Resilient Commercial Development: Improving the Bottom Line by Being Prepared
Two ways to prepare for the future that can benefit commercial real estate development.
Resiliency means different things to different people. But for commercial developers and corporate real estate executives, it most often means money. That’s because adding resiliency features to a project has typically been expensive. A development isn’t feasible if the financing doesn’t work out, so many assume these features can’t be included while still meeting profit goals.
However, this isn’t necessarily the case today — recent experience suggests a few ways that resiliency can actually improve the bottom line. Rather than increase risk, resiliency can be the very feature that makes a project possible.
Red Hook is a low-lying urban waterfront neighborhood in Brooklyn, New York, that needs a flood wall to protect against future storms. But the neighborhood also contains old industrial infrastructure that could potentially function as a barrier. As well, many large waterfront parcels are in the hands of very few owners: one site covers as much as 17% of the waterfront, so a developer protecting this area could complete a substantial portion of the flood wall required by the entire neighborhood.
One solution is to look at how new buildings and new infrastructure can blend together — essentially, how buildings themselves can become the flood wall. For instance, a public promenade along the harbor could serve as the first wave-action buffer. Then buildings would reduce wave action further; in the event of flooding, the floor levels would be stepped up, with potential workshop space or restaurant seating at the lowest levels, potential kitchen areas elevated above that, and mechanical infrastructure even higher, above the flood line.
The back sides of the buildings, facing inland, would then be solid and function as a flood wall, with temporary barriers installed between buildings when necessary. This would address a key element: financing. The city has money to build a flood wall, and they could very well be amenable to paying for the reinforced part of the building, instead of constructing a separate wall.
An arrangement like this is complicated, but a partnership between public and private entities has the potential to mitigate financial risk and make a project feasible. It’s also about more than financing and flooding — it’s about community: protecting homes, providing access to the waterfront, and creating active streets that wouldn’t otherwise be possible given financial constraints.
If some resiliency strategies are driven and aided by public entities, others are achievable through tenant demand. Financial services firms and other business that require 24/7 operations or handle incredibly sensitive information are leading the way in understanding “no single source of failure”: features like internal and external power backups, and direct connections to fiber optic cables.
Location dictates a lot; some things are beyond a developer’s control. But what a developer can control, like backup generators, can help to upsell a project and achieve higher rents. Sustainability and wellness certifications like LEED, WELL and Fitwel also help a property stand out, and they often help with resiliency as well.
Operable windows, natural lighting, access to the outdoors, prominent stairwells and things like bicycle rooms that encourage people to commute in other ways are all resiliency factors — if the power goes out, you want to be able to open the windows, to see using natural light, to exit the building and get home. Anything that limits energy usage, anything sustainable, helps in the event of a catastrophe.
For instance, a Philadelphia-based developer is currently negotiating with a potential tenant for a project targeting LEED Silver. But the tenant believes that the asking rent is more appropriate for a LEED Gold or Fitwel certified building. Achieving those certifications could potentially help justify the higher rent.
Anything is possible — the question is just about who will pay for it. More and more the market is coming to demand healthy, sustainable, resilient environments. Although the right strategies depend on each project and location, a developer shouldn’t automatically assume that resiliency is too expensive or provides only a single-use benefit. After all, what’s more cost-effective: recovering from a disaster, or investing a little more up front, in ways that support a project and its tenants 365 days a year?
Will Robertson, AIA, is an architect and commercial development principal at NBBJ.