David Gottfried, WorldBuild

While at USGBC, Gottfried helped develop the Leadership in Energy and Environmental Design (LEED) rating system. In 1994, he started his own green building consulting firm called WorldBuild. Most recently, in January, he opened a new venture capital firm called Regenerative Ventures, which has already invested in a few companies and positioned Gottfried on the advisory board of a handful of others. In the midst of all that, Gottfried is also doing “a deep-green remodel” of a 1915 Craftsman home in the Bay Area. When it’s done, he says, it will be the region’s first LEED-Platinum home.

Considering the current economic downturn and slowing housing market, it seemed a good time to tap the mind of a man steeped in both green building and real estate markets, and to hear what he thinks about the prospects for green building in uncertain economic times.

SI: Do you think the possible recession we’re facing is going to affect the green-building market?

DG: It’s hitting the building industry hard, but the bright spot still is green building. The market’s been growing about 30 percent a year for green building, whereas it’s decreasing for the industry in general. The LEED rating system has some 15,000 projects that have registered for certification. Over 100 cities mandated green requirements for their own buildings. Some of the homebuilders who are building are starting to move over and embrace green. Why is all that doing well? Because new construction is slowing down, but there’s existing buildings which are being rehabbed green.

SI: So the green building market can rely on remodeling to keep it afloat during this downturn?

DG: I think because of the recession that becomes a more important market, because it’s hard to get financing for new construction. The credit market is still confused, even though the rates have dropped. We’re still watching that. I think owners are rehabbing their homes, they’re going to rehab their office buildings and retool them for the next generation; and that’s a good business. It also saves money because it brings your energy bill down by 30 percent to 50 percent and your water bill down by 30 percent. All of that enhances the value of the asset that you own in the marketplace.

SI: Are there certain green remodeling strategies that are worth focusing on right now, in this market? Ones that should be put on the backburner until the market settles out?

DG: Absolutely. Whether it’s a home or an office building, there is low-hanging fruit there. Always we start with the Energy Star list of lighting and efficient motors, better control systems and ways we manage the property. All of those things pencil out in under three years or less. It’s interesting if you study the LEED Existing Building rating system. There are credits that total about 30 points that have to do with efficient operations and green asset management policies and programs. You can implement those in measures across the building in terms of how it’s managed and how tenants operate. They don’t require a lot of upfront capital and a long payback period.

Then there’s the things that are beyond that to get to deeper green like solar, under-floor air systems, taking out windows and insulating better. I advocate all those, but they should follow efficient load management. That’s the priority that sometimes folks forget about.

I’m doing a full green remodel of a 1915 Craftsman for my family. I’m taking this whole property that hasn’t been touched in 60 to 70 years and the first thing I’m doing is tightening up the windows. We’re blowing cellulose into the walls. We’re putting efficient appliances everywhere. We’re just really tightening up the envelope. On the water side, we’re looking at graywater capture and rainwater capture. Then we’ll put solar hot water on the roof and, in the backyard, a solar cell. It’s expensive. But some of it has a great payback, and I’m betting that overall it increases the value of the home.

SI: Can the market bear that kind of an investment?

DG: The consumer doesn’t ask your LEED rating, about appliances and energy bills and what’s Energy Star. You do a home inspection, but green is further down the value chain. With this home we’re doing a green remodel and going down deeper than I think almost anyone goes, because I see the value of efficient windows and insulation. But not every buyer sees that in a house.

If we finish all that and I put it back on the market to sell with the market value of what I did, it’s not fully known what we would get. But I did sell our prior home in Berkeley [Calif.]. I put in eight green improvements, and we did get a premium for that product and a buyer who liked everything that we’d done.

SI: So what role can the real-estate sector play in green building and remodeling?

DG: It starts with the owner and requiring efficient homes or buildings and then extracting the scorecard of performance into the leasing or sales process and publishing that transparently. Real estate brokers need to learn about green building and homes and green leasing. They need to understand what that means in terms of LEED and other rating systems. It would help if they can get accredited as a LEED professional. If I were a home broker, I would want to know the energy bill. I would want to know what was Energy Star. Did they change the windows? What’s the R-value? What’s the water consumption? And I’d want to communicate that to the buyer, especially if I represented the buyer.

If I was a leasing broker, I would do a survey of what are the green buildings in my marketplace, and I would advocate that I am knowledgeable in those areas to represent my tenants to get into quality space. They’re going to end up paying the energy bill. It impacts them. So I would think that would be something to learn about and represent as part of being someone who is embracing best practices. I’ll even go further and say I believe there’s enough information out there that the brokers who aren’t doing that are negligent.

SI: What else are you working on?

DG: In January, I started Regenerative Ventures. With Regenerative Ventures, I venture my time and brand and experience and go to work to join advisory boards for companies that are startups in greentech. I become a small owner in those companies and sit on their boards and help them navigate in this green building arena. Some are solar companies doing parking-lot solar structures. One is called GreenHomeGuide.com, an Internet community for green homebuilding and remodeling that I helped start. I’m also trying to create an investment fund that follows me into those firms and others.