Sassyk Real Estate Development has completed the Pre-Development phase of the Five Points Development project and has presented their findings and conclusions to Fred A. Forgey Investments. Upon further review by Forgey Investments, the following additional requirements are being reviewed and added as part of the Development Phase:
- The Five Points Development Project is to meet Sustainability criteria. That is to say, the project will be expected to perform as a Sustainable whole, meeting LEED criteria for xxx certification.
- The Five Points Development Project is to have a solid Marketing & Budget Plan. Marketing strategies will be formed to address the challenges of leasing a Sustainable Living Unit within a Sustainable environment. and budgets will be set (addressing unconventional reserve requirements), which will include a leasing plan to match the Sustainable environment of the project.
- The Five Points Development Project is to have a Project Management Plan as well as a Facility Management Plan. These plans include employee education in meeting the challenges in a Sustainable environment.
- The Five Points Development Project is to have a solid Cash Flow Model projecting returns showing side by side models of conventional vs. Sustainable construction.
The Sustainability Aspect
In discussions with Forgey Investments, a plan was designed to meet the Sustainability aspect of the project. An agreed definition and direction for the Sustainability of this project was decided as follows: To construct, develop and maintain (includes performance measurements) a mixed-use development, retail and multifamily complex that promotes and practices not only "green" features, but is expanded to a sustainable way of life. That is to say, with on-going education and practices relating to the environment of the complex and the community, an evolving process which will be economically feasible while promoting a high quality of life, which will ultimately preserve this way of life for future generations who chose to live in the complex/community.
The Five Points Development Sustainability Features
Often, a property is defined Sustainable if it has a combination of "green" features that work as a unique system. One of the most comprehensive programs that addresses Sustainable construction and development is the LEED program which is a certification point system, devised by the United States Green Building Council (USGBC). The LEED program was chosen for this project due to the thoroughness of the program, more specifically, the LEED New Construction (NC) category which address the following issues:
- Sustainable Sites - addresses issues of site development pertaining to density, alternative transportation/reduced parking, storm water design, heat island effects for roof and non-roof areas, and light pollution reduction. Projected LEED certification Sustainable Site Points 16.
- Water Efficiency - addresses issues of water use reduction, water use for landscape, and waste water technologies. Projected LEED certification Water Efficiency Points 10.
- Energy and Atmosphere - addresses on-site renewable energy, and minimizing energy output.
Projected LEED certification Energy and Atmosphere Points 30
- Materials and Resources - addresses Construction Waste management, ongoing recycling, materials reuse and certified renewable construction materials. Projected LEED certification Materials and Resources Points 6
- Indoor Environmental Quality - addresses indoor air quality, increased ventilation, lighting and thermal controls, Tobacco Smoke control, and daylight and views. Projected LEED certification Indoor Environmental Quality Points 15
- Innovation and Design - addresses LEED certification of the design team. Projected LEED certification Innovation and Design Points 2
- Regional Priority Credit - Projected LEED certification Points 2
A total of 79 points is needed for a Gold certification under the LEED criteria checklist for New Construction (NC). The Five Points project is projected at a total of 81possible points.
The Factors Of Sustainability
The factors of sustainability address issues that encourage or support an sustainable environment. Advances in sustainability initiatives have improved in the real estate/construction industry in the last several years. One current challenge that remains in sustainability is in quantifying over a period of time the advantages of sustainability verses the cost of sustainability. Another challenge addresses the issue of underwriting/due diligence reporting. It is absolutely essential that the performance of the property is constantly monitored, recorded, and for the purpose of LEED certification this criteria is meticulously reported. From these performance reports targeting year one results, additional investment and forecasting decisions/adjustments can be made for several years to follow. One of the most important aspects of process performance is Integrated Design (ID). "Integrated design ("ID") is a design process that employs a collaborative, multidisciplinary project team throughout design in order to optimize the whole building" (Muldavin, 2010 Pg 35).
Some of the practices for Integrated Design include the following:
- Commitment from all parties
- Designating a member of the design team as the "integrated design coordinator"
- Bringing the team together as early as possible
- Include a diverse set of parties on the team
- Incorporating the requirements for an integrated building design process onto the project documents
Muldavin, S. (2010). Value beyond cost savings: How to underwrite sustainable properties. Retrieved from www.fredforgey.com
Projected Sustainability Costs for the Five Points Development
The Five Points development project will make application for LEED Gold certification which will focus on the following LEED features and their associated projected costs:
- Sustainable Sites - COSTS
- alternative transportation/reduced parking
- Installed bicycle racks (4 X 325.00) $ 1,300.00
- Alternative Transportation
- Vehicle - efficient vehicles (facilities) $ 62,000.00
- Site development
- Open space $ 10,000.00
- Restore Habitat $ 20,000.00
- Quality control $ 5,000.00
- Heat Island Effect
- Roof $11,000.00
- Light Pollution Reduction $ 5,000.00
- Water Efficiency -
- Water efficient landscaping (Native plants) $15,000.00
- Innovative waste water technologies
- Storm Water Recapture Systems $2,000.00
- Gray water filtration system (4 X 12,500.00) $50,000.00
- Water use reduction (20% LEED required reduction)
- Tenet reduction (low flow fixtures) $34,000.00
- Energy and Atmosphere -
- Optimize energy performance (Meters) $ 3,200.00
- Onsite renewable energy (52% produced on site)
- Solar voltaic/solar hot water system $780,000.00
- Green power
- Energy Star Electric Fixtures $ 8,100.00
- Energy Star Appliances $ 72,000.00
- Materials and Resources -
- Recycled content $ 30,000.00
- Regional materials $ 50,000.00
- Rapidly renewable materials
- Certified wood $ 8,000.00
- Wool Carpets $114,800.00
- Indoor Environmental Quality -
- Construction IAQ management plan - during construction $ 5,000.00
- Construction IAQ management plan - before occupancy $ 5,000.00
- Low admitting materials-low VOC paints $ 20,000.00
- Controllable of systems = lighting/thermal comfort $ 8,000.00
- Innovation and Design -
- LEED accredited professional $ 30,000.00
Additional "Soft" Costs - Certification, Energy Design, Commissioning $60,000.00
Total Projected Sustainability Costs $1,409,400.00
Marketing and Budget Plans
Marketing Strategies
Marketing strategies and a marketing plan must be developed early on, preferably, on the day of ground breaking. The Five Points Development is unique in that it is a mixed-use development that promotes a Sustainable lifestyle. A solid marketing plan should include the following steps:
- Marketing The Five Points Development should take place on two fronts.
- Promotion of the development should first be through a Public Relations Consultant, first local and then statewide promotion.
- The second front is through Sassyk Real Estate Development. One of our services we provided is a basic start-up marketing package.
- Marketing a Sustainable development can be a "double-edged" sword. First, the development should promote how Value is found in a Sustainable lifestyle. It should offer the following:
- Superior location ( a walkable community) that also promotes the surrounding community.
- A LEED Certified development that promotes conservation of energy use and lowering carbon foot-print on an individual basis
- The Developments "Green Features" such as energy and water savings through building design and solar energy.
- The advantages of a mixed-use development. A cohesive environment where families can live, play and work and have access to retail outlets, entertainment, and other local services.
- Second, the other edge of the sword is preventing what is commonly called "green washing".
- Green washing is the practice of deceptively promoting green features to increase profits.
- The key to preventing any deception is to promote the benefits from the features and not the other way around.
- One of the most important marketing tools is education. Education should be in the form of:
- Direct and Indirect Values that come as a result of Sustainable living.
- Who should be educated:Primarily, all Staff Members; which includes the following:
- On-site manager
- Assistant manager
- All rental agents
- All maintenance supervisors, maintenance staff, and the custodial staff.
- Another important marketing tool is in the use and promotion of Green Leases.
- Green leases consist of using the standard Texas Lease Contract and the inclusion of Green Addendum's that address the sustainable features.
The following are Year One Operating Expenses:
Maintenance/Custodial Costs
Janitorial/Maintenance Staff/Porter $232,000.00
Repairs and Maintenance/From Req. Reserves $45,000.00
Tools and Equipment $30,000.00
Window Cleaning Service $15,600.00
Landscape Service $15,000.00
Fire and Life Safety Supplies $8,500.00
Trash Removal $15,600.00
Recyclable Materials Removal $6,500.00
Supplies (Green) $12,600.00
Office/Administration
Administrative(Salaries/Fees) $200,000.00
Advertising and Promotion $22,500.00
Non-Reimbursable Expenses $28,600.00
Real Estate Taxes $177,600.00
Insurance $30,000.00
Security Services $70,000.00
Facility Utilities
Electricity $30,000.00
Water and Sewer $16,200.00
Total Operating Expenses Yr. 1 $955,700.00
Project Management/Facilities Management
Project Management Aspect
Project Management during the Construction/Development Phase is often overshadowed by costs and schedules to meet on time construction demands. Unlike standard building construction, the "Green" Project Manager has to be educated in Sustainability construction. Sassyk has contracted with TenStep, Inc., which promotes their Green Project Management (Green PM) for guidance in performing project management tasks for this project.
The Green PM program uses a ten step process. This process includes:
- The Green PM program supports a "Greenthink" ideology. The Greenthink ideology is a way of thinking about the environment in a friendly and sustainable manner that supports individuals as well as the environment.
- Integration management
- Scope management
- Time management
- Cost management
- Human Resource management
- Communications management
- Risk management
- Procurement management
"The point is not invent (many) new project management processes. The point is to adopt GreenPM into our existing project management methodologies." (TenStep, 2008 printed page 6)
TenStep. 2008. Green Project Management: (GreenPM). Retrieved from
http://www.green-pm.com/articles/WhitePaperGreenPM.pdf
Facility Management Aspect
Facility Managers have the difficult task of promoting and incorporate the concepts/ideas of Sustainability and Energy efficiency into the project. By incorporating Process Performance and constant monitoring of the Sustainable environment, the promotion of these concepts results in lower operating costs by protecting occupant health and safety, improve employee productivity while reducing the negative impact on the environment.
These initiatives can be met by using the following sources:
- IFMA Green Zone
- The Green Compass
- Sustainable Energy Education and Communication
- Research and Communications
- i-Sessions/IFMA
- World Work Place Conference's and Expo's
Sanchez, A., (2007). Facilities management: Green tools for facility managers. Retrieved from
Project Financials
| Cash Flow Analysis For The Five Points Development Project-Post Development Phase | |||||||
| Prepared By: Richard Noel | |||||||
| Prepared For: Fred A. Forgey Investments | |||||||
| Date Prepared: May 7, 2012 | |||||||
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| Note: All Retail Space is NNN unless otherwise noted. Any re-lease will require new tenants to be responsible for all tenant improvements, which will be approved under the strict Sustainable guidelines of Five Points Development. Previous tenant upon move out will be charged at a demolition rate of $6/SF to return space to workable retail shell. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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