What’s CRE? Commercial Real Estate, which faces an impending crisis of national import. Don’t take my word for it, ask Elizabeth Warren.  You’ll find that $1.4 trillion (with a “t”) in mortgages on commercial properties are coming due between early 2010 and 2014, and at least half of that property is underwater.

Since commercial owners favor balloon mortgages, for which they pay only interest charges, and since commercial property values have fallen 40% since the mortgages were established, and since the banks are already feeling a lot of pain for bad loans that is now manifesting itself as extreme caution with respect to offering new loans, owners are going to have a very tough time refinancing. And once banks end up owning some of those non-refinanceable properties, they in turn will have trouble staying afloat. That’s why Warren has been asking Congress to start getting ready to deal with this through prudent planning and carefully thought-out strategies. Good luck with that.

Meanwhile, the Obama administration has developed “The President’s Plan for Better Buildings.” This incorporates some existing initiatives, like using ARRA stimulus money for increased Weatherization, and some low cost proposals for green workforce development and streamlined regulations, but it also has some meat. The juiciest piece would take existing tax deductions, called the “Section 179(d) Building Efficiency Tax Incentive,” and turn them into tax credits. This will make them worth about three times as much, depending on the owner’s financial situation. Because Republicans enjoy giving tax breaks to business, this plan may not be DOA in Congress.

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The folks at Environmental Building News outline a recent study of the value of green building in the marketplace that finds an “effective rent” premium of 8%.  The piece also outlines the difficulty of gathering enough data to complete statistically relevant analysis, a challenge we also faced when we developed our own study of the cost of green building in New York City, here.

The New York Times has a ton of stuff on green issues today, from the sublime to the ridiculous.  There’s an Op-Ed on Climate Change by Mikhail Gorbachev and an article about Greenpeace targeting Facebook for their reliance on coal plants to power their data centers.

Greenpeace started its campaign in February, urging “ The So Coal Network” — a play on Facebook’s “social network” identity — to “Unfriend Coal,” which it calls “the dirtiest source of energy and largest single source of pollution in the world.”

Following on the data center issue there’s a great piece on European Union efforts to significantly increase the energy efficiency of their data centers. Seriously- the Europeans are cleaning our clocks on this stuff- they are way out in front of us.  While the EU works on advancing energy conservation where it counts we have to beat back attempts to eliminate one of the only clean energy laws in the US.  The Times has a nice editorial on the resounding defeat of the efforts in California to kill their enormously successful Climate Change law.

All of this is book-ended by a style-type piece on upcycling and the growing culture of seeing waste materials as a resource rather than a nuisance to be disposed out of sight, and a business section item on the many bond funds out there working to finance clean energy investments.  This last piece has a lot of great stuff on progressive bond funds but makes one of the most common and most unbelievably frustrating mistakes about the economics of climate change.  They open the piece with:

Financial experts may debate how much it would cost to shift the world to a low carbon economy, but they agree on one thing: the amount would be phenomenal.

It’s a snappy way to start but totally ignores the issue at hand, namely, our options.  Shifting to a low carbon economy might entail spending significant sums of money but it will not be “expensive” when compared to the other options.  As Amory Lovins has pointed out, “The good news about climate change is that it’s cheaper to fix than it is to ignore.”  Yes- reorienting our infrastructure to clean and green energy sources will cost money, but the repercussions of just burning all the fossil fuel the planet has to offer as quickly as possible will cost even more.  This is simple math, folks.

An interesting proposal to increase funding for clean energy research in the absence of a cap-and-trade bill from Congress.  From David Leonhardt at the NYT, here.

Hopefully this, will lead to less of this:

Gowanus Canal Raw Sewage Overflow

Video here.

These are some of the words people used to describe William McDonough’s opening keynote at Urban Green Expo last week.

I have seen Mr. McDonough speak on two other occasions but I have never seen him more passionate and energized. He spoke about how his upbringing shaped his view of the world, about his early years as an Architect in New York, and about his current work, both with his architectural firm and with Michael Braungart. He spoke powerfully about the need for us to move our thinking from “efficiency” to “effectiveness”.   He laid out how the guardian of government, though essential at this time, will never be able to move as quickly as commerce. The answer is not more and more regulations, but to put commerce at the service of the environment by creating buildings that produce energy and water and fresh air, by manufacturing products that are infinitely recyclable, compostable and, hell, edible.

I told him later how impressed I was by his presentation, even as compared to seeing him previously, and he responded that he was “really excited to be back in New York.” This is where he started his own firm in the 80′s, only leaving to run the architecture program at UVA, where his firm remains. As John Mandyck of Carrier noted in his introduction, McDonough’s offices for the Environmental Defense Fund here in NYC were completed in 1984, 14 years before LEED 1.0 hit the streets. And his talk was peppered with calls for us, the people in the room, to step up and challenge our clients and the industry to move to this new model of manufacturing products and designing buildings that are net positive in their contributions to the environment, the next industrial revolution.

Were you there the morning of September 29th to hear McDonough’s keynote? If you were we’d love for you to leave your impressions in the comments to this post.

Listen to a provocative 2-part piece in NPR we caught last week:

Part 1
Green Building: a Real Estate Revolution?

Part 2
Critics Say LEED Program Doesn’t Fulfill Promises

It is depressing how often I hear (mostly from folks my parent’s age or older) that “this whole sustainability thing” is just a passing fad, something that will eventually be ignored and forgotten.  Their favorite example is the 1970′s oil crisis and the hullabaloo that surrounded it briefly before we went back to our old, wasteful ways.  Does anyone else remember those “OPEC Loves it When You Leave the Lights On” stickers over light switches?  But apparently the folks over at EL Insights haven’t got the message that green should be replaced by another, more fashionable color this season.  They did some actual analysis and project the green building market to grow from it’s current size of about $70B to a staggering $170B in just five years.  That’s explosive growth and indicates, to this layman, that the movement to sustainability is not a passing concern but a fundamental shift in our thinking.  Warning: this may be the only good news you hear regarding the economy this week.

Richard Conniff has a great piece over at Yale e360 which surveys the reasons Commissioning is not more popular among building owners, despite being an incredibly cost effective means of reducing operating expenses.

At the risk of exposing my inner geek (I know, some of you are itching to point out it’s not that buried) I will reveal that I could literally spend hours at this website, the Housing + Transportation Affordability Index.  There is a lot of talk about how expensive it is to live in the city but often when people speak of this they are only talking about the costs of housing and not also the costs of transportation- which can be significant.  The H+TA website, developed by the brilliant folks at the Center for Neighborhood Technology, graphically contrasts the difference between measuring just the cost of housing and measuring the cost of housing AND transportation.  The example they use on the homepage is of Minneapolis/St. Paul metro region, below.

Basically, the blue areas are expensive and the yellow are less so.  The map on the left shows housing costs as a percentage of income, with 30% as a threshold.  The map on the right shows the combined costs of housing and transportation, with 45% as the threshold.  The difference is pretty striking, when you consider the costs of transportation the denser areas are far more affordable places to live.  But I know less than nothing about this area so I decided to look closer to home.

Here’s a look at my neighborhood, Ft. Greene-Brooklyn, where you get a finer grained example of a similar effect.  The grey block on the upper left is Ft. Greene park and the map on the left shows clearly that housing near the park is more expensive, no surprise. But adding the costs of transportation you see that some blocks close to the park are more affordable and, of course, some blocks near transportation are more affordable as well.

I then looked at the suburban neighborhood I grew up in outside Seattle, Washington and here you see a kind of inverse version of the same concept.  On the right hand side of the maps you can see the edge of Lake Washington.  The big blank spot in the middle is, of course, a shopping mall.  On the left everything looks fine- an inexpensive place to live.  But when you consider the costs of transportation you see that living next the mall (as I did) is only 10% less than living next the lake (which I decidedly did not.)

CNT has noted that the state of Illinois has adopted H+T as a planning tool.  Expect this sort of data to play a big role in municipal planning around the country in the years ahead.