Investors, Customers Pushing Environmental Responsibility

6/23/2011 | By Allen Kenney

Demand from customers, investors and regulators is spurring more environmentally conscious construction and property operation in the commercial real estate industry, according to David Stanford, founder and executive managing director of RealFoundations.

RealFoundations is a Dallas-based management consultancy firm that specializes in the commercial real estate sector. In a video interview at REITWeek 2011: NAREIT's Investor Forum at the Waldorf=Astoria in New York, Stanford discussed his firm's involvement with NAREIT's Leader in the Light Awards program, as well as other key issues facing his clients.

In March, RealFoundations hosted the first-ever Leader in the Light Working Forum at its offices in Dallas. Stanford said RealFoundations was motivated to get more actively involved with the Leader in the Light program in response to the growing demand from the commercial real estate industry's stakeholders for more sustainable building and operations.

"You have investor-led demand to be more socially responsible and to do better with the environment," Stanford said. "That is now translating into customer demand. You're going out and getting new tenants in office and retail, and that's starting to filter into the leasing discussions."

Stanford added that regulatory pressures are mounting for commercial real estate companies, too. He pointed out that environmental regulation in the United States tends to start with state and local governments, whereas international markets feature top-down regulatory regime emanating from the national level.

Stanford said RealFoundations' clients are increasingly requesting consulting services related to international expansion.

"We work with REITs and other partners in the capital stack, and, increasingly, our work is both inside and outside the U.S.," he said. "We do a lot of work with multi-country portfolios. That kind of work in our business is increasing, so we see the export of the REIT structure really driving requests in our business."

Additionally, RealFoundations' clients have shifted some of their focus from cutting costs through streamlining "back-of-the-house operations" to generating increased revenue. Likewise, commercial real estate companies are no longer so "insularly focused" as they have been during the economic recession, according to Stanford. Now, they're setting their sights on growth and taking advantage of opportunities, he said.