Big Apple to Slow City:
Tony Ciochetti Gets an Overview of Sustainable Building’s Potential
By Jim H. Smith
Posted October 26, 2010
The 61st floor of the Empire State Building does not boast a famed observatory, like the 86th. And it is 40 floors lower than the stratospheric summit. But it still offers spectacular views that extend from mid-Manhattan across the rivers and far out into the surrounding countryside.
The 130 people visiting the 61st floor early last June, weeks ahead of July’s unrelenting heat and haze, had no difficulty seeing in all directions. In fact, their view was unprecedented. And therein lies a story.
The visitors – including CRE Chairman Tony Ciochetti – were guests of the Urban Land Institute, which hosted an Energy Efficiency Finance Forum on June 8. The forum was followed, a day later, by a conference on “Responsible Property Investing: Growing the Field” conducted by the Responsible Property Investing Center (RPIC), the research and education center that is a collaboration of Harvard and the University of Arizona.
The Empire State Building was chosen precisely because its symbolism was relevant to both topics. The art deco skyscraper speaks to nothing more eloquently than the concept of possibilities. The American Society of Civil Engineers calls it one of the seven wonders of the modern world, along with such engineering marvels as the Panama Canal, the Channel Tunnel and the Golden Gate Bridge. And no wonder. The Empire State Building was built in just 12 months, during the first year of the Great Depression. As the nation’s economy declined month after dreary month, an army of gravity-defying iron workers displayed American-style can-do grit, erecting the building’s 60,000-ton frame at the astonishing rate of four and a half stories per week.
Rising more than 1,400 feet from Fifth Avenue to the lighted tip of the iconic 204-foot antenna to which King Kong famously clung in 1933, the building has always stood as a symbol of both New York’s and the nation’s boundless potential. In the wake of the 9-11, it is once again the tallest and most prominent building in what is arguably America’s most storied real estate market. But now it is also being transformed into a beacon symbolizing the potential for economic revitalization through environmental revitalization.
“Hard to Ignore”
At the time of the June conferences, a collective of consulting, design and construction partners – including CRE partner Jones Lang LaSalle, one of the world’s largest international real estate services and investment management firm – had just completed an eight-month evaluation of the 80-year-old building in preparation for the retrofit. Among other astonishing discoveries was the fact that the building consumed as much energy as 40,000 single family homes. Expected to be complete by 2013, the retrofit involves eight projects, including improved windows, high-efficiency light bulbs and updated heating and cooling systems. Collectively, they will save nearly 40 percent of the building’s energy and some $4.5 million annually.
The resulting retrofit of the building will save nearly 40 percent of the building’s energy and some $4.5 million annually.
One of those projects could not have been more clearly on display to the guests attending the June conferences. The building’s 6,500 windows had been replaced with new, energy-efficient ones. And all of the windows on the 61st floor could be easily seen, because the floor was entirely vacant, stripped to its bones and waiting to be built out by a new tenant.
“It was a terrific way for the Responsible Property Investing Center to showcase the potential that energy retrofitting offers developers and property owners,” says Ciochetti, who was there to moderate a panel discussion on innovative investment vehicles. “As a model for the idea of sustainability the Empire State Building is pretty hard to ignore.”
Besides representing the CRE at the high profile programs, Ciochetti enjoyed the added benefit of meeting Catherine Pfeiffenberger, senior vice president of Skanska (www.skanska.com), one of the world’s largest international construction and project development companies and another MIT/CRE partner. Along with Next Phase Studios (www.nps-architects.com), a large full service architectural firm, Skanska has provided support for Ciochetti’s innovative 1K House project. (See “Ciochetti Introduces the 1K House to Kenya” and “1K House: Affordable Housing for the World” elsewhere on this site.)
Skanska had decided to move its New York office to the 32nd floor of the Empire State Building in 2008, requiring a $4.6 million build-out that, according to Tom Stabile in McGraw-Hill’s New York Construction magazine, “may set the benchmark for what it costs, what it takes, and how much can be saved in the long haul by creating a LEED CI Platinum office in an existing building, much less a landmarked skyscraper.” Pfeiffenberger, who has earned the LEED AP credential, was involved in the entire build-out process and had some interesting observations to share with Ciochetti. (See “Skanska’s New York Office Demonstrates Ups and Downs of Sustainable High-rise Building,” following this story.)
“I’m really glad Dr. Ciochetti could participate in our conference,” says David Wood, director of the Initiative for Responsible Investment at Harvard, who is one of the two co-directors of the RPIC. “Everyone wants to understand better how markets can engage in promoting sustainable development. That’s not only true in cities like New York, where retrofitting can have a huge impact, but also in emerging markets. To my mind it’s a natural place to look for such opportunities, and Tony certainly has a global perspective. He’s a strong advocate for sustainable development and an articulate spokesman for sustainability wherever he goes.”
As though to prove Wood’s assertion correct, a week after the RPIC conference, Ciochetti found himself making the case for sustainable development more than 5,000 miles removed from New York, in one of the largest and oldest cities on the planet.
“Quality” and “Slow” vs. “More” and “Fast”
n June 15, Ciochetti flew to Istanbul, where he was a guest of the Turkish Association of Real Estate Investment Companies (GYODER) at the organization’s 10th annual Real Estate Summit. “Turkey is a great place to talk about sustainability and the future of housing,” says Ciochetti. “It has one of the youngest populations in Europe, with more young people than the total population of many European nations. That is clearly apparent in Istanbul, the world’s fifth largest city proper and also one of the world’s oldest cities. The population of Istanbul more than tripled during the quarter of a century from 1980 to 2005.”
Bringing together a cast of world leaders in the real estate sector, the GYODER event focused, in large part, on the future of real estate. That the topic was central to the event was underscored by the fact that the visionary panel discussion Ciochetti participated in was called “Cities of the Future.”
For Ciochetti, attending the event also presented an opportunity to re-connect with MIT alumnus M. Emre Camlibel, CEO of Soyak Holding, the giant Turkish construction and development company and a member of the board of GYODER. “Emre is clearly a well respected leader in the industry,” says Ciochetti. “When we have strong alumni like him, it’s hard not to get involved in these markets.”
Meeting the growing demand for affordable housing in developing countries poses a host of challenges, says Camlibel, who moderated the “Cities of the Future” panel. Not surprisingly, he was quick to note that financing sustainability is one of those challenges, and one about which Ciochetti came to the program armed with both professional expertise and a global perspective he has been honing during years visiting the world’s leading real estate centers.
“Dr. Ciochetti is one of the most influential authorities today, with his expertise, knowledge and vision in the field of real estate,” says Camlibel. “Hosting him was a great opportunity for the real estate industry of our country. He is one of the figures closely followed by the leading institutions and organizations operating in the field of real estate in Turkey. His studies in the field of sustainability are internationally recognized.” (See “Financing Sustainable Development in Turkey,” following this story.)
Other panel participants included George E. Leventis, president of Langan Engineering and Environmental Services, prominent architect Frederic Schwartz, and MIT alumnus Peter Droege, professor of Sustainable Developer at the University of Liechtenstein. Two years ago, Ciochetti was introduced to Droege by Lorenz Reibling, chairman of CRE partner Taurus Investment Holdings, and he participated in the symposium on responsible property development that Droege developed at the University of Liechtenstein.
“At a time when rates of consumption are being questioned in the world and the concepts of ‘quality’ and ‘slow’ are replacing ‘more’ and ‘fast,’ we must ask ourselves what is the best for our society,”
The GYODER event afforded Ciochetti and Droege an opportunity to talk about the keynote address Ciochetti would be delivering on Sustainable Infrastructure Day at the Liechtenstein Congress on Sustainable Development and Responsible Investing in September. “Tony is a terrific force,” says Droege. “It is terribly important for MIT to have international ambassadors of knowledge like him. He has a tremendous grasp of detailed technical issues of energy optimization, and his enthusiasm for grasping the business and development side of doing better, in sustainability terms, is simply infectious.”
The fifth member of Ҫamlibel’s panel was M. Tunç Soyer, mayor of Seferihisar, a resort city on the coast of Turkey that is one of the more than 130 cities, in 20 nations, that have joined the Cittaslow (slow city) movement. Launched in Italy, in the 1990s, Cittaslow is open to cities with a population of fewer than 50,000 residents. To become a member, municipalities must demonstrate strong commitment to the nearly 60 goals and principles of the organization, which include protecting the environment, promoting individual cities’ cultural diversity and uniqueness, inspiring residents to a healthier lifestyle, and resisting the homogenization and globalization of towns all over the world. To learn more about Cittaslow, visit the organization’s website at http://www.cittaslow.net/.
“At a time when rates of consumption are being questioned in the world and the concepts of ‘quality’ and ‘slow’ are replacing ‘more’ and ‘fast,’ we must ask ourselves what is the best for our society,” says Camlibel. “Maybe in the future, megacities and urban areas with populations of 50 million will be a part of our lives. To attain a controlled increase in population density and keep the burden of this population on the environment at manageable levels, there must be a new understanding of management, of settlement, of transportation and of energy utilization.”
There’s no easy way to reach nations as far away as Turkey or, much farther still, India, China and Japan, nations to whose real estate centers Ciochetti has been building bridges since 2004. Economies of travel inevitably call for layovers in major transportation hubs. On the trip home from Istanbul, Ciochetti took advantage of his stop in London to catch up with Don Belanger, managing director of UBS Investment Bank; Michael Topham, executive vice president of CRE partner Hines UK, the world’s largest private developer; and David Maxwell, ceo of Deutsche Land.
“It’s essential for the CRE to expand into key real estate markets,” said Ciochetti, “and Istanbul, with its huge population of people under 40 is certainly such a market. With its east-meets-west location and rich and varied culture, it’s a huge city with immense potential. From a real estate perspective, it’s a city that’s going to be interesting to be involved with for a long time. So, this trip was important that way.
“At the same time, we need to maintain contact with all our global partners,” he added, “and on this journey I was able to catch up with many of them on the way home. I was able to showcase CRE research, meet new participants in the world of real estate, make new contacts and catch up with existing partners. That’s what I call a successful trip.”
Skanska’s New York Office Demonstrates Ups and Downs of Sustainable High-rise Building
Skanska USA’s new home, on the 32nd floor of the Empire State Building, is more than just a stunning suite of offices for the multinational construction and development company, the largest construction firm in Sweden. It is also a showcase for the idea of sustainability.
When Skanska, which had previously occupied offices on Madison Avenue, began looking for a new office last year it was already determined to pursue the LEED CI Platinum status. Though the Empire State Building is 80 years old, it offered Skanska a “leg up” in that pursuit. Built to take advantage of natural daylight and ventilation, the building was “inherently green” noted Skanska’s executive vice president and area general manager, Steve Pressler.
Skanska’s nearly $5 million build-out of the 24,000+-square-foot space generated an impressive 44 LEED points. On the 57-point scale that was sufficient to earn the Platinum status. While construction of the facility cost some $200,000 more than regular Class A office construction would have, Skanska expects to recoup upwards of $375,000 over its 15-year lease, based on projected energy savings of more than 45 percent. Already, in fact, the company is experiencing energy savings over its previous space which, some 10,000 square feet smaller, could not accommodate the company’s entire New York staff.
Though Skanska’s success certainly serves as a model for sustainable high-rise development, Catherine Pfeiffenberger, senior vice president of Skanska, is quick to note that the quest for sustainability in urban high rises can be challenging.
“Good air quality calls for an open floor plan,” she says. “But achieving that, and our objective that everyone in the office should have a view, was not simple, given that employees also want offices.” To address those dual – and dueling – objectives, Skanska opted for an under-the-floor air plan, which offered challenges of its own. Nothing about a project like this is simple, she notes.
“We were able to dramatically reduce electric use,” Pfeiffenberger adds, “but in other areas it was much more difficult to achieve the same kinds of savings.” The company’s desire to reduce water consumption, for instance, was complicated by the fact that an anticipated level of water consumption is built into the design – and lease costs – of skyscrapers like the Empire State Building. “For a lot of tenants there’s not much incentive to use less,” Pfeiffenberger says.
Looking around the 61st floor, on the day she met Tony Ciochetti at the Urban Land Institute and Responsible Property Investing Center programs, she pointed to the inherent limitations imposed by the building’s immense supporting columns. “You can’t move columns,” she said, but with a shrug she was quick to add the corollary: “The older the building, the better the bones.”
To see photographs of and read more about Skanska’s LEED Platinum headquarters in the Empire State Building visit http://skanska.eu/en/Projects/Display-project/?pid=925
Financing Sustainable Development in Turkey
“Hosting Dr. Ciochetti at the 10th Association of Real Estate Companies (GYODER) Summit was a great opportunity for the real estate industry of our country,” says M. Emre Camlibel, CEO of Soyak Holding. “Among the priorities focus on by Soyak, which has lead the industry with its activities in the field of real estate in Turkey for almost 50 years, are environment and sustainable life. Creating projects to meet the ever-changing needs of life, Soyak aims to contribute to the development of a quality lifestyle. That’s why I attach great importance to the philosophy behind Dr. Ciochetti’s studies.”
At the GYODER conference, Ciochetti spoke on the subject of sustainable financing. “Providing valuable insights into the industry, Dr. Ciochetti addressed the financing problem encountered by developing countries in the real estate industry,” said Camlibel, a civil engineer who completed post-graduate work at MIT in 1994. “Financing of sustainability is an issue which is particularly important for developing countries. Long-term real estate policies gain much more significance as the cities of tomorrow are being designed. Dr. Ciochetti emphasized that the housing demand is growing in developing countries, especially China and India, (and) the demand for ‘affordable houses’ also rises.
“Another issue addressed by Dr. Ciochetti is that tomorrow’s buildings should be designed to achieve low energy consumption. He emphasized that increasing energy efficiency would also result in significant saving, which would eventually increase the value of the building. Thanks to energy-saving building design, these houses will pay for themselves in a much shorter time.”
Camlibel lauded Ciochetti for the work he is doing on the 1-K House Project (See MIT 1K: Affordable Housing for the World, on this site.) As an example of sustainable development Soyak is currently involved in, Camlibel pointed to the Soyak Siesta project in the port city of İzmir, on the Aegean Sea, Turkey’s third most populous metropolis.
“The Soyak Siesta project consists of six stages and 2,250 apartments, which we developed with the objective of building horizontal buildings with fewer floors,” he said. “It provides residents with a chance to live in the midst of nature without traveling far from the city. Soyak Siesta is covered with a ‘green’ roof. The lighting in its living rooms is equipped with dimmers. Energy-saving light bulbs are used in all light fittings. Lighting on the grounds is achieved with LED systems, and solar panels are used to heat water. Apartments are also equipped with two-stage 3-6 liter flush systems in the bathrooms to urge residents to conserve water. An energy savings of 35-50 percent is targeted with the use of correctly applied façade insulation.
“Our main objective is to create healthy and sustainable living areas and to provide the urban residents with projects that will create the best environment for a happy and comfortable life,” he said. “Environmental practices are our priority while we provide creative solutions in line with the expectations of modern life.”
Camlibel spoke at the CRE graduation in 2008 and has continued to work with the Center ever since. Soyak has hosted visiting CRE students and Camlibel says, “I believe that our cooperation with MIT, which is among the best universities in the world, brings benefits for both sides. Cooperation between the academic community and the private sector contributes to the future of the real estate industry, as well as providing business experience for students.”
