Archive for May, 2010

Corrected: Green labels, embraced in Europe, new to the U.S., ignored in Canada

Tuesday, May 18th, 2010

The green building industry is relatively new in North America yet there is no shortage of labels, rating systems and standards.   LEED, BOMA Best, Energy Star and Built Green have all become available in Canada in the past 15 years and this is the tip of the iceberg globally.

Speaking at the inaugural Green Building Ottawa Conference held on May 13th, Wayne Trusty, President of Athena Sustainable Materials Institute whose Canadian head office is in Merrickville near the capital said ‘there are over 500 green building labels in the World.’

In the rapidly evolving world of green standards, and in spite of the what may seem like an abundance of rating systems,  there are industry experts who make a case for Canada to consider new green labels that are gaining market acceptance in other countries and being overlooked here.

The Athena Sustainable Materials Institute (ATHENA) is a non-profit organization that seeks to improve the sustainability of the built environment by helping industry professionals evaluate the environmental impacts of new and existing buildings through Life Cycle Assessment (LCA).  It offers the only two software tools in North America for the life cycle assessment of whole buildings and assemblies.

Life Cycle Assessment, like that offered by the ATHENA Institute, is critical to the growth of environmental product standards such as those created by the International Standards Organization (ISO).

ISO 14040 is a series of standards for conducting life cycle analysis and ISO 14025 is for environmental declarations and programs. With reference to these two standards ISO has prepared a methodology for preparing quantified
environmental product data. An Environmental Product Declaration (EPD) based on this data is international, verifiable and accurate information about a good or product that can be used as a green label that is not misleading.

In 2007 ISO released ISO 21930 that describes the principles and framework for environmental declarations of building products, taking into consideration the complete life cycle of a building.

Climate related data can be taken as an excerpt from an EPD where the information is expressed in CO2 equivalents for the life of a product. This information can be used to generate a ‘climate declaration’.

Following the commercial success of green labels like LEED in North America there has been an epidemic of companies that have undertaken to create their own ‘green brands’.  These ‘self declared’ labels have garnered well-deserved skepticism from procurement professionals and the public alike.

What EPD’s offer, that self declared private green brands lack, is a verifiable and accurate process developed through the use of international, scientifically accepted and proven methods for life cycle assessment (LCA) of products and services.   They provide a credible way to compare potential purchases so that professionals can optimize environmental choices, avoid green washing and deliver higher value to their organizations and customers.

Organizations and businesses have emerged that support and help to prepare EPD’s based on the ISO standard and create an international market for products with the declaration. A non-profit called the EPD®system based in Europe is one.  In the original version of this article we incorrectly assumed that it was somehow representative of all EPD’s globally. Nevertheless called the EPD®system website has current information about the tremendous growth in the demand for EPD’s around the World.

An October 2008 news report on the EPD®system website describes 89 EPD’s developed in 6 different European countries as well as Japan. Since the article was published EPDs evolved significantly and are now being used by transit services such as the Swedish rail service The Botnia Line which has issued EPD’s covering railway infrastructure and rail cars.

A recent article in Greener Buildings reports that the U.S. Government, which has mandated a substantial green house gas reduction initiative, is expected to give preference to EPD rated products as part of greening its procurement process.   In addition a U.S. based organization  The Green Standard is offering a Green Purchasing Accredited Professionals training program or GPAP.  Its inaugural course offered in March 2010 was attended by people from CB Richard Ellis.

Asked “What is the most effective step Canada could take toward a greener future?”  Wayne Trusty said ‘more data’.   Data is a vital ingredient for LCA’s,  the building block of EPD’s and similar labeling systems. ‘The EPD process has been ignored here in Canada’ he said.

Ian Theaker, Senior Sustainability Specialist, Halsall Associates, another speaker at the Ottawa conference, said that mandatory ‘energy efficiency labels’ for buildings would be the most powerful mechanism for accelerating the implementation of green building practices in Canada.

Theaker said that a building label that itemized a buildings energy footprint, green house gas emissions and the cost of energy would not be expensive to implement and would provide a market incentive for improving building energy performance. He said that the National Research Council is looking into it.

Since greening a building is entirely voluntary in Canada, Theaker said, there is no incentive for people who own poorly performing buildings to do anything.

The Real Property Association of Canada has declared a voluntary National Energy Consumption target for commercial buildings called 20 x 15.  The goal is for buildings to achieve 20 equivalent kilowatt-hours of total energy use per square foot of rentable area per year in office buildings by the year 2015.   Although this program is not enforceable, Theaker’s point, it does establish a target for reduced energy consumption for the real estate industry.

While energy labeling for homes has been mandated by the European Union, in Canada the Federal Government recently shut down the home based energy conservation program associated with recent Government stimulus money.  Furthermore,  Theaker said, in the housing sector in Toronto only a quarter of the homes that are sold  have a property inspection.

“Canada is falling further, and further behind other countries” in implementing measures that will move the country toward a greener economy according the Theaker “and it will have a difficult time catching up.”

Will the GTA be flooded by PPP opportunities?

Wednesday, May 12th, 2010

In the Greater Toronto Area there are five active public real estate companies: Build Toronto, Toronto Lands Company, Waterfront Toronto, Ontario Realty Corporation and Canada Lands Company owner of Downsview Park. Each organization has been established to develop and manage public property in order to  generate a sustainable revenue stream or enhance the value of its assets or both.

Build Toronto

The newest of these organizations Build Toronto announced that it is open for business today, May 12th at the Toronto Board of Trade.  It was established in 2009 by the City of Toronto under the direction of Mayor David Miller.

Build Toronto has a portfolio of 31 properties representing hundreds of millions of dollars worth of real estate.  The properties include underutilized transit land, parking facilities, libraries, police stations as well as the City’s residential properties.

Four large projects have been identified by Build Toronto as its first priority in the search for Canadian and International investors to partner in unlocking the market value of these sites.   The properties include:

(1) A 54-acre location next to the Downsview subway station.

(2) 154 Front Street at the corner of Sherbourne and Front in the St. Lawrence neighbourhood in downtown Toronto.

(3) A 24 acre industrial property off the QEW highway near Islington Ave. and Lakeshore Blvd. in the city’s west end.

(4) 4050 Yonge St. an under underutilized 2 acre site projected for a 450,000 square foot development at the corner of York Mills Rd. and Yonge St.

All of these are Class A locations with extraordinary development potential.  Under the direction of the Build Toronto Board, which includes leaders in Canadian real estate industry, Build Toronto seemed destined to find suitable partners that will see the properties developed.

In addition to Build Toronto there are four other public real estate companies.  They are:

Toronto Lands Company

The Toronto Lands Corporation was created in September 2007 and incorporated in April 2008 as a wholly-owned subsidiary of the Toronto District School Board.  The TLC’s mission is to maximize the Toronto District School Board’s real estate revenues in order to reinvest in TDSB schools and students.

Shirley Hoy, CEO of Toronto Lands Company said her organization is expected to generate a $30-million surplus annually for the Toronto School Board.

Waterfront Toronto

The Waterfront Toronto website says that it is building the largest urban revitalization project in North America.  It is mandated by the three levels of Government each equally represented on its Board of Director to develop the publicly owned waterfront lands in downtown Toronto.

Ontario Realty Corporation

The Ontario Realty Corporation manages one of the largest real estate portfolios in Canada, consisting of approximately 6,000 buildings and structures and over 80,000 acres of land across the province. The portfolio includes a wide variety of properties ranging from detention centres to office space, courthouses and heritage buildings.

Its major projects in Toronto include 222 Jarvis St., the Keele-Wilson Provincial Campus Redevelopment and the West Don Lands Flood Protection Platform.

Canada Lands Company

Canada Lands Company Limited is an arms length, self-financing Crown Corporation reporting to the Canadian Parliament through the Minister of Transport, Infrastructure and Communities.

In Toronto CLC owns the CN Tower and several downtown office locations as well as other properties listed on its website.

Downsview Park in Toronto is a 572 acre property that was taken over by the Federal Government after the Canadian Forces Base on the property was closed in 1994.  It is operated by PDP a crown corporation and subsidiary of the CLC established in 1999 that received full ownership of the Park in 2006.

While Build Toronto is well positioned to succeed with a strong Board of Directors and an exceptional portfolio of properties all five of these organizations are competing in the same jurisdiction for essentially the same partners and investment.

Does the presence of the five public development organizations work to their advantage or will the GTA becoming flooded with public private opportunities?  Could flooding the market dilute the value of the opportunities to the development organizations and the public?

CPPIB grows its U.S. real estate investments by $1Bln

Monday, May 10th, 2010

In the past month the Canadian Pension Plan Investment Board (CPPIB) has announced two real estate acquisitions in the U.S. that combined are worth over $1-billion.

Today, May 10th, the Globe and Mail reported that the CPPIB agreed to pay U.S. $663-million to buy a 45% minority interest in two New York City office buildings.  The two properties, 1221 Avenue of the Americas, also known as the McGraw-Hill building which is part of the Rockefeller Centre and 600 Lexington Ave. have a combined value of about $1.45-billion including CPPIB’s share.

In April Kimco Realty Corporation and the CPPIB announced that they have formed a joint venture to acquire shopping centres through out the U.S.  Their initial investment of $370-million includes five retail properties that Kimco had previously acquired.  CPPIB will hold a 45% interest in the venture while Kimco will retain 55% as well as continuing to manage the properties.

The Kimco and CPPIB joint venture is described by Peter Ballon, Vice-President, Head of Real Estate Investments – America’s as one that will allow CPPIB to continue to expand its retail investment program in the U.S.

The Canadian Pension Plan Investment Board (CPPIB) is Canada’s largest single purpose pension funds and one of the largest in the World.   It has $123.9 billion in assets of which about 42.6% (or $52.8 billion) are invested in Canada.

The fund currently has about 5.8% (or $7 billion) invested in a real estate portfolio comprised primarily of office and retail properties.  Its properties are in Canada, the U.K., and to a lesser extend in the U.S. Mexico, across Europe and in the Asia-Pacific region.

Canadian examples of CPPIB properties include First Canadian Place, 2 Queen St. E., the Royal Bank plaza in Toronto, Oceanic Plaza in Vancouver, Canterra Tower in Calgary and Constitution Square in Ottawa.

The two recent U.S real estate acquisitions by the CPPIB, $663-million for the Manhattan office buildings and $370-million for its investment in the Kimco joint venture add up to $1.03-billion.

These new acquisitions suggests that CPPIB now has closer to $8-billion invested in its real estate portfolio, $1-billion more than mentioned on its website, and that it has also simultaneously increased its foreign investments.

It will be interesting to see where CPPIB, one of several Canadian pension funds buying foreign real estate, will decide its allocation to real estate, and foreign property will end.