Washington DC. In 2016, KBS led the charge with 11 of its buildings becoming the first-ever Wired Certified buildings in the Dallas market. KBS currently has 33 Wired Certified buildings in the U.S., showcasing the company’s continued dedication to providing the high-tech capabilities their tenants require.

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Walk Score
The expression “live, work, play” has become synonymous with the industry. People want to live in walkable communities proximate to their jobs, homes and the things they enjoy doing.

Walk Score measures the walkability of a property on a scale between 0 and 100, based on three key metrics. The greater the score, the more pedestrian-friendly the property and the more connected it is to that “live, work, play” lifestyle. According to Walk Score, a 10-point increase in Walk Score can increase office property values by up to 9%, depending on property type.

The simplicity and ease-of-use of this distinction makes it a powerful tool for property owners and prospective tenants. Users simply visit www.walkscore.com or www.redfin.com/how-walk-score-works and enter a property address. Results will yield scores: Walk Score, Transit Score and Bike Score.

KBS’ portfolio is dense with properties boasting high Walk/Transit/Bike scores. For example, its 201 Spear Street office tower is proximate to everything downtown San Francisco has to offer. Its Walk Score is 97 (Walker’s Paradise), Transit Score is 100 (Rider’s Paradise) and Bike Score is 86 (Very Bikeable).  In Portland, its Meier & Frank Building touts a 99 Walk Score, 98 Transit Score and 95 Bike Score. The building’s superior location within the epicenter of Portland’s Public Transit System and downtown Portland’s makes this property highly desirable.

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BOMA’s Outstanding Building of the Year (TOBY)

The TOBY award is another prestigious awards program in the commercial real estate industry, recognizing quality in building construction and management in various categories. All facets of a building’s operations are thoroughly evaluated, including site management, community involvement and environmental policies and procedures.

In 2018, KBS’ 500 West Madison building in Chicago won the TOBY award in the “Over 1,000,000 Square Feet” category. 500 West Madison is a 42-story tower comprised of 1.5 million square feet of mixed-use space. It is also LEED Gold-certified.

The bottom line is, these certifications are a great addition to a building’s brag sheet. The commercial real estate space has experienced so much growth in recent years and tenant demands are becoming increasingly more focused, that these certifications can allow landlords to distinguish their buildings, and in certain cases, even pump up their operational revenue. As the saying goes: It doesn’t hurt.

 

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Brent Carroll is a senior vice president for KBS and co-director of KBS Asset Management.  Brent oversees over 2.5 million square feet of office space in the San Francisco Bay area, Silicon Valley and Sacramento.