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about 15 percent more to construct, compared to the standard code, she says.
“We engaged in a heck of a lot more risk on this project, largely because we needed the increased zoning,” she says, adding that “it doesn’t compensate you for the costs that you’re incurring from a construction perspective.”
The company had previously done a small classroom addition to the Bertschi School in Seattle that also earned Living Building Challenge certification in 2013—the first in the world to earn the certification under a revised set of criteria. Its U.S. portfolio also includes some 125 projects that have obtained or are pursuing Leadership in Energy and Environmental Design (LEED) certifications—a far more common green building standard.
“We’re committed to pushing innovation in this area,” Picard says. “We believe the way we build matters to the community, it matters to the planet.”
By finding a like-minded tenant for most of Stone34 in Brooks Sports before construction began, the risk of doing a deep-green building was reduced, Picard says.
Another key difference from many other developers: Skanska self-finances its developments, so it didn’t have to convince outside investors or lenders that the investment in a high-performance building was worth it. That said, Skanska underwrote the project with an eye toward achieving a risk-adjusted return, “like any other developer would,” Picard says.
Late last year, Skanska sold the building to a joint venture of Unico Properties and Laird Norton Properties for $70 million. The company expected to spend $51 million to develop it—which translates to about $392 per square foot, compared to the Bullitt Center’s $625—but would not confirm the actual total cost. (The transaction includes the transfer of a 55-year land lease Skanska inked with Fremont Dock Co., meaning the land itself was not sold.)
Picard described the outcome as “awesome,” because the project achieved both Brooks’s goals and the return-on-investment the developer sought.
Combe, of the 2030 District, says Skanska’s success with Stone34 “definitely opened the eyes of a lot of developers out there, who started to realize that this was a way to actually make a profit on a building, rather than just doing things the way they’ve always done it.”
In addition to the environmental and social benefits of a Living Building—many of which don’t deliver anything tangible to the bottom line, but may be worth tens of millions of dollars over a building’s lifetime—there are substantial risks to this kind of development, which incorporates new technologies, materials, and approaches to just about every aspect of designing, constructing, and operating a commercial building.
“[T]he most significant risk for project teams working on deep green buildings is the possibility that they will not be able to achieve their environmental goals cost-effectively, if at all,” wrote Kathleen O’Brien, Nicole DeNamur, and Elizabeth Powers in a 2013 Washington Journal of Environmental Law & Policy article (PDF). “If they do not, the environmental and financial costs can be significant, resulting in the loss of correspondingly significant societal benefits.”
The Living Building Challenge focuses on actual performance rather than just the features put into a building—an important difference from other green building certifications. That’s why the Bullitt Center only this month earned … Next Page »