Dr. Kurt Becker, associate provost for research and technology initiatives, professor of applied physics, Polytecnic Institute of New York University, noted that it was important to know which kind of innovation was being implemented: Disruptive, which has a high resistance through cost or behavioral changes or if it was an incremental change. These were mitigating factors in some innovations not taking hold within a project and ultimately holding back the larger movement of sustainable building.

Data collection was touched upon by a number of the speakers, as they stressed the importance of not only gathering the correct data, but analyzing it in ways which were helpful for builders and investors. Like anything else in this industry, cost was the driving factor in getting projects up and running, adding innovative technologies and getting investment capital.

As it stands now, there is not as much concrete incentive out there to get investors interested, even if a developer commits to some form of sustainability. Dr. Franz Fuerst, associate professor or Real Estate Economics, Universty of Reading, UK explained in the “Financing the Smart City” panel that there is a “triple market failure” right now. Polluters do not have to pay for the clean up of pollution, so there is no incentive for them to stop. Likewise, early adapters of innovation take all the risk, monetarily as well as experimentally, benefiting their competitors and later adapters. There is no advantage for being “first,” he expains. And particularly with multifamily units, he notes that there is a split incentive for optimizes these properties, where the rental market owner does not reap the benefits for lowering his/her tenants’ electricity bills. He also points out that the “invisibility of the product” is not helpful in trying to sell sustainability’s benefits.

Dr. Ingo Holz, partner, BEOS GMBH, concurred noting that even successful greening of buildings often lowers cap, but doesn’t raise the net rent; leaving investors with little incentive to give the go-ahead.Wendy Rowden, managing director, investments Jonathan Rose Cos., agrees, but noted that within her company’s portfolio, despite the lack of rental rise, renters when given a choice “always pick green” buildings over the non-sustainable properties outpacing their counterparts by an average of 10% higher occupancy rates.

Sam Marks, vice president, Deutsche Bank Americans Foundation, thinks a good solution is some of the governmental public-private partnerships and agencies, which allow a “one-stop shop” for all the forms, requirements, monetary approvals and backstops that are often complicated roadblocks to many retrofits or developments. FRICS executive director, Green Building Finance Consortium, Scott Muldavin felt that the industry needed a fundamental change with its lending practices. He explained that there was too much segregation between construction and permanent lenders. “I don’t believe in green financing,” he proclaimed. It should be able to be done with a hybrid model under regular lending functions, without breaking it into a special category. Bowden noted the current dilemma with funding and data collection alike, “Nobody will give you money on future savings.”

Officially, the two panels mentioned in this article were: “Smart building and Design”: Cliff Majersik, executive director, Insttute for Market Transformation; Becker; Fox, Dr. Young Lee, senior research, IBM; Tom Paino, director of sustainability, New York City Department of Design and Construction; Pyke. “Financing the Smart City”: Dr. Constantine Kontokosta, clinical assistant professor, director, Center for the Sustainable Built Environment, NYU Schack Instiitute of Real Estate; Fuerst, Holz, Marks, Muldavin and Rowden.