(ECON = Economics; DES = Design; BUS = Business)
(SZ = Siqi Zheng; ZT = Zhengzhen Tan; JP = Juan Palacios; CD = Carlos Cerezo Davila)
Session 1: Introduction: The why of sustainability in real estate [SZ, ZT, JP]
Sustainable Real Estate Course Overview
Economics
- Energy efficiency: Energy consumption and emission by buildings
- The economics of green buildings: tools, policy, ESG
- Sustainability 2.0: Healthy Building
- Sustainable 3.0: Climate Resiliency
Knowledge structure: connecting economics and business
- Sustainable real estate as business strategy
- Sustainable design
Logistics of this course
Session 2: ECON 1-2 Green buildings: economic rationale and analytical tools [SZ]
How the market may work: The business case for green buildings
- Triple bottom lines: Developers, owners, tenants
- Building asset’s cash-flows and risk: hypothetical and Rockville pro forma
- Life cycle cost-benefit analysis: impacts of greenness on pro forma by stakeholders
How the market may fail: Market failure and correction (1) - Information asymmetry
- Information Asymmetry and adverse selection
- Green building certificates
- Benchmarking and transparency policies
Session 3: ECON 1-2 Green buildings: economic rationale and analytical tools, continued [SZ]
Building decarbonization: Technology side
- Passive house
- Building electrification: heat pump
Building decarbonization: people side - landlord vs. tenant
- Market failure and correction (2): Split Incentive and green lease
- Rockville building case revisit
- Scope 1-2-3: whose carbon is it?
Session 4: BUS 1 Winthrop Center [ZT]
Boston’s $1.3 billion Winthrop Center was conceived and constructed 2016–2021 in a market with increasing sustainability sentiment from regulators, community and corporate tenants. The case is about two critical decisions: RFP and Design Development, students will learn:
- How to approach quantitative and qualitative analysis in making high stake sustainability decisions.
- Execution risks associated with fast evolving sustainability concepts. Trade offs and challenges in bringing Passive House concepts to reality. What’s the risk involved and how to control the risk.
Session 5: ECON 3 Green building version 2.0: economic rationale and analytical tools of health in buildings [JP]
Quantifying the impact of buildings on occupants’ health and performance of occupants
- The impact of environmental hazards on human health and productivity
- The role of buildings in climate resilience strategies (adaptation)
Value of healthy buildings
- How to account for investments in health? An accountant look into how to measure the impact of healthy building strategies on firms’ financial performance
- Healthy buildings in the post-COVID era
The role of technology and certification
- Information as a public good: sensors, building certifications and industry standards for healthy buildings
- 425 Park Avenue case from the economic perspective
Session 6: BUS 2 425 Park Ave [ZT]
Understand the science of healthy buildings and its value proposition in office sector
Analyze financial returns of healthy building investment
Session 7: ECON 4 From Green Buildings to Green Cities: pricing environmental features and supporting decision
making [SZ]
Estimating green building premium: Hedonic pricing technique
Pricing green amenities
- Within-city applications
- Cross-city applications
Supporting decision-making: Business and policy
Session 8: ECON 5 Climate Change and Real Estate Investments [SZ, JP]
Physical risks associated with climate change in asset markets
- Physical risks for different real estate asset classes
- The role of uncertainty and information on climate change in the value of residential and commercial buildings.
- Ricardian framework to evaluate changes in real estate asset pricing associated with climate change.
Mitigation and adaptation strategies for real estate investors
Transition risks
- Markets, climate change and real estate markets: Preferences for climate amenities
- Transition risks for different real estate asset classes
Data and models to assess climate risk in commercial real estate
The role of insurance markets in shaping physical climate risk
Session 9: ECON 6 Climate Change and Real Estate Investments, part 2 [SZ, JP]
Discounting climate risks: the role of belief
Climate risks in housing markets
Empirical strategies to quantify impacts of climate change on real estate prices: Difference-in-difference model
Climate risks in commercial real estate markets
Session 10: ECON 7 Climate Change and Real Estate Investments, part 3 [SZ, JP]
Climate risk and insurance market crisis
Leave or rebuild: Is managed retreat an option?
Session 11: ECON 8 Business Case 2.0: Policy as a Game Changer for Sustainable Real Estate [SZ]
Policy landscape and the impacts on pro forma cash flow
Positive externality and “carrots” policies:
- Subsidies for green buildings
- FAR bonus
Negative externality and “sticks” policies:
- Minimum Energy Efficiency Standards (UK)
- Building performance standard: Local Law 97 (NYC) and BERDO 2.0 (Boston)
- Risk disclosure mandates: Boston Seaport case
- Building energy codes
Session 12: BUS 3 EDGE: Reinventing Sustainable Real Estate in the Digital Age [ZT]
This case highlights the journey of EDGE that once fit a traditional real estate business model has transformed to develop some of the most sustainable buildings in the world with novel digital technologies. By examining the transformation of EDGE, this case explores the potential that digital technology has in advancing sustainable buildings, and the challenges and risks that arise with implementation. Students will learn:
- How was OVG/EDGE able to convert sustainability and technology investments into business value? how to build a business model and competitive advantage to capitalize sustainability;
- What is the synergy between digital technology and building sustainability?
- how to build capabilities in the development process.
Guest speaker: Coen van Oostrom, Founder & CEO of EDGE
Session 13: ECON 9 Financing Sustainable Real Estate at the Asset Level [SZ]
Big picture: Sustainable finance; equity and debt financing in sustainable real estate
Debt: Mortgage markets
- Mortgage markets and climate risks (-): default risk and securitization
- Mortgage markets and sustainable buildings (+): default risk and green mortgages
Equity: Private equity funds for sustainable real estate
Session 14: ECON 10 Financing Sustainable Real Estate at the Portfolio Level [SZ]
Sustainable real estate investments at portfolio level :
- Equity: Real Estate Investment Trusts (REITs)
- Debt: Green Bond
Benchmarking & Disclosure
Session 15: DES 1 Design strategies for sustainability and resilience [CD]
A framework for sustainable design (With Jamie Von Klemperer)
Building scale strategies:
- Passive and active thermal design
- Occupant health and wellbeing
- Embodied carbon and lifecycle design
Site and urban scale strategies:
- Climate, microclimate and future climate
- Stormwater control, flood mitigation and landscape
- District systems, electrification and mobility
Session 16: DES 2 Integrating sustainable design in development [CD]
Sustainable design in the development process:
- Project timeline and design decisions
- Scope definition and goal setting
- Working with architects and consultants
Narratives for different design consumers:
- The public: Right to Daylight in NYC
- The tenant: Communicating comfort benefits
- The utility: Building energy at the portfolio scale
Global perspectives on climate action and regulation
Session 17: DES 3 Applications of environmental modeling tools [CD]
Performance driven sustainable design
Modeling tools and methods:
- Early design modeling tools
- Daylight and views analysis
- Energy modeling by phase
- Material data transparency
Data visualization, communication & decision making
Session 18: BUS 4 Taurus Investment Holdings: Decarbonization Venture [ZT]
Business innovation to capitalize building decarbonization thesis in private equity real estate investment. The components include:
- proof of concept with technology; business process and deal economics;
- investment thesis and vehicle formation;
- capital raising; and
- seed asset acquisition.
Guest Speaker: Peter Merrigan, CEO and founder, Taurus Investment Holdings
Session 19: BUS 5 Boston Properties: Measuring and Implementing Portfolio Sustainability [ZT]
Understand the capital market’s influence on the behavior of long-term core asset investors, owners and operators.
As sustainability becomes an integral part of company strategy, how to set up a framework to define, measure, report and manage sustainability performance.
Learn how to approach portfolio level sustainability challenges, such as net-zero carbon operation, ESG benchmark, green financing.
Guest speaker: Ben Myers, Vice President, Sustainability at Boston Properties
Session 20: BUS 6 Sustainability Data Strategy under new regulation and investor mandate [ZT, JP]
Understand the capital market’s influence on the behavior of long-term core asset investors, owners and
operators
Guest Speaker: Jonathan Flaherty, Global Head - Sustainability and Building Technology Innovation, Tishman Speyer
Session 21: ECON 11 Sustainable Real Estate in the Broader Capital Market [SZ]
Why do institutional investors care about ESG?
- Proposed SEC Climate Disclosure Rule
Recent Backlash against ESG
Global Sustainable Real Estate Investment
Session 22: BUS 7 ESG Talking and Doing [ZT, Jacques Gordon]
Industry Panel:
- Jacques Gordon, LaSalle
- Matt Ellis, CEO & Founder, Measurabl
- Lori Mobardi, ESG Senior Director, U.S. Real Estate Equity, Barings
- David Devos, Global Head of ESG, LaSalle Investment Management
- Dan Winters, Senior Director, GRESB
Session 23: ECON 12 ESG Preferences and Performance [SZ, Bram van der Kroft]
● ESG confusion
