Page 179 - The Green Building Bottom Line The Real Cost of Sustainable Building

158 CHAPTER 5

LEED building for equivalent costs to conventional construction. Having said that,
Abercorn Common was one of those early LEED projects that did cost more. We feel
it is important to be open and transparent about that premium cost, even thought we
also feel that such a premium is largely—though not entirely—irrelevant today. Let’s
first address the issues that are still relevant.
One of the main premium expenses for developing Abercorn Common as a LEED
project was overcoming the learning curve associated with approaching a project dif-
ferently. Much of that additional expense we associate with time: the time it took for
us to become conversant with the LEED program, the time it took for us to determine
which materials and technologies to use, the time it took for us to educate tenant-rep
brokers and potential tenants about the nature of the project, the time it took for us to
draft and negotiate leases that called for build-out specifications different from those
typically called for in our tenants’prototype designs. How much time? It’s hard to esti-
mate the delays directly associated with the LEED program, since we lack a counter-
part with which to compare it. Our best-guess, conservative estimate is that the overall
time it took to become conversant with the LEED program was around six months and
probably led to delayed rents of approximately $400,000. Rather than attribute that
cost to Abercorn Common specifically, we believe this expense item is one that should
be considered a cost to the company as a whole, as the cost of our general effort to
attain expertise in green development. As such, that particular cost has been addressed
in Chapter 4 as part of our overall learning curve
Another significant cost premium associated with Abercorn Common concerned the
additional fees paid for design and engineering. None of the professionals on our team
had experience doing a LEED project, and so our architect, landscape architect, and
civil and structural engineers all charged their standard fees plus an add-on for ad-
dressing the unknowns of this project. These soft fees alone amounted to approxi-
mately $300,000, or 2 percent of the overall construction budget for the in-line
shopping center. It is telling that our professional fees for McDonald’s and Shops 600
fell dramatically, as our designers and engineers felt comfortable with delivering a
LEED product within their normal fee-based schedule. All told, the soft-cost premium
for Abercorn Common was about $340,000.
Finally, there was the premium we paid for materials and technologies, totaling
about $650,000 for all three projects at Abercorn Common. Of this sum, roughly one-
third was devoted to a more thermally efficient building envelope, one-third to reflec-
tive roofing surfaces, and one-third to pervious paving materials. Overall, we calculate
expenditures of approximately $1 million for all LEED items, resulting in an overall
premium of 4.6 percent. An overview of the hard and soft costs for all three projects
at Abercorn Common can be seen in Table 5.4.
It’s worth noting that any company that develops to green standards will face some
type of premium as a result of learning the ropes—expressed either in terms of addi-
tional time and expense of developing this expertise in-house or the cost of hiring an
outside consultant. The good news is that this premium is significantly less than what
we experienced, since the marketplace in general is more familiar and comfortable
with the LEED program than it was in the early 2000s. The premiums associated with