Increasingly across the country, the “green” trend in commercial real estate is extending beyond government tenants.
Corporate America has begun to add eco-friendly to its criteria for space. At some point, having “green” office space could be a factor in luring a corporate relocation.
“We’re hearing it more and more especially build-to-suits,” said Jeff Hite, director of business recruitment.
So far, Hite said, it hasn’t been a factor in whether or not a company chooses Nashville.
“It probably will be in the next three to five years,” Hite said.
Brokers said inquiries about eco-friendly space come more from companies outside Nashville than from inside.
Corporate America’s space tends to be for regional or divisional offices. Such operations have tended to got into multi-tenant buildings developers build on speculation and are the least likely to be “green.”
James Trone, a broker with Nashville Commercial/Cushman & Wakefield, said such a tenant is looking like The Pinnacle at Symphony Place.
“(Green) is one of the big items they check off,” said Trone, who is helping leased the building for the developer. “They have asked me about it at length.”
The many definitions for green building is why the U.S. Green Building Council created a certification process for Leadership in Energy and Engineering Design.
Brokers have said the challenge is convincing tenants to pay the rent premium developers have to charged because building to LEED costs more on the front end.
“It’s expensive to do it,” said Jimmy Webb, a principal in Freeman Webb. “We’re hoping there is a market that will pay extra for this.”
Freeman Webb is constructing an office building in Bedford Commons in Green Hills that is shooting for the gold LEED certification. The building has 40,000 square feet available for lease.
Brokers said the developer is asking $32 per square foot for gross rent. The base rent is $25. Those rents are about $7-$8 higher than other new space downtown or in Cool Springs.
Trone said The Pinnacle, which is shooting for silver LEED, is seeking the same in rent.
The spread covers the operating expenses for the office building. Trone said those figure is conservative because it’s based on the expenses that traditional buildings have now. There’s no experience locally with a “green” multi-tenant building on which to base figures.
“We’re not lowering expenses until we see the first year,” Trone said. “We’re already starting to see some savings on Pinnacle.”
One area, for example, is in water consumption as the building rises.
Freeman Webb’s building will lease more because of location than for being eco-friendly, said Crews Johnson, a broker with Colliers Turley Martin Tucker.
“You don’t see a lot of Corporate America in Green Hills,” Johnson said.
He said the tenants will be local companies wanting new space in Green Hills because the executives live nearby and there isn’t a lot of available space in that area.
“Green is a bonus,” he said.