The product of a long-term commitment by owner Teachers Insurance and Annuity Association, College Retirement Equities Fund (TIAA-CREF), and a collaboration between developer United Properties, property manager NorthMarq, architect Edward Farr and various consultants, the 8200 Tower already is pre-certified as LEED Gold. That should help attract new tenants and achieve higher returns in a down time.
"It was our idea to make it a sustainable project," says Bill Katter, a vice president of United Properties, Bloomington, MN. "We packaged it and brought it to [TIAA], who asked us to go further. We found we could get to Gold [certification] without too much economic investment."
The 11-story, 275,000-square-foot building--which will open in April 2009--is part of a 1.7-million-square-foot office park that includes four towers of Class A office space. Among the tenants in the other buildings are TIAA-CREF, Microsoft, Merrill Lynch, GMAC ResCap and Morgan Stanley. Amenities include a restaurant, conference/training facilities, a fitness center, retail and walking trails nearby. While the four existing buildings are Energy-Star rated, 8200 will exceed that efficiency, per TIAA's policy.
"A large measure of what 8200 represents had its genesis in TIAA's support and direction," says Nicholas Stolatis, director of strategic initiatives, TIAA-CREF Global Real Estate. The fund has been an Energy Star partner since 2002, and was providing efficient buildings long before.
A skybridge will connect 8200 to one of the other towers. "We are very sensitive to the integrated synergy of the five buildings," Stolatis says. "In the nice weather, we want people to be able to walk outside."
It also dovetails well with TIAA-CREF's major commitment to sustainability. The fund has a goal of improving the energy efficiency of our 43-million-square-foot commercial real estate portfolio by 10% by 2010, he points out. It was named Energy Star Partner of the year in 2007. The fund's One Boston Place in Boston is the first building to earn the Leadership in Energy and Environmental Design (LEED) Gold designation from the United States Green Building Council (USGBC) for Existing Buildings: Operations & Maintenance.
"There is no one standard definition of green," Stolatis notes. "We have benchmarked 100% of our office portfolio, which includes 200 office buildings." That isn't as easy as one might think. TIAA-CREF is working with energy intensity rather than energy usage to reduce variances by region and costs of each individual utility. By averaging a 10% improvement across the portfolio, some individual buildings will be more efficient, others less. Each new TIAA-CREF building will be LEED-certified.
"There's no justification not to have LEED certification," Stolatis says. "You shouldn't do anything less than that." That the 8200 tower is pre-certified as Gold shows the company's commitment, which extends beyond preserving the environment, to doing well for its investors.
"As fiduciaries, we're extremely motivated," he explains. "If we can operate more efficiently and reduce tenants' operating expenses, they will be more motivated to rent in our buildings. That will lead to shorter vacancy times."
The green features employed at the 8200 tower range from the readily obvious to those less visible to the user, said building architect Edward Farr, principal of Eden Praire, Minnesota-based Edward Farr Architects--with a predecessor firm, Farr also was involved with design of Normandale's four existing towers.
Among the visible green features are the use of highly efficient lighting and recycled aluminum, concrete and steel. "We did maximize the daylighting by using full-height windows," Farr says. Lobby windows feature sunscreens for solar control.
Local limestone was used in the elevators and lobby. The use of deck rather than surface parking will reduce the heat island effect. A rain garden in front will help to tell the story of sustainability.
Less evident, however, are the use of low VOC products and the recycling of rainwater, collecting overflowing into underground cisterns that will irrigate the rain garden. "We'll use it during the drought, which usually occurs mid-July through August," Farr says. Water usage also is minimized by the use of automated flow devices such as toilets.
Transportation also was one of the key LEED points. The new building will have bicycle racks and lockers, and even shower facilities for bikers looking to freshen up after commuting to work. Hybrid vehicles will be given priority parking.
Throughout the design process, the team worked with LEED consultants LHB Architects of Minneapolis on the Core and Shell submissions, which allows precertification."This allowed them to advertise to tenants early on," says Nick Vreeland, an associate at LHB.
Xcel Energy retained The Weidt Group, a Minnetonka, MN-based software design and energy consultant firm to assist in DOE (Department of Energy) II analyses of the building so the developers could obtain a rebate. "This is about the most sophisticated analysis you can do," says Rick Carter, a senior VP at LHB.
Based on the current cost of energy, the DOE II analysis found that the measures put in place will save approximately $190,000 annually, for a payback between two and five years. As a result, the building received a $170,000 rebate, which reduces the payback period further. Water savings are more difficult to quantify, but Weidt estimates that the building will reduce potable water consumption by 30%, resulting in a savings of approximately 2.2 million gallons annually, Carter says.
Benfield Holdings--which is now being acquired by Aon Corp.--was the first tenant signed, and United is negotiating with another company for the remaining five and one half floors. The building has a base rent of $19.50 square foot, which is highest of all the buildings at Normandale. The office park as a whole commands a premium over comparable buildings in the metro area, Katter says. Each tenant at the 8200 building also must participate in United's program to use efficient lighting.
"Aon was completely on board," Katter says. "The LEED certification was attractive to Benfield and even more so to Aon."
Vacancy in Class A office space in the overall market rose from 11.0% in 2006 to 11.8% in 2007, according to CB Richard Ellis Twin Cities 2008 Market Outlook. "Overall suburban absorption has slowed the last few years, primarily due to the lack of large blocks of space and corporate consolidations into single-tenant projects," says the CBRE report.
As always, cost becomes a factor in pricing. While LEED and LEED Silver-certified buildings do not cost more to construct than non-LEED buildings, all say, LEED Gold adds between zero to 2% to the cost, which TIAA expects to be paid back. Houston-based CenterPoint Energy has provided a small rebate based on energy efficiency to the development, and Xcel Energy provided a free energy modeling to assess the tower's efficiency.
Energy savings are passed through to the tenant, requiring an intense cooperation between landlord and occupant after construction. "The operations of a building are where the rubber hits the road," Stolatis notes.
Property manager NorthMarq has been working with tenants at the four completed towers on a number of initiatives. Recycling is important throughout the complex, as is retrofitting the already efficient other buildings in the complex. More efficient lightbulbs were distributed in October, and NorthMarq continues to work with individual tenants on such basic practices as lowering blinds.
Restroom lights have been placed on sensors, atrium lighting has been placed on timers and daylighting is being incorporated wherever possible. "So many tenants allow their people to work at all hours," says Theresa Elveru, general manager of the complex. "We're trying to train them not to turn on every light on the floor, but just their area."
The 8200 Tower is not the only LEED Gold office building in the area. Ryan Cos.' recently completely Two MarketPointe, also has achieved LEED Gold Status. At press time, the building was almost ready for tenant fit-out after nearly 16 months in construction.
"Everything has gone according to plan," Katter says. "Obviously, we're delivering the building in a different [economic] environment. We'll have to work hard."
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