Blueprint

Founded at NYU Schack Institute Of Real Estate

Sustainability

Professor Brodsky’s Reading List

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As part of our commitment to innovative practice, we invite readers to share knowledge in their areas of interest and expertise through creating and sharing a reading list

These books are a combination of what Professor Brodsky refers to as readings with the greatest potential, if one were to read nothing else, to appropriately influence and encourage young real estate developers by introducing them to the issues, opportunities, and challenges of budding careers.

  • Building Revolutions: Applying the Circular Economy to the Built Environment, by David Cheshire
  • Climate of Hope: How Cities, Business and Citizens Can Save the Planet, by Michael Bloomberg and Carl Pope
  • The Well-tempered City, by Jonathan F. P. Rose
  • The Mass Timber Design Manual, Think Wood, publisher
  • ULI Sustainability Outlook 2021, The Urban Land Institute, publisher

Mass Timber March Madness

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State of the Mass Timber Industry

Over the month of March, an organization called Mass Timber City held a series of webinars entitled Mass Timber March Madness (henceforth, MTMM).  Speakers came from all over the world, including mass timber hotspots like Finland and Germany, as well as those working in the more nascent industries in the United States and Canada (a full list of speakers can be found here).  They came from many industries, including mass timber production, general contracting, architecture, government, sustainable finance, and tech, which has embraced mass timber much more rapidly than the broader American market.  Notably, there was not a substantial presence from real estate developers.  Through the month of discussions, a broad narrative emerged.  Participants saw the mass timber industry as poised for substantial growth, and with the potential to play an important role in the fight against climate change and the housing crisis.  However, scores of obstacles, from regulatory hurdles and exclusionary zoning to engrained workflows in architecture to developer and financier wariness remain to be solved.  These problems are complex and interconnected, and the solutions are far from clear, but they also present opportunities for the entrepreneurially minded.  

What is Mass Timber? Why is this an Exciting Opportunity?

First, it might be useful to provide some background on Mass timber, and why many find it so exciting.  Mass timber refers to a wide swath of products that usually amount to a great deal of small pieces of wood combined into a much larger piece.  The size of the smaller pieces and the method of combination can vary, and each technology has advantages and disadvantages.  The most well-known in the US is probably CLT, or cross-laminated timber.  CLT is made up of timber boards (often pretty similar to the 2” x 6”s found at a typical hardware store) glued into panels edge to edge.  These panels are then glued face to face with the direction of the boards alternating (cross-laminated).  These panels can be used for floors, walls, and roofs.  Panels are also made of boards nailed together (NLT, or nail laminated timber) and held together by dowels (unsurprisingly, DLT, or dowel laminated timber).  Structural beams are often made of Glulam, which like CLT is made up of boards glued together, but rather than gluing edge to edge first, Glulam is typically a single board width, but can be made very deep.  

Besides these and a variety of other similarly comprised products, there also exist more elaborate and technical mass timber products, like prefabricated floor systems that use structural engineering to decrease the amount of material compared to CLT.  This has the added benefit of providing ready space for things like insulation and mechanicals as well (which can even be installed in advance!).  

With that far from comprehensive overview complete, why are people excited about mass timber?  There are a few answers, but the most important is that mass timber is generally considered an environmentally friendly alternative to typical steel and concrete tower construction.  While details of construction technique will affect this number, building a mass timber tower typically produces somewhere around 20% of the emissions of a similar tower in steel and concrete (although there is debate around this number).  Additionally, trees absorb carbon when they grow, and store it until the tree is burnt or dies and decays.  When a tree is made into timber and then into a building, that carbon is “captured.”  When paired with sustainable forestry practices, mass timber buildings have the potential to act as a massive carbon sink – one of the best possibilities at present to not just slow climate change but reverse it.  

Despite the purported benefits of wood construction, many people’s reaction is simple – what about fire?  The answer is that these mass timber buildings do not burn in the way wood typically does, say in the way that a standard stick frame American home burns.  While part of this is due to a variety of technological safeguards, like fire-resistant coatings and powerful sprinkler systems, much of it comes down to the simple bulk of mass timber products.  When a mass timber beam burns, the exterior chars quickly.  However, it is difficult for the fire to move deeper into the beam, because there isn’t sufficient oxygen to fuel the fire.  While it can burn eventually, mass timber can achieve similar fire safety to other construction methods. 

Mass Timber in the United States Today

Mass timber construction has a long history in the United States, going back to heavy timber framing that, rather than using many wood boards glued together, simply used massive old-growth trees to provide similarly massive beams.  Many of these buildings survive, often in the form of warehouses in older cities.  However, fire in Chicago and San Francisco (which loom large in any discussion of mass timber) changed the perception of wood construction in the US, and steel and concrete became universally dominant.  While this began to change in Europe several decades ago, the United States has moved much more slowly.  One frequent lament from event commentators was how much the US lags Europe in terms of supplier and product volume and diversity, as well as in completed projects.  That said, projects are happening. Much of the activity is centered on the west coast, where the timber industry is long established.  The current tallest mass timber building in the US is the eight story Carbon12 in Portland.  In New York, there are a few mass timber office projects under construction, and there were plans for a 10-story condo building on 18th Street (designed by SHOP architects, which is active in the space), but this ended up falling through.  

Despite this lag, the United States does appear to be picking up the pace.  The number of projects tracked by industry group Woodworks has increased substantially over the last decade.  Hundegger, a prominent manufacturer of the CNC machines used to manufacture many mass timber products reported increased interest and sales of their machines to the United States.  One strong market for mass timber buildings has been the offices of high-tech firms.  Representatives from both Sidewalk Labs (an Alphabet company) and Microsoft presented during the event, and both firms are investing both in mass timber and in the technology that supports it.  Even outside tech, mass timber offices appear to be settling in as an attractive and visible way for a firm to demonstrate its social conscience.  Wal-Mart has announced that its new Arkansas campus will be primarily mass timber – more than 1.1 million cubic feet.  As further demonstration of their interest, the firm also invested in Structurlam, the company that will produce the components for the project.  There is also increased interest from the finance sector, both in the form of ESG (environmental, social, and corporate governance) focused funds and on venture capital in general, which, as readers of this magazine will know, view proptech and contech as large potential markets.  

Obstacles to Broader Mass Timber Adoption

Despite these positive trends, there remain substantial obstacles to widespread adoption of mass timber.  

Regulatory Hurdles

One of the most substantial is building code and local regulatory bodies, who have moved much slower than their European counterparts in supporting mass timber.  The International Building Code, on which most American building codes are based, permitted wood-frame structures up to six stories (85 feet tall) in 2012.  The newest edition, the 2021 IBC, allows for mass timber up to 18 stories (270 feet) and nearly one million square feet.  This is slow, by international standards.  In Canada, the student housing tower Brock Commons opened in 2017 with a height of 18 stories (174 feet).  Mjøstårnet in Norway opened in March of 2019, at 18 stories (280 feet).  Furthermore, the IBC requires mass timber buildings at that height be fully encapsulated in drywall, which adds cost and removes the aesthetic advantage of wood construction.  Finally, some American jurisdictions move even slower than the IBC – New York’s upcoming code revisions are based on the 2015 and 2018 IBC, which means they will not include the taller mass timber allowances.  While it is still possible to build mass timber towers where they are not explicitly allowed by code, this requires expensive ad-hoc performance testing, which adds substantial complication to an already complicated choice for developers.  

That said, regulation does appear to be moving in the right direction for mass timber, and there are organizations tackling the problem from a variety of directions.  Proponents of mass timber have been involved in drafting the IBC’s new rules. Trade organizations like Woodworks (a MTMM attendee) are advocating for these changes and educating the development industry on their progress.  From another direction, Jon Roebuck of Holmes Solutions spoke of how his firm provides testing of materials, components, and designs for developers to demonstrate safety to local regulators.  This helps developers establish “performance-based” code compliance and is the method by which existing or in-progress mass timber buildings in NYC have been permitted.  It’s a helpful option for those looking to pioneer, but the added time, expense, and uncertainty hinder widespread adoption.  Roebuck highlighted the need to move from a “detail” to a “product” – that is, from a one-off solution that solves a problem to a plug-and-play, tested solution with regulatory approval that can be deployed repeatedly.  

Insurability

Another complication for mass timber construction is insurability.  While the safety of well-engineered mass timber construction has been firmly established, its novelty and the slow movement in building codes makes it a more difficult sell to insurers.  According to Janelle Leafblad of Woodworks, it is frequently a challenge for owners to get their insurers on board with a mass timber project.  Woodworks can help walk owners through that conversation and provide useful data, but like most problems emerging from mass timber’s novelty, increased exposure may be the most potent cure.  

Trained Labor Availability

While a frequently mentioned benefit of mass timber construction is the potential for smaller construction teams (particularly valuable given the large and growing labor shortage), specialized skills are required.  Many contractors are not familiar with mass timber construction and so may be wary of taking on a project.  Similarly, developers may have difficulty finding an experienced mass timber team, which further increases perceived risk. Leafblad again highlighted Woodworks’ work in this area, which includes training seminars where construction workers get hands-on experience with mass timber, including life-sized joint assembly.  Increased interest in mass timber construction should lead to more labor acquiring the skillset, and each additional project means more seasoned workers.   

Developer Wariness

Perhaps understandably, given these challenges, developers and financiers have been hesitant to move into mass timber.  Many of the benefits of mass timber construction, from its sustainability to shorter construction timeframes and lower finishing costs, are difficult for developers to quantify.  Some of this is a data issue, and organizations like Woodworks are working to solve it (for instance, by publishing case studies).  Policy makers have ample opportunity to encourage mass timber, and it dovetails nicely with many cities’ stated goals around climate change.  However, examples to date have been relatively sparse.  For example, NYC’s widely heralded Local Law 97 is concerned only with operational carbon, not embodied carbon, drastically limiting mass timber’s value.  

Mass Timber & PropTech

Another notable theme of MTMM was the intersection of mass timber and construction and proptech.  Because substantially more work on a mass timber building is done off-site, the process lends itself quite naturally to many technological and process advancements.  Offsite manufacturing is one of these, and presenters noted numerous advantages.  Building in a factory allows the environment to be sculpted around the work required – it removes weather from the equation, improves safety, and typically allows for more precise work.  Construction in urban environments typically involves small nuisances for neighbors, like noise and road closures.  More work done offsite means less of these annoyances, which could help diminish anti-development sentiment.  Additionally, taking the work offsite allows for the simpler utilization of impressive new machinery – massive CNC machines and      robotics capable of ever more complex work.  .  

BIM & DfMA

However, the more parts arrive at the job site finished, the less room there is for improvisation.  This means that more care must be taken in the design, and fewer problems can be left half-solved, for completion on the job site.  The industry is already moving in this direction, and BIM (Building Information Modeling) products continue to get more sophisticated. Where CAD (computer-aided design) allowed construction drawings to be done digitally (and hence, much more quickly and easily), BIM allows practitioners to model the connections and performance that emerge out of those drawings. 

However, MTMM presenters highlighted several areas where the process needs improvement.  Perhaps the most straightforward representation of the problem came from Fabian Scheurer of Design to Production, a firm that helps shape designs towards manufacturability – “when you digitize a shitty process, what you get is a shitty digital process.”  Each participant in the design process – architects, engineers, general contractors, subcontractors – is siloed during the design process, and information flows primarily in one direction (down, from engineer to architect to contractors to suppliers).  Substantial technical knowledge is required at each stage, but good processes for sharing that information are uncommon or nonexistent.  Scheurer noted the waste involved in a typical design process, where each actor provides too much information and too little quality (architects draw details subcontractors will glance at, and then begin from scratch). Salla Eckhardt of Microsoft said that her firm’s first focus is on simply establishing data standards so that information can be effectively passed between designers, producers, contractors, and operators.  If information can be made to flow both directions more efficiently – if general contractors can explain the cost differences between details to architects during the design process, for instance – this could create substantial savings. 

This idealized, more communicative process is typically referred to as DfMA (Design for Manufacture and Assembly).  This means design that accounts for not only how the building will perform, but also the capacity of producers and assemblers. For example, a BIM model of a mass timber building would incorporate how the various CAD plans fit together, as well as systems like HVAC and electrical.  To this, effective DfMA would add the mass timber factories’ production capacities, and assemblage constraints (like whether components interfere with each other’s installation – beams that must be installed first, but prevent CLT floor panels from being craned in, for instance).  Wolfgang Piatke of Hundegger, one of the largest manufacturers of the CNC machines, emphasized the importance of understanding the machines capabilities – 95% of operations are easy, 3% are very difficult, and 2% must be done manually.  This knowledge exists in the hands of manufacturers and contractors, but there is not a good system to pass it up the chain and allow it to be acted on.  If a design is completed without giving thought to these limitations, costs may be substantially higher due to decisions that are not vital to the design intent.  

Conclusion

This overview has only scratched the surface of the discussions held over the course of Mass Timber March Madness.  For those interested in the industry, videos of the presentations are available on YouTube.  Mass timber sits at the intersection of two of the greatest challenges facing the United States – the climate and housing crises.  It is also intimately linked with problems facing the construction industry at large, like declining labor productivity.  The event organizers should be congratulated for creating an engaging forum for discussion and a valuable learning resource, particularly for budding real estate professionals.

About the author: Aaron Marx is a graduate student at NYU SPS Schack Institute of Real Estate, pursuing a Master’s in Real Estate Development.  Aaron is passionate about well-designed, sustainable housing, and obsessed with the policies and technologies that can help produce it.

Multifamily Passive House: Connecting Performance to Financing

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Speakers at the Building Energy Exchange (BE-Ex) event, ‘Multifamily Passive House: Connecting Performance to Financing’ make you think twice before claiming it costs more to make your building sustainable. Read on for key takeaways from the event.

Speakers

  • Atalia Howe, Manager of Sustainability Programs, Community Preservation Corporation
  • Jon Braman, Executive Vice President, Strategic Initiatives, Bright Power
  • Jen Leone, Chief Sustainability Officer, NYC HPD
  • Eric Bluestone, Partner, Bluestone Organization
  • Mark Ginsberg, Partner, Curtis + Ginsberg Architects
  • Joanna Grab, Senior Sustainability Consultant, Steven Winter Associates

What is Passive House?

A set of standards requiring thoughtful design and quality control during construction to attain rigorous levels of energy performance. Principles include: airtightness, continuous insulation, thermal bridge free construction, high performance doors and windows, energy recovery ventilation, appropriately sized HVAC, and quality control via testing and certification.

Why Passive House?

Building to the Passive House standard reduces operational costs, which can offset incremental costs of construction and create ongoing cash flow. Benefits include utility cost saving, avoidance of carbon penalties and regulations, construction risk reduction, excellent indoor air quality and occupant health, superior comfort, climate resilience, and reliability.

Connecting Performance to Financing

While there are many benefits, we cannot ignore that fact that developers face numerous barriers adopting Passive House standards. Some obstacles include: limited access to financing because of the perceived first cost increase; limited data to prove operational savings; the inability to quantify value of non-energy benefits; and lack of methodology for underwriting these specific deals.

The research team established objectives to demystify Passive House Developments:

  • Objective 1: Provide a framework to compare data from a study group and control groups.
  • Objective 2: Compare site Energy Use Intensity between the study and control groups.
  • Objective 3: Compare carbon emissions and financial implications of carbon regulations.
  • Objective 4: Calculate operational cost savings.
  • Objectives 5 & 6: Demonstrate a methodology for underwriting incremental first costs and operational savings.

Knowledge is powerful. As we learn from the past examples, research supports that Passive House is an effective standard to maximize energy efficiency and carbon savings, recognizing value benefits that can be leveraged in underwriting deals. High-performing buildings can yield savings that increase NOI and offset incremental first costs of constriction. These Passive House buildings can be cost-competitive to construct and operate and can have great benefits on building within the affordable housing sector. As we invest in the future, we look to expand the database of sustainable tools to educate lenders and developers to make informed and conscious decisions to build sustainably.

Climate Tech Landscape

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Executive Summary

The COVID-19 pandemic presents a worldwide challenge to battle issues in our professional work, food systems, and public health. During these unprecedented times, our economy and society continues to suffer. Amidst the turbulence, our world encounters yet another fight: climate change. Unless in the next 10 years global greenhouse gas emissions cut in half and global warming increases to a maximum of 1.5°C, scientists acknowledge irreversible damage, such as extreme poverty + heat and major drought + flooding. Additionally, we must reach net zero emissions prior to 2050. Candidly, the entire economy must recreate itself as a sustainable entity. At large, sectors including energy, agriculture, transportation, materials & resources, and the built environment play a pivotal role. In preparation for the challenges which lie ahead, climate tech will act as the necessary driving force to adopt and innovate the global economy. Although the total dollars into climate tech appears insufficient, investment into the industry over the last seven years continues to grow. In particular, the built environment, the greatest industry contributing to climate change, is bound to receive far greater dollars of venture funding. A major headwind the built environment faces is the industry’s lackluster effort to adopt innovation. Nonetheless, trends driving sustainability, such as greater demand from stakeholders and shareholders, favorable capital markets and pressure from governments, will continue to accelerate the investment and adoption of climate tech initiatives. The market presents an opportunity for investors to enrich innovators with the capital required to produce a significant difference in the world and generate monumental returns.

Climate Tech Investing

Consisting of a large group of industries tackling the decarbonization of our earth’s economy, climate tech is the investment sector dedicated to achieving net zero emissions prior to 2050. Notable sectors within climate tech encompasses energy, agriculture, buildings, transportation, adaptation, industry and materials & resources. This overview will specifically touch on the ‘Built Environment’ and target the discussion towards buildings and construction.

Climate Tech Investment Opportunity

The human race is tasked with its greatest battle by decarbonizing our economic activities. Simply put, time is running out. The world is challenged to limit global warming to 1.5 °C by 2030; a battle which will require drastic action. By no means, should this draw investors to close the door into the space. While the solutions required to achieve this goal must be met quickly and effectively, already the climate tech bug is reaching local to national governments, small to large businesses, and shareholders + stakeholders around the globe. Additional trends driving investment and investor interest in the space consist of recent technology advancements, greater sustainable demand by consumers and corporates, political and regulatory commitments, and boosted investments in climate tech.

Overview of the Built Environment

Just close to 40% of the greenhouse gas emissions (GHG) entering the environment come from buildings and construction. Over a third of GHG emissions generated from building and construction is associated with embodied carbon emissions. Embodied carbon is the sum of all the GHG emissions resulting from the mining, harvesting, processing, manufacturing, transportation and installation of building materials. Close to 2/3 of the emissions mentioned draw from operations which encompasses all activities related to the use of the buildings, over their lifespans. In order to minimize the GHG emissions originated by the built environment, a building and the life cycle of one ought to integrate effective processes and solutions. Innovation in energy used to heat, cool and light buildings includes, but is not limited to, air purification, electrification, carbon capture, zero-carbon hydrogen, and passive solar and radiant heating. Additionally, processes to consider adopting on the embodied carbon side consist of material-efficient design, reductions in material waste, substituting low-carbon for high-carbon materials, and circular economy interventions.

Analysis

Investment level: From 2013 to 2019, the built environment noticed just over 6% or $3.7 billion of the total venture capital dollars invested into climate tech. Given the extent the built environment is responsible for climate issues, a disproportionality small investment from climate tech is in effect.

Climate Tech Landscape

Deal flow: In 2019, the built environment noticed 65 climate tech investments which is 5x more compared to 2013. Smart management and sensor technology raked in close to a third of the deals in 2019 primarily because of greater demand for this product, better understanding from investors, and low investment cost.

Investors: From a total dollars invested standard, Khosla Ventures, Obvious Ventures, and DFJ Growth rank the highest. Amazon Alexa Fund, Demeter, New Enterprise Associates, and Prelude Ventures lead investors for most deals invested in.

Performance Levers

Carbon Cutting Construction Systems

Themes in investments: over a third of the total built environment climate tech funding comes from here. Katerra, consisting of 90% of total investment dollars in the section, creates a lopsided investment story. The construction behemoth and a limited set of startups collectively sum up the group of companies aiding to control construction environments and waste reduction. Systems in place consist of modular construction, 3-D printing, off-site construction, and enabled construction planning. 

Notable startups: Raising $1.2 billion from 2016 to date, Katerra is the most funded startup in this section. Additional startups worth mentioning include Plant Prefab, Factory OS, and NODE. 

Sensor Systems

Themes in investments: Carrying a sum of 139 deals in relation to just over a quarter of the total investment dollars, the focal point of a sensor system is to save/reduce energy consumption costs in residential/commercial buildings. Systems in place consist of energy consumption analysis, site condition monitoring, equipment/material/facility management, and data gathering sensors.

Notable startups: From a relevance and venture capital total funding standpoint, companies in this vertical creating noise include Veev, a home operating system platform, EquipmentShare, a startup providing construction workers smart jobsite technology, and Prescient, an integrated design, engineering, manufacturing, and construction solution platform.

Final Thoughts

While the current capital, time, and energy spent towards the climate tech landscape is insufficient to achieve net zero emissions before 2050, over the course of seven years, the space noticed significant positive growth. As the largest proponent to GHG emissions by sector, the built environment is in a particularly special position to initiate positive change in the environment all while benefiting the bottom line in a scalable fashion. With the environmental crisis only likely to worsen this year, climate tech investing is likely to continue building momentum. Through trends such as growing advancements in technology, developing demand for sustainable initiatives by consumers and producers, local to national government backing, and increased capital allocation towards climate tech, the sector is well positioned to flourish.

About the author: Joshua is a graduate student at NYU SPS Schack Institute of Real Estate and Proptech & Innovation Committee Chair. As an aspiring built environment professional, Joshua is pursuing a Master’s in Real Estate. Influenced by constructing an innovative and sustainable built environment, he is determined to create a positive impact in the industry.

Going Green: Sustainability in the Built Environment

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Panelists

  • Michael Beckerman: CEO, CREtech
  • Greg Smithies: Partner, Fifth Wall
  • Michael Rudin: SVP, Rudin Management
  • Trista Miller: Associate Director, Sidewalk Labs
  • Joshua Moinian: Proptech & Innovation Chair, NYU REISA

Most people agree with the idea: buildings perform better if they aren’t on fire or under water. Then, why isn’t everyone jumping on the sustainability bandwagon? 

Joshua Moinian kicked off the event discussing the triple bottom line – economic, social and environmental evaluation of sustainability on investments. The real estate industry has an opportunity, and many would argue a responsibility, to produce a favorable impact on the environment. Buildings contribute greatly to climate change – in fact, buildings equate to 40% of all greenhouse gas emissions. Through education, connectivity, and innovation, we can become the change agents. 

Here’s what we learned: 

  • Opportunities: Decarbonizing buildings could become one of the largest venture capital opportunities in the coming decades.
  • Data: We need the right data. Life cycle analysis and transparent information will allow developers and contractors to make more informed decisions.
  • Demand: Tenants need to drive the “green” demand. We have seen many Fortune 500 companies make a sustainability commitment, inclusive of occupying spaces that are more sustainable. 
  • Financial “No-Brainers”: There is a perception that “greener products” are more expensive. In reality, companies are manufacturing new products that are less expensive than traditional products. Knowledge is power. 
  • Innovation: The greater the investment in sustainable technologies, the more efficient the product will be, which means fewer inputs and costs. There is powerful momentum to make sustainable materials the norm. 

In the end, sustainable business is good business, but many people need a wake-up call. We, the next generation, must tell the story now. We do not have 10 years to wait for the alarm clock. It must come from within — from tenants driving demand to green buildings, to developers seeing financial advantages of energy efficiency, and local and federal government support. 

Sustainability is not about the newest trend, or a flashy ad, it will become normal and routine. When one walks into a building, you do not question fire safety, so why should you question if a building is sustainable. Let’s continue the momentum to build sustainably. 

Four Steps to Adopting a Circular Economy in Commercial Real Estate

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The pandemic has challenged industries to confront the inevitable, climate change and social unrest for human equality. Companies have come forward to discuss a restructure in their organizations and set initiatives to include a more diverse workforce and/or benchmark of their carbon emissions reduction.  However, companies have failed to collectively discuss a reorganization in their business models and to consider a circular economy or cradle-to-cradle approach to business. In commercial real estate, small movements have taken place to integrate the circular economy (CE) approach to business, including the switch to renewable energy in lighting and HVAC. Furthermore, investments are lacking  today due to the misconception of high costs, which is refuted by Forbes. Tushar Mittal, Founder & Managing Director at SKV, recommends we continue to invest in renewables and includes 3 additional steps to embrace change: Design A Circular Office, Reduce Waste Landfill and Reuse What You Can. These measures range from readapting the building’s core to serving a versatile function to disrupt the supply chain of materials. The hope is for our industry to design buildings to be more of a material bank – where both construction material and interiors can be recycled, repurposed, leased and otherwise kept out of landfill.

Discussion Question: What other strategies can we push forward in real estate to adapt a circular economy (CE) model and commit to the ethical valuation of our planet?

Q + A with Cecil Scheib, Chief Sustainability Officer at NYU

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As chairman of the Proptech & Innovation Committee at NYU Schack, I’m fortunate to address matters and set goals most dear to me. With the overarching goal to provide greater awareness to the NYU community as it relates to real estate innovation, I curated my approach into four buckets: found a student-led real estate publication, moderate panel discussions with leaders in the industry, partner with proptech venture capital firms to give entrepreneurial students access to proper resources, and create ties with organizations in the realm of sustainability in our built environment. 

In 2012, NYU achieved its 30 percent emissions reduction goal five years ahead of schedule. The next set of climate goals is to reach a 50 percent reduction by 2025 and carbon neutrality by 2040. NYU’s greenhouse gas reduction progress will increase resilience, lower maintenance and insurance costs, and make buildings quieter, healthier, and more comfortable for their occupants. NYU accounts for almost 0.5 percent of all New York City GHG emissions from buildings.

Furthermore, to aid the achievable goals set by NYU, targeted attention towards building infrastructure is a priority. For color, the buildings and construction sector accounted for 36% of final energy use and 39% of energy and process-related carbon dioxide emissions in 2019, 11% of which resulted from manufacturing building materials and products such as steel, cement and glass. 

In order to achieve the goals set, we must aggressively reduce energy consumption in our buildings.

NYU employs strategies to reduce energy in academic and office buildings through conservation, efficiency methods and on-site power generation. NYU’s energy-saving strategies include standards for green construction and renovations; large-scale retrofits; operational innovations through building management systems, advanced controls, active monitoring, and operator training.

To facilitate and better understand the ongoing efforts at NYU, I spoke with Cecil Scheib, Chief Sustainability Officer at NYU. Please find the Q+A below:

JM: Let’s start off with your background. I’d love to learn more about your career path which ultimately brought you into the NYU ecosystem.

CS: Sure. Well, I studied civil engineering at Stanford in the late 80s, early 90s. I developed a strong interest in the environment around that time. After college, I helped found an eco-village, located in Northeast, Missouri, where our intention was to demonstrate sustainable lifestyles so that people could come and live a healthy, happy, fulfilling and successful life. At the time, we had solar panels, composting, organic food and green construction, but there was no place you could go and live while doing those things at once. Also, it was a pretty different type of construction compared to here in New York because they were straw bale houses with natural plasters from sand, lime and clay– some of which were on site. They were 100% off grid. When we took our ecological footprints, we had a 90% lower impact than the average American. Basically using 10% of the energy, 10% of the carbon emissions, and 10% of the water. So, it was a great example that it is possible to live a modern lifestyle and have much less of an impact.

JM: It sounded so exciting when you were touching on the eco-village. It reminds me a lot about what’s beginning to gain interest as with the three P’s– people, planet, profit. Did you guys embody that idea of living sustainably within the means of your people, as well as the planet, all while generating a dollar profit on that project?

CS: You know, part of the social orientation of the eco-village, in addition to the sustainability orientation, there was a strong aesthetic about sharing, which I think is part of sustainability. So, for example, people didn’t own private vehicles or cars at the village. We had an internal car sharing co-op. So, we shared two or three vehicles among 75 people. So that’s one way of having a much lower impact, but also it means you’re going to make some social choices such as ‘Hey, we’re going into town. I need to run errands and you have a doctor’s appointment. So, I’ll wait around when I’m done with my errands so we can drive home together once you’re done with your doctor’s appointment.’ So, it makes some choices and also a very strong aesthetic about doing it yourself. A lot of people were gardening or growing their own food, building their own houses and even making their own entertainment. For years, people were living on very little money. I was living on about $7,000 a year and with that was able to build a two-story, six bedroom straw bale house. For me, and the people I lived with, we had ethernet in every room and all the modern conveniences, including solar panel systems and batteries that ran the whole place. Of course we didn’t have urban rents, but if you’re willing to do things for yourself, it’s possible to live with a lot less money.

JM: It reminds me a little bit of a kibbutz in Israel. I was always amazed with the simplicity of the citizens’ living situations and just how functional they were. They weren’t making a tremendous amount of money but they were living within their means. Why don’t we jump into what’s exciting you today about leading out NYU’s ongoing sustainability efforts.

CS: Well, there’s so much going on right now and of course it’s been a hard year for everyone, especially for students. So maybe a little good news in terms of sustainability is a good thing. This year we ranked number 43 on the Princeton Review list of top green colleges. We’ve been on the big list before but never cracked the top 50. So that’s great. Another ranking we got this year through STARS, a Higher Ed sustainability rating system, got gold both times, putting us in the top 30% of international institutions ranked. People probably assume that those rankings are about our operational performance, like things with our carbon reduction. And that is part of it, but it’s actually largely based upon the efforts of faculty and students. This is all part of the STARS ranking, as much based on academics and engagement as it is on operation. So, that’s really a testament to the work that so many departments are doing all across the university and not just the Office of Sustainability. So, that’s super exciting to see the recognition. Climate agenda has been strong for a long time. We’ve reduced greenhouse gas emissions intensity by about 30% since we started, which is saving about $15 million a year from our energy budget. That’s money that can be put back into the NYU academic mission. So we think that’s great.

JM: You touched on the topic of students and faculty playing a part with NYU’s ongoing efforts. It’s not just within the NYU organization, it’s also the people within the building that make a difference. I’d love to hear how you believe students and faculty can get more involved and what we can do on our end to make a positive impact.

CS: Well, NYU is a large institution, right. We’re like an 80,000 person community. One quarter of all New York City emissions come from NYU. When we cut our emissions by 30%, that was like a .1% cut in citywide emissions. You could literally see NYU’s efforts on New York City carbon emissions. That is the result of a team effort of everyone, that’s not something as the chief sustainability officer I can do for people. I mean, it sounds like such old advice, but sometimes it’s true. It boils down to, ‘do you turn things off when you leave the room.’ These things really add up. So, what can students do to help reduce energy use, energy costs and  carbon emissions? Turn things off when you’re not using them. On the other end, I’m well aware of the massive effect a college’s experience can have on what you choose as a career and how you go about it. So as much as I’m interested in saving energy, I’m interested in what students are learning and what they’re talking to each other about. And again, I know from personal experience how much of what I learned was not from faculty, but from other students and communicating with them. That’s why my office spends so much time working with student clubs and talking with students, like yourself, and try to keep involved to help out any way we can with what students are doing to educate each other and themselves both about what needs to happen at the personal level, but also at the political and corporate level. If we’re going to address this crisis, all of these parts have to be working together.

JM: I’m curious to hear more about the current and future methods in place which relate to real estate sustainability.

CS: As you are aware of, over 96% of NYU onsite emissions come from buildings. We don’t have a huge fleet of campus vehicles. Any path to reaching our carbon goals has got to go through buildings and that’s similar to the city– three quarters of its emissions are for buildings. Truly, real estate professionals are absolutely critical to getting this right. Real estate professionals are necessary to help save the world. That’s what it boils down to. I think part of what needs to happen is we need to stop looking at sustainability as something that is edgy, new or interesting. It has to be something that is completely normal and routine. For instance, if you’re a prospective tenant looking for space, you don’t ask the broker about the fire safety of the space– you just assume that that’s taken care of. We need the same thing for sustainability. Our buildings need to be just as sustainable as they’re safe. Right now, when I talk to brokers and say like, ‘Oh, do you sell the green features of your building?’ They respond with, ‘No one asks about those things, so we don’t tell them.’ So my answer to your question is, people need to be so educated about these things until they become so familiar that it’s just like second nature, not what’s necessarily cutting edge.

JM: Right on. At this point, it’s not a nice have. It’s a must have.

SC: It’s true. How many times do you get off the elevator and there’s one light switch that turns on and off all the lights on a 30,000 square foot floor? So, if you’re there working late at night in one corner of the floor, you’ve got to have 30,000 square feet of lights on. We got to stop doing that.

JM: Wrapping up, I wanted to ask about what advice you have for the next generation of real estate professionals.

CS: First of all, I think people need to be aware of this issue and what their role in it is. Educate yourself. Learn the difference between a sustainable building and an unsustainable building and how we can make things better. I really recommend involvement in professional associations that deal with this so students can talk to other people who are working on it and support other peer groups. I am on the board of a nonprofit called Urban Green Council, which is the leading voice for green buildings in the city. I recommend students to check that out. In fact, because NYU is a member, if you or other students want to attend events, let me know. We have a certain amount of complimentary admissions so students can attend free of charge. Go to urbangreencouncil.org to check out the upcoming events. 

Prologis – Leader by Example

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Time and time again, I reevaluate my place in society. Who should I surround myself with? What am I here on earth to accomplish? What is my purpose? Who must I follow for guidance? Thoughts like these provide great insight into who I am at the core. With a pandemic at the forefront of our culture, my current reflections ensue greater intent and reason. I now dig deeper to understand the necessity for the human race to come together not only in times of celebration, but also hardship.

Do good for thy neighbor. I stand by this message. One company to take note of which aligns with my values is Prologis. Led by Hamid Moghadam, the “Ahead of What’s Next” organization follows suit with not words, but actions. Through their Prologis Essentials program, customers gain additional business opportunities. Also, the company recently received an award for 10 GRESB Green Stars. During these tough times, Prologis is showing its true colors by providing leadership for companies and professionals to follow.

Discussion Q: Which company do you notice impacting our society in a positive way?

Repurposing the Built Environment

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Ground-up construction is frequently regarded as the best channel for incorporating various green measures, yet some of the most effective sustainable projects are reinventions of existing properties, as discussed last week at the U.S. Green Building Council’s Greenbuild conference. The building sector accounts for roughly a third of global fuel consumption, and in turn, adaptive reuse projects are on the rise as our understanding of embodied energy grows.

One example is the UCLA Center for Health Sciences in Los Angeles, which was originally a hospital. Instead of being demolished, the 60-year-old science building was transformed into lab space for students. And, by reusing the existing building, the renovation will reduce the property’s carbon footprint by 48% over 20 years.

Q: How does adaptive reuse satisfy the three pillars of sustainability?

What We’re Watching, Reading, Listening To

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Podcast – City of the Future – Sidewalk Labs

Review: It’s no secret that cities are progressing to keep up with the times. Rapid urbanization, driverless cars, and evolving infrastructure are challenging cities to adapt. Hosts Vanessa Quirk and Eric Jaffe discuss one subject in detail in each episode. The duo kicked off their inaugural episode with a conversation about mass timber. Skyscrapers wouldn’t have happened without the early innovations of structural wood. The hosts are joined by wooden buildings leader Michael Green and Sidewalk’s Director of Building Innovation Karim Khalifa to discuss how wooden buildings are making a comeback.

Docuseries – Home – Apple TV Originals

Review: The docuseries “Home” explores the world’s most innovative homes, from a 3D-printed community in Mexico to a bamboo palace in Bali. A family home inside a greenhouse in Sweden. A bamboo treehouse in Bali. A 344 square-foot Hong Kong apartment that transforms into infinite layouts. These are just a few of the boundary-pushing buildings featured in the new AppleTV+ series Home. Although the houses featured are some of the most unconventional and innovative in the world, this is not your average home show. I love the series because it is centered on the concept of innovation and big ideas and solving problems creatively.

Book – Transfluence: How to Lead with Transformative Influence in Today’s Climates of Change

How do you lead with transformative influence in today’s complex world?

About: Walt Rakowich brings a real-world perspective to leadership that’s based on experience, not just theory. Walt was CEO of Prologis, the world’s largest owner of industrial warehouses and a critical partner to companies distributing products throughout the global supply chain. The company was near bankruptcy when Walt took over at the height of the Great Recession. While leading Prologis back to prominence, and in the years since, Walt realized leaders today must lean into timeless values and principles, but with a fresh perspective on the new realities of our leadership climates.

The modern leadership environment exists at the convergence of three distinct and dynamic climates: the climates of access, diversity, and acceleration. On their own or in the aggregate, these climates produce significant opportunities and tensions that will challenge leaders for generations. With a fundamental understanding of these climates, leaders develop a selfless approach that withstands the toughest storms.

Transfluence shows leaders how they can have transformative influence by overcoming their fears and pride, building transparency into their leadership, developing a strong core of authentic values, and passionately pursuing a meaningful purpose. When leaders do this, they seize opportunities, embrace challenges, and make their organizations and communities greater than ever.

→ SIGN UP for REISA’s fireside chat with Author, Walt Rakowich:  bit.ly/reisa-event

What are you watching, reading, listening to? Let us know in the comments.