The Surge in Green Building
The green building sector is a huge and growing industry which is expected to contribute 3.3 million jobs and $303.5B to GDP in the United States by 2018 . This focus on resource efficient design, often noted by LEED certification, is not only beneficial to the environment, but is also a large cost-saving opportunity for real estate operators. LEED-certified buildings have almost 20 percent lower annual maintenance costs than traditional commercial properties . These cost-savings, as well as the investor and end-consumer appeal of energy efficient properties, have enabled real estate firms such as Related to embrace green building.
Related Companies: Embracing Sustainability from Corporate to Property-level
Related Companies is a New York City-based diversified real estate company with an existing portfolio of over $30B in real estate assets . The company has implemented sustainability not only in its development projects, but also in its corporate office and property operations. On the development side, Related pursues a minimum of LEED Silver certification for all its eligible developments. Currently, this totals twenty-seven completed developments, and an additional sixteen planned developments . Additionally, Related makes environmentally conscious decisions in many aspects of their corporate office. These decisions include choosing a hybrid car service, stocking recyclable pantry items, and relying on electronic payroll processes . Lastly, Related has enhanced its properties’ recycling capabilities and exclusively offers eco-conscious dry-cleaning and house-keeping services .
Hudson Yards: A Model for Sustainable Urban Development
Hudson Yards, the largest private real estate development in United States history, is currently under development in New York City by Related. When the project is completed in 2025, it will include over 100 shops and restaurants, 4,000 residences, a public school, a luxury hotel, as well as commercial office space for companies like Coach, KKR, and Wells Fargo Securities . The first tower to open as part of Hudson Yards is a LEED platinum-designed tower, the highest level of LEED certification. The entire project goes above and beyond traditional green building by incorporating organic waste conversion facilities, storm water collection, and an advanced technology platform that can reduce energy use through efficiently directing services like electricity and air conditioning . Hudson Yards’ onsite power plants are projected to save 24,000 MT of CO2 emissions, the equivalent of over 2,000 homes or over 5,000 cars .
Looking to the Future: The Potential for Green Retrofitting
While Related has made significant progress in incorporating green building into new developments, opportunity remains in retrofitting existing properties to green standards. These upgrades include reducing water usage, improving the air and light quality of the property, and increasing energy performance.
Benefits of green retrofitting include:
- A reduction of operating costs by 9% over one year, and 13% over two years 
- A payback period of seven years 
- An increase in property return on investment of just under 20% 
Currently, Related has about 135 portfolio properties  that are not specifically mentioned on their company website as LEED certified, and may therefore present an opportunity for green retrofitting. Assuming Related is planning on holding existing properties for over the seven-year payback period, retrofitting could represent significant cost savings.
Additionally, by incorporating green retrofitting into its strategy, Related will be well positioned in its primary city target markets, which increasingly focus on retrofitting as a way to reduce energy usage. In New York City, Related’s largest market, Mayor de Blasio released the ten-year plan One City: Built to Last in 2014. This plan seeks to reduce the city’s contribution to climate change by 80 percent of 2005 levels by 2050 though retrofitting public and private buildings .
As a leader in green development, Related is already taking advantage of the focus on energy reduction due to climate change. However, it is now time for the company to further embrace the green development opportunity by adding green retrofitting to their strategy.
1 Ryan Boysen, “Hudson Yards’ Smart City Initiatives Could Provide Glimpse of NYC’s Future,” Bisnow, February 22, 2016, https://www.bisnow.com/new-york/news/commercial-real-estate/hudson-yards-smart-city-initiatives-could-provide-glimpse-of-nycs-future-56252, accessed November 2016.
2 “New Study Finds Green Construction is Major U.S. Economic Driver,” USGBC, September 16, 2015, http://www.usgbc.org/articles/new-study-finds-green-construction-major-us-economic-driver, accessed November 2016.
3 “Benefits of Green Building,” USGBC, April 1, 2016, http://www.usgbc.org/articles/green-building-facts, accessed November 2016.
4 Related Companies, “Corporate Info,” http://www.related.com/our-company/CorporateInfo.aspx, accessed November 2016.
5 Related Companies, “Development and LEED,” http://www.related.com/our-company/businesses/23/Development-LEED, accessed November 2016.
6 Related Companies, “Sustainable Building,” http://www.related.com/our-company/businesses/16/Sustainable-Building, accessed November 2016.
7 “Hudson Yards Welcomes its First Employees and Officially Opens its Doors,” press release, May 31, 2016, on Related Companies website, http://www.related.com/our-company/press/247/HUDSON-YARDS-WELCOMES-ITS-FIRST-EMPLOYEES-AND–OFFICIALLY-OPENS-ITS-DOORS, accessed November 2016.
8 Hudson Yards New York, “Hudson Yards: Engineered City,” http://www.hudsonyardsnewyork.com/wp-content/uploads/2016/08/HY_Press_HYPIS_FINAL_4-15-2014_1846.pdf, accessed November 2016.
9 Harvey M. Bernstein et al., “World Green Building Trends: Business Benefits Driving New and Retrofit Market Opportunities in Over 60 Countries,” SmartMarket Report (2013), McGraw Hill Construction, http://www.worldgbc.org/files/8613/6295/6420/World_Green_Building_Trends_SmartMarket_Report_2013.pdf, accessed November 2016.
10 Related Companies, “Property List,” http://www.related.com/our-company/PropertyList.aspx, accessed November 2016.
11 Christopher Cadham, “NYC’s Public-Private Partnerships to Fight Climate Change,” State of the Planet (blog), Columbia University Earth Institute, March 30, 2016, http://blogs.ei.columbia.edu/2016/03/30/nycs-public-private-partnerships-to-fight-climate-change/, accessed November 2016.