It takes a village to build green, particularly where it comes to commercial real estate. That village needs tenants who value energy efficiency and the intangibles of working in “green space.” It helps to have tax incentives to make eco-friendly buildings feasible. And perhaps most importantly, the village needs developers with vision to put the pieces together and build something that is both environmentally and commercially sustainable.
One such new, green village is near Rochester, New York, a 70,000-square-foot office park addition called Cambridge Place, designed by HBT Architects to accommodate commercial and medical enterprises as well as Gallina Development, the property developer and owner. Andy Gallina, president of the development company, says the project is something of an experiment. “We are dipping our toes into the water of LEED-certified building,” he says. “We are interested to see if environmentally conscious tenants will be attracted to LEED buildings with geothermal systems.”
Facts & Figures
17.4% – Vacancy rate of Rochester commercial real estate market, putting it 56th out of 132 US markets
$1.4 million – Net cost of the geothermal system at Cambridge Place. Without the 30% tax credit, the price tag would’ve been close to $2.1 million.
$628,000 – Amount Gallina Development saved with federal incentives
400 feet – Depth of some of Cambridge Place’s 64 geothermal wells
Though very much a university town and technology hub—among the top ten employers in the region are the Rochester Institute of Technology and companies such as Kodak and Xerox—LEED-certified commercial building has lagged. Gallina had proposed a LEED program to a build-to-suit client on another project a few years ago. “They showed initial interest,” Gallina says, “but decided against it due to net construction costs.”
Which brings us back to other aspects of the village. Federal tax credits currently (through 2016) provide building owners with incentives to incorporate geothermal heating and cooling systems, installed by Leo J. Roth Corporation. By investing in geothermal for Cambridge Place, Gallina will be able to take a one-time federal tax credit of 30 percent on that total cost of the geothermal system, which was about $2.1 million. That will amount to $628,000 saved, bringing the net cost of the heating and cooling system to about $1.4 million. Which was doable, Gallina says. “I don’t know if we could do this project without the tax incentive,” he explains.
Another part of testing the waters will come in the marketing of Cambridge Place. “We will have a competitive advantage on rental rates due to reduced energy costs,” Gallina says. “It will give us more to say in the marketing story.” Which should matter: at the end of 2011, Rochester’s commercial vacancy rate was about 17.4 percent, ranking it number 56 out of 132 US markets.
The geothermal system comprises 64 wells with vertical loops reaching depths of 400 feet. Leo J. Roth Corporation is an HVAC contractor that has constructed at least 14 commercial-scale geothermal systems in the past couple of years, mostly for colleges and universities in central New York. Architecturally, Cambridge Place is the work of Pittsford, New York-based HBT Architects, which designed the twin buildings to achieve Silver or possibly Gold certification when completed in 2012.