Southern California Office Real Estate Blog

GREEN BUILDING BASICS

GREEN BUILDING BASICS
 
 

Didja know…cement is the critical ingredient that makes sand and gravel bind together and become hardened concrete. Manufacturing cement is energy intensive and hard on the environment. Research reveals; when a ton of cement is made, up to a ton of carbon dioxide is released into the atmosphere. A solution is to be able to reduce the amount of cement mixed into concrete without affecting its structural integrity. Try fly ash, an industrial waste created at coal burning power plants. Fly ash is said to strengthen the concrete because it changes its chemical properties. Another option, opt in recycled glass cullets for gravel ->  made in part from the glass bottles.
 
 

The concept of green building is “Any structure, that is designed, constructed, renovated or operated in such a manner as to minimize its impact on the environment, protect the health of its occupants and utilize resources efficiently,” notes property columnist Paul Bianchina.
 
 

For those who want to build cleaner and meaner, there are two particular parts to green building – materials and occupant health.
 
 

OCCUPANT HEALTH
 
 

The World Health Organization has confirmed formaldehyde as a human carcinogen. This toxic eye and nose irritant and can cause respiratory problems. Ironically, Paints, finishes for floors and other components, some types of adhesives and other materials commonly found in building construction may cause volatile organic compounds such as formaldehyde that can be harmful to building occupants. Green building practices make extensive use of products that do not contain formaldehyde. The California Air Resources Board is considering standards that would ban some of these toxic substances in the use of indoor furnishings.
 
 

BUILDING MATERIALS
 
 

Twenty years ago, it was easy for builders to get 2×4s from old-growth forests. The wood was straight, and unlikely to warp. Today, 95% of the nation’s indigenous trees have been cut.  Alternatives do exist, reclaimed lumber, engineered lumber, SIPs (structural insulated panels), oriented strand board, glu-laminated beams, I-joists and many other similar products make use of smaller, fast-growing trees harvested from tree farms like other crops.
 

The result is stable, uniform and structurally solid building materials that minimize the impact on existing old-growth and even second-growth forests.
 
 

“Green Building Products,” a guide for residential building products states that a product may be considered green if:
 
 

1) It’s made with recycled, salvaged or agricultural wastes (most commonly crop straws, as in adobe);
 
 

2) It conserves natural resources because it’s especially durable or it’s made with a rapidly renewing material such as bamboo that can be harvested every ten years;
 
 

3) It enhances indoor air quality because it has low or no emission of toxic chemicals into the air or because it helps block the introduction of indoor contaminants such as mold;
 
 

4) Its manufacture does not produce toxic emissions;
 
 

5) It saves energy or water;
 
 

6) It reduces the environmental impact of the construction itself. Porous driveway paving products absorb a substantial amount of the rain that hits them and this reduces the amount that runs off into a local and often overwhelmed storm water collection system.
 
 

BASIC EFFIENCY
 
 

In the Northern Hemisphere it is most efficient to orient the building with southern exposure. This allows for passive solar heating and improved natural lighting, which conserves energy usage.
 
 

An excellent example of Green multi-unit construction is Colorado Court, located on the corner of Colorado and 5th Streets, is  a 100% “green” affordable housing project.  The building features  44 “single room occupancy” units, each with its own kitchen and bath. The small units feel spacious because of the high ceilings, and efficient use of natural light.
 
 

“The original schematics for the building were east/west. That is the worst way to orient a building for solar conditions. We changed the orientation to north/south, so it would be more efficient,” observed architect Lawrence Scarpa.
 
 

A combined effort of the City of Santa Monica, The Community Corporation of Santa Monica, and local architects Pugh Scarpa Kodama, Colorado Court utilized energy efficiency on everything from solar heating to ecologically appropriate building processes.
 
 

Santa Monica also boasts one of the nation’s best examples of green commercial building.  The Natural Resources Defense Council’s Southern California office at 1314 Second Street in downtown Santa Monica is constructed to the highest green building standards. The property has been given the Version 2 Platinum green building rating – the highest possible level of sustainable design – by the U.S. Green Building Council for  LEED (Leadership in Energy and Environmental Design). It was the first structure in the United States to receive this status.
 
 

Jodi Summers negotiates investment properties for Sotheby’s International Realty. For your real estate needs, e-mail Jodi Summers at jodis@verizon.net, or call 310.260.8269. Visit her websites at http://www.SoCalInvestmentRealEstate.com or http://www.santamonicalandmarks.com.
 
 

NATIONAL ASSOCIATION OF REALTORS SPRING 2007 COMMERCIAL REAL ESTATE OUTLOOK

NATIONAL ASSOCIATION OF REALTORS SPRING  2007 COMMERCIAL REAL ESTATE OUTLOOK
OFFICE  SECTOR
With a $306.8 billion transaction volume, investment in commercial real estate reached record levels in 2006. In particular, office building trades were up 32% and industrial building trades were up 9%. Add to this more than $35 billion in hotel trades and the continued robust flow of capital into commercial real estate is clear to see. With
investor interest in commercial real estate, there has been development of new
commercial space, most of which is either build-to-suit or with a significant pre-lease in
place. New supply can and often does have an impact on fundamentals.
NAR FORECAST: The flow of capital (both equity and debt) will continue to be strong
as through 2007. Office, hospitality and industrial will continue to be the most sought after type of commercial real estate, while retail and multi-family will remain in the
doldrums. The expanding new supply will be an issue for all sectors and will cause
fundamentals to worsen moderately by the end of the year.
The Office Sector: New supply of office space begins to impact national office markets….
While investment in office properties increased by a record 32% in 2006, so too
has the level of new construction. While the level of speculative new construction is
being held in-check, build-to-suit and preleased new office construction is occurring in some markets. In areas where new office buildings are being introduced, the “flight to quality” is resulting in higher vacancy rates in older Class”B” and Class “C” buildings.
NAR FORECAST: Respectable job growth within the “office-using” sectors is prompting
demand for new office space, which is being met through the build-to-suit process.
Unfortunately tenants are not “back filling” space vacated in this flight to quality. Office
vacancy rates have begun to increase, going from a low of 12.6% in December 2006 to the current level of 13.2%.

 

Broadreach Buys $51M Culver City Office Campus

Broadreach Buys $51M Culver City Office Campus

Broadreach Capital Partners has acquired a 204,612-sf class A office complex at 200 & 300 Corporate Pointe in Culver City for $51.25 million from Scanlan Kemper Bard of Portland, OR. The complex consists of two mid-rise office buildings and an adjacent 732-space parking structure on four acres of land fronting Slauson Avenue and extends along Hannum Avenue - a half-mile east of the 405/90 freeway interchange.

The property consists of one 90,209-sf, four-story building and one 114,403-sf, five-story building. Built in 1984 and renovated in 2004, the buildings are collectively 85% leased, with a credit tenant roster that includes the University of Phoenix, Paychex and State Farm Insurance. Broadreach managing director David Simon, who heads the real estate private equity firm’s operations in Southern California, says that the acquisition “meets our investment strategy of acquiring well-located, value-add assets significantly below replacement cost.”

The deal is an especially good one for the Los Angeles area, where rents are rising in many markets, Simon points out. “Even in the softest markets, replicating this type of product in today’s climate would cost in excess of $400 per sf,” Simon observes.

Both Broadreach and Scanlan Kemper Bard were represented by principals Lynwood Fields and Bob Safai of Madison Partners. Fields called the transaction an “exceptional deal” that “takes advantage of today’s low interest rates, availability of capital and the limited number of good investment opportunities in Los Angeles’ Westside.”

Fields adds, “In this climate, investors are willing to pay a premium price for prime assets such as Corporate Pointe.” The property sold for a 6% cap rate on existing income, with the buyer defeasing the existing conduit loan upon expiration of the lockout in June 2007.

The Broadreach Southern California portfolio totals approximately three million sf of office properties and land with a stabilized value of nearly $900 million. Its assets include the CNN Building in Hollywood and the Sunset Millennium in West Hollywood.

info courtesy of Bob Howard of GlobeSt.com

CALCULATING COSTS IN A RUNAWAY REAL ESTATE CONSTRUCTION MARKET

The Adjusted Basis is simply the cost of your home adjusted for tax purposes by improvements you’ve made or deductions you’ve taken.
For example, if the original cost of the home was $100,000 and you added a $5,000 patio, your adjusted basis becomes $105,000. If you then took an $8,000 casualty loss deduction, your adjusted basis becomes $97,000.
Here’s how you calculate the adjusted basis on a home:
1.    Start with
·         The purchase price of your home (as described above), or
·         If you filed Form 2119 when you originally acquired your old home to postpone gain on the sale of a previous home (back in 1997 or earlier), use the adjusted basis of the new home calculated on your Form 2119.
2.    To that starting basis, add:
·         The cost of any improvements that added value to your home, prolonged its useful life, or gave it a new or different use
·         Any special tax assessments you paid
·         Amounts spent after a casualty (disaster such as a hurricane or tornado) to restore damaged property
3.    From that upwardly adjusted basis, subtract:
·         Certain settlement fees or closing costs
·         Depreciation allowed for any business use portion of your home
·         Residential energy credits claimed for capital improvements
·         Payments received for easements or right-of-ways
·         Insurance reimbursements for casualty losses
·         Casualty losses (from accidents and natural disasters) that you deducted on your tax return
·         Adoption credits or nontaxable adoption assistance payments for improvements added to the basis of your home
·         First-time homebuyers credit
·         Energy conservation subsidies excluded from your gross income
The result of all this calculating is the adjusted basis that you will subtract from the selling price to determine your gain or loss. This adjusted basis is what’s considered to be your cost of the home for tax purposes.
For more information please go to ttp://turbotax.intuit.com/tax_help/selling_a_home.
 

Jodi Summers negotiates investment properties for Sotheby’s International Realty. For your real estate needs, e-mail Jodi Summers at jodis@verizon.net, or call 310.260.8269. Visit her websites at http://www.SoCalInvestmentRealEstate.com or http://www.santamonicalandmarks.com.