Property managers are asking themselves how a new ordinance requiring the installation of rooftop gardens will impact the cost to run their properties.
The cost of the so-called “green roof initiative,” which voters approved in November, will fall on developers, but questions around water, rent and structural concerns remain.
The ordinance says that buildings over 25,000 square feet must dedicate a percentage of the roof to green, vegetative space. Developers could use a combination of plants and solar panels to achieve the green roof size required for their building, but 30 percent or more of the roof must be green. Existing buildings do not need to immediately add a green roof, but will upon roof replacement.
The ordinance does outline an exemption for existing buildings if they are unable to provide the mandated green roof upon replacement, for example, due to the major structural alterations it would require. The proposed ordinance says that the building owner could make an application to the Denver Planning Board, who then could completely exempt the building from the requirement, or allow the building to have a smaller green roof than what would be required. A cash-in-lieu payment would be required when a smaller green roof is constructed.
Multifamily residential buildings of up to four stories are exempt. The coverage required for industrial buildings is different as well; 10 percent of the roof, up to a maximum of 25,000 square feet.
The version of the ordinance Denver voters passed is unlikely to be the final one. The city of Denver formed a Green Roofs Review Task Force that will develop modifications, clarifications and improvements to the bill. Any changes to the initiative would require a super-majority of 10 city council votes, so the mandates to the ordinance will be finalized later this year.
Irrigation systems — on a roof?
“Water is king, certainly in Denver,” said Josh Shoemaker, regional director of management services at Newmark Knight Frank (NKF). Newmark Knight Frank is a New York-based commercial real estate and property management firm with offices in Denver.
“The lack of rain that would keep green roofs viable, alive and healthy would mean you need irrigation systems on the roof. That’s an additional cost and structural modification to what exists,” Shoemaker added.
Paul Schloff, regional manager at JLL and co-chair of Denver Building Owners and Managers Association’s (BOMA) government affairs committee, added that it can be difficult to successfully grow plants in the Denver area, and trying to grow them on a roof would add even more challenge.
“We’re going to be using a lot of water,” he said. ” The plants might not even grow very well — we don’t know.”
Shoemaker said he is concerned about the potential problems there could be in introducing water to a roof where it didn’t previously exist.
“If you’ve got any roof leaks or any penetration, that extra water is just going to compound that problem,” he said. “A lot of buildings weren’t designed to carry that initial load of the green roof, or don’t have the proper structures for drainage that will be required. Not to mention irrigation.”
But Denver Green Roof Initiative, the organization that championed the initiative prior to the election, said that green roofs are practical options for storing storm water and will take the place of “costly” stormwater detention systems.The organization added that the saved costs should be returned to the tenant.
“It certainly adds another element to our preventative maintenance program, as well as another element to to our expertise,” Daniel said. “Right now, we aren’t exactly horticulturists. We’re going to have to learn that trade.”
‘Tenants pay their share’
Joe Daniel, a senior property manager with NKF, said he thinks the initiative will impact rent, both for residential and commercial tenants.
“In a downtown office space, tenants pay their share of operating expenses,” he said. “Those expenses are [most] definitely going to [go] up — an increased maintenance load and an increased use of water.”
Asked what the effects of the ordinance might be for property managers, Brandon Rich, senior managing director at Greystar, highlighted tenant impact.
“The biggest impact will be increased costs, which will put upward pressure on rents or divert resources from amenities or other services,” he said.
Paul Schloff, regional manager at JLL and co-chair of Denver Building Owners and Managers Association’s government affairs committee, also voiced concern over existing buildings.
“It’s one thing to make this a requirement for a new building, but it’s especially onerous to make this a requirement for an existing building,” he said.
Schloff said many structures that would fall under the ordinance requirement — anything over 25,000 square feet — were not designed with the added weight on the roof in mind. Industrial buildings, especially, have increased vulnerability, according to several property managers.
“Industrial is typically more horizontal with a much larger roof area, but less rentable square feet,” Schloff said. “And the rent is cheaper than office space.”
When the time comes for existing industrial buildings to repair their roofs, some worry that the cost of installing a green roof will be unattainable.
“I think industrial and retail will suffer most,” Shoemaker added. “Those are single-story, sometimes two-story, but they have a much larger roof.”
Shoemaker added that training personnel to keep up with the roof or hiring a gardner will be another expense.
We like it, but it needs work
Schloff, like many property managers, ultimately liked voters’ intention of cleaning up the environment, the focus of the ordinance.
“But they don’t understand the economics of it,” he said.
CBRE Denver managing director Simon Gordon agreed.
“While we strongly support sustainable practices at our buildings, we have some concerns about the viability and long-term effects of implementing some of these initiatives,” said Gordon said.
Daniel added that he wished green roofs had been “incentivized instead of mandated,” or that stakeholders had been consulted in the writing of the code.
BOMA has representatives on the task force that will make the final changes to the ordinance before it gets mandated later this year.
“We’re [BOMA] hoping we can have some influence as the details are worked to make it more economically reasonable,” Schloff said.
2017 Largest Commercial Real Estate Brokerages by Square Feet Brokered
Ranked by Total Denver-area industrial, office and retail square feet brokered
Rank Business name Total Denver-area industrial, office and retail square feet brokered 1 Cushman & Wakefield 23.39 million 2 JLL 18.29 million 3 Colliers International – Denver 16.75 million View This List