Starting my holiday season waaay too early? No, but I’ve been talking to some smart people recently about some of the strategic, financial issues concerning building green. On Tuesday I met with Sally Wilson, SVP and Global Director of Environmental Strategy for CBRE, the world’s largest brokerage firm with over 1.7 billion square feet of commercial real estate under management. Sally spent the early part of her career as a retail broker, but more recently in her new role is responsible for internal strategy and external education about building green. (Sally’s husband is the well-known interior architect, Ken Wilson, who was named “Designer of the Year” in 2005 by Contract Magazine, and whose firm, Envision, has created the interiors of many green buildings, including Greenpeace’s headquarters in Washington, DC.)

We talked a lot about how a broker can create new models which promote green building and efficiency… and ultimately, the power that the contract has to bring about greater reduction in energy use and emissions. She’s keenly concerned with “connecting the dots” between the production of energy (utilties for the most part) which produce emissions and the place where the energy is actually used, i.e. the buildings.

“We’re potentially two cycles out when we will reach substantial risk for commercial buildings because of climate change… think Long Island under water,” Sally explained, since leases are generally six years long. “So certainly risk management is also becoming part of the conversation at CBRE.” LEED buildings can achieve anywhere from 30-50% energy savings – good, right? So what’s the hold-up in converting every building tomorrow to LEED?

Here’s the rub: many buildings have agreements in place that allow landlords to pass energy costs on to tenants, sometimes with a percentage-based increase over their volume costs. These agreements are negotiated to the benefit of landlords, sometimes within the same firm, like a CBRE. In New York City, for example, most buildings are heated by ConEd’s consolidated steam system, and are accountable for 27% of emissions in the city. Ever wonder why they are so hot? The landlords have in many cases an incentive to keep them that way. And that’s not going to change any time soon.

So, there’s clearly a simple win/win for broker and tenant for building green, or not? Is this one of those places where free markets don’t seek efficiency, at least quickly enough? What role can the utilities play in getting efficient energy use put back on the table?

I’d like our readers to comment on how this might be addressed…