A Student of the Real Estate Game


Interview with Urban Visions: The Importance of Sustainability

Feb 8, 2010 | Entrepreneurship

Our nation is expected to grow by nearly 90 million people over the next 30 years. We face a critical choice: do we grow by sprawl and continue the destruction of biodiversity, social degradation and adverse climate impacts, or do we develop compactly, building diverse, healthy transit- served communities? It’s up to us.

Urban Visions is a progressive real estate development and brokerage company committed to smart growth principles, sustainable development choices and increased urban density. They’re leading the way to redesign and revitalize downtown Seattle.

Today we’re lucky to have an interview with Vice President of the Company,Broderick Smith. Broderick sits down with us to talk a little about the company, the importance of sustainability, the LEED system, and blogging. Be sure to check out their newly designed site and their blog for more information about the company and their projects.

Urban Visions is a very progressive company, can you tell me a little bit about the creation of the company, its values and why you as a company believe sustainable development is so important?

My father, Greg Smith, founded Urban Visions in 2002 with a commitment to sustainable development and smart growth principles, two fundamentals which he has bundled into all aspects of the firm.   I like to think of it as a ‘sustainability screen’ that we’ve integrated into our decision making process – nine times out of ten a project or an idea comes out better than it went in when we run it through the ‘green lens’.  Seattle, with its interesting land supply constraints (water, mountains, growth management act etc), was victim to a large amount of urban sprawl over the past twenty years.  So taking that into consideration and balancing it with development, Urban Visions’ ultimate credo is to promote urban density and smart growth in order to protect the qualitative assets (Olympic Mountains, Mt. Rainier, Puget Sound, Lake Washington etc) that attract so many talented people and businesses to our region.  In other words, our surrounding natural resources distinguish us from the competition; we want to preserve this competitive advantage for the city while creating exciting places to live, work, and play.

Prior to founding Urban Vision’s, Greg was a principal of his father’s firm, Martin Smith Inc.  He also founded Martin Smith Development Corporation where he developed buildings such as Millennium Tower, and entitled/sold other sites such as IDX Tower.  He left because he wanted to pursue his passion for development and the environment.  It was a strange concept to some at the time, but one which now makes perfect sense.

What projects are you currently working on? Do you have any development plans in the pipeline?

We are currently working on several projects.  The most relevant is Seattle’s first Hard Rock Café, a LEED Gold (soon-to-be) certified restaurant, bar, and concert venue scheduled to open in February.  It is a very exciting development – Hard Rock gets it when it comes to sustainability and responsible development, and they fully embraced the LEED process.  We acquired the building, a former pawn shop and adult book store in front of the Pike Place Market, in 2006.  The location along Seattle’s busiest pedestrian corridor, Pike street, is phenomenal; Hard Rock will bring great energy to the area, which currently receives more than 10,000,000 visitors each year.

We are also working on entitlements for a 35 story LEED–certified apartment tower across from Hard Rock’s new location.  The 19,000 SF site is currently a parking lot but will eventually address a 440 foot tower with 340 apartments plus a sky bar and restaurant overlooking Pike Place Market.  Tom Kundig, recipient of the 2008 National Design Award in Architecture Design, is designing the tower.  His talent coupled with Greg’s vision is a remarkable combo.  This project, which is being modeled after the concept of an ‘urban tree’, will be a unique and iconic addition to the Seattle skyline.

We’re also working on a Green Auto Row to support what we see as a revolution in the automotive world (the Nissan Leaf for example); there are some other projects we are molding right now that have not yet gone public.  It’s a great time to get creative and tee-up for the next cycle.

There is this misconception that there is a prohibitive cost premium to building green. What will need to happen to change the general public’s view?

Our view is of course very micro in the whole scheme of things since we focus on the Seattle market, however in Seattle, the demand is here.  We see it and we hear about it on a day to day basis.  There are skeptics out there, but we think the evidence is overwhelming for developers and landlords.

Ultimately we think it comes down to smart design.  As more and more architects, contractors, and developers familiarize themselves with the process, the more innovative and cost effective the green process will become.  Technology plays a huge factor in this as well.  I’m a big believer in letting markets move naturally, and I’d like to think the markets are naturally demanding a sustainable, healthy product.  The government is getting involved, but I think it’s only speeding up the process, not forcing it.  Large corporations are demanding it (Microsoft for example), and this continued demand will help reshape the misconceptions regarding the green premium.

There are studies that show LEED accredited buildings obtain higher occupancy and rental rates than their peers (check out a new study by CoStar on this subject).  Eventually I think this rent premium will disappear.  Instead, Landlords with inefficient buildings will be penalized by the market (IE discounted rents).

Has the green building premium almost completely disappeared?

If you are referring to the green premium as it relates to construction, there is still a cost.  From what I understand, it really depends on the quality of the team you’ve assembled to get you over the LEED hurdle.  I’ve heard of projects coming in with almost no green premium, and others with quite a large premium. Its’ also important to note that there is a relationship between the green premium and the total project cost.  A sustainability ‘guru’ from a prominent construction firm recently told me that a $5,000,000 project might have a 2.5% premium, while a $200,000,000 project might have a 0.10% premium.  These are estimates of course, but his point is the premium varies from project to project based on size and design.

Say a LEED Silver project that cost $200 PSF included a 2.5% ‘green premium’, or $5.00 PSF, but the landlord received an additional $1.00 PSF in rent per year.  Who knows where CAP rates are today, but say they’re at 8.0% here in Seattle for office product.  If that were the case, I would pay the 2.5% premium…  Another reason why I would spend the money is some funds and investors won’t even look at your building anymore if it’s not LEED, and the same holds true with tenants in the market.  Tenants are going to become more and more conscious of a buildings’ energy efficiency, and the governments are going to monitor it as well (sub-metering will become a must.)

The company also has a blog, how has blogging helped the company? Have you done any deals or got any business directly through the blog?

The blog is a fantastic communication medium for us.  I like it more than other social media because we own and control the space right down to the domain.  We can completely customize the site, and our brand is not diluted by another brand, person, or advertisement.  Delivering the latest news or our thoughts on a particular subject is fairly simple; in other words you don’t have to be a web-dev to figure out how to update the page.  We’ve integrated our blog into the new website, and we are preparing to unveil some innovative new features to better integrate the blog with our business.

To answer the second part of your question, we have received business through our blog, and I think this trend will only grow in the future.  I use Google Analytics to track how many people read it and what content they were most interested in, and find that feature very useful to gauge what’s working and what isn’t.

You’re studying for your LEED AP Designation, how has that process been?

I thought about taking the exam before the new LEED guidelines were passed, however I decided to wait and study the new system, LEED 3.0.  I am currently involved in the LEED EBOM process for an Urban Visions’ building down in Pioneer Square, so I plan to take the LEED 3.0 test later this year once this is complete.  Based on the practice tests I’ve seen, its challenging.

Do you like the LEED system?

I think it’s a fascinating system and a huge step in the right direction; it is important for me to work in a building that speaks to my values and most importantly my health.   I like knowing that I’m breathing clean, filtered air, that the paint on my walls is low or no VOC, that my lighting is efficient with low mercury, and that if I want a breath of fresh air, I can open one of the operable windows nearby.  But like any system it’s not perfect.  I can share a frustration with it in fact; in 2004 Urban Visions began redeveloping a 60,000 SF building in Pioneer Square, Seattle’s Historic district.  The building, constructed around 100 years ago, already held a huge amount of embodied energy, so I think there should have been an enormous credit right there for the redevelopment versus demolishing the structure and building a new development with new materials.  Anyhow, Greg had a mill brought onsite so that the construction crew could harvest the buildings’ old timbers to make stairwells, flooring, ceilings, new beams etc.  The results were beautiful and we saved a lot of material in the process.  But when it came time to go through the LEED scorecard, we really didn’t receive that much credit for something that seemed so innovative and for a lack of a better word, sustainable.  They’ve released new versions of LEED since then, but I think there is always room for improvement.  I’m really fascinated with the LEED EBOM process right now, especially given the current built environment (or lack thereof).

You also completed a 1 year intensive Commercial Real Estate Program through the University of Washington. How has that program helped you in your career? Why did you choose that program over Runstad Center for Real Estate?

The program was excellent – it’s essentially a one year crash course taught by various big hitters in the Seattle real estate world.  Hearing how things really work from people who are actually out in the battle field on a day to day basis really grabbed my attention.  Asides from the knowledge, the networking opportunities were second to none.

So in short I ended up applying to this program over the Runstad Center because I liked the idea of having so many different professors throughout the year.

Does the program have a focus in sustainable real estate development?

The program did have a short segment focused on sustainable real estate development – it was excellent and I would have liked to spend more time on the subject.  We had probably 40 professionals come teach throughout the program, and I would guess 60-70% of them brought up sustainable real estate development one way or another and how it influenced their industry and product type.

What are your future aspirations in real estate?

My future aspiration is to become a successful developer; I really want to contribute to the Seattle skyline and create.  But for now, our principals Greg Smith and Dana Beckley are extremely talented and great teachers, so my plans are to continue working with them and the Urban Visions’ team.  Though I’ve graduated from the UW program and a few other courses, I think I’ll always view myself as what you would call “A Student of The Real Estate Game”.

If you have any questions on sustainability post them in the comment section below or reach out to the Urban Visions team directly.