Green office development seems to have turned a corner in San Francisco over the past two years, driven by growing tenant interest and new city rules. 

Buildings are aiming to meet stringent environmental criteria on more and more large office towers, betting that such eco-consciousness will drive up rents even as a growing body of green-building expertise drives down costs. 

The trend is helped along by city rules, dating to last year, that move to the front of the permitting line building projects registered with the U.S. Green Building Council's Leadership in Environmental Design, or LEED, program.

Some 48 San Francisco real estate developments registered for LEED certification during the two years ended April 12, according to the building council, compared with 14 projects in the city during the two years prior. 

A blockbuster lineup of very green office projects in the pipeline includes towers from big-name developers like Tishman Speyer and Wilson Meany Sullivan, to say nothing of public projects like the Federal Building and a proposal by the San Francisco public Utilities Commission to construct a green headquarters with its own electricity-producing wind turbines.  

Paul Woolford, design director at San Francisco architecture firm HOK, said LEED projects have gone from at most 25 percent of his office's business five years ago to 100 percent of it today. 

"The difference is remarkable in the last five years," Woolford said.  "We were always walking our clients through why (green certification) is a benefit to them.  Now the clients are coming to us."

According to figures from early 2006, San Francisco has the sixth most LEED registered and certified buildings per capita in the U.S. As of this month, the city still hadn't cracked the top five, but Woolford said the city is clearly a national leader in this emerging trend. 

Gabriel Metcalf, executive director of think tank SPUR, expects green building to be more common in San Francisco in coming years, driven mostly by changes to state and local building rules. 

"Ten years from now, every building that gets built in San Francisco, and most of the buildings that get built in California, will be green," Metcalf said. 

The hard part, Metcalf said, will be improving the city's vast stock of existing buildings, reducing their energy and water use.  With energy costs relatively low, that will likely involve city incentives or regulation. 

"That's how we're really going to have impact on the environment - not increasing LEED certification from 1 to 5 percent, but making 100 percent of the buildings energy and water efficient." 

Planning cuts costs

Workers are interested in green buildings partly because they believe it is healthier to work in buildings with fresher air and fewer harsh chemicals and materials.  They are also interested in conserving energy, a concern stoked, several industry players said, by Al Gore's global warming documentary "An Inconvenient Truth." 

The LEED process touches on those topics and more, awarding up to 69 points for things like how construction impacts soil and air; proximity to mass transit; neighborhood density; water use; energy conservation and generation; construction materials; indoor emissions from paints, carpets and fixtures; and natural light.  The base certification requires 26 points; silver, 33 points; gold, 39 points and platinum, 52 points. 

Certification occurs only after the building is finished, but developers may register their project with the Green Building Council as early as they wish, filling out a simple form and paying a $450 free.

Because the state already imposes energy standards for new buildings, last updated in fall 2005, the base level of LEED certification can sometimes be achieved at no additional cost with proper site planning, or by adding perhaps one percent to the total cost of a project, architects and developers said.

Silver-level LEED certification is believed to add roughly 2-3 percentage points to total construction costs, with LEED gold adding 2-3 more and LEED platinum remaining expensive.  But exact cost additions vary from project to project, with larger projects generally paying less in percentage terms to move up the grading system.  

Learning curve less steep

The generally lower costs reflect a smoother design and construction process for green buildings thanks to years of learning on the part of developers, architects and contractors.

The city's expedited planning process for green buildings also helps developers save money, since they can shorten the period between buying the land and starting construction, and start earning a return sooner. 

The cost savings are key, and the pools of institutional capital that finance construction of large-scale development have taken notice and want to get ahead of the curve, said Jones Lang LaSalle executive vice president David Christensen. 

"I have never seen capital be so green as it is now," Christensen said.  "In the last six months, there has been a dramatic emphasis on the ability of capital to steer developers to integrate within their designs LEED compliance and LEED gold and platinum." 

Though lenders may be driving the trend, some people in development circles warn that worker eco-consciousness and health concerns remain a marginal driver of the green building trend. 

"It's not a dominant leasing criterion," said Tom Sullivan of Wilson Meany Sullivan, which leased the initial phases of eco-friendly office park Foundry Square before launching plans for a new, LEED-gold-certified phase.  "It's something we anecdotally observe people paying more attention to, but when you're talking to a company about leasing space...green falls into a category that's nice to have, but they won't necessarily spend more money on." 

But others said the situation is changing fast, with more tenants demanding LEED certification and other green attributes. 

Beyond office space

Of course, office buildings are not the only local real estate projects going green.  The Orchard Garden Hotel, which has applied for LEED certification, opened last year.  Kimpton Hotels has started making its existing San Francisco hotels more eco-friendly.

Seattle-based Intracorp has said it will pursue LEED certification for its Arterra condo highrise planned for Mission Bay.  

But it is the tightening office market that has developers talking, partly because that is where city residents tend to spend their daylight hours, surrounded by power-hungry air conditioners, chemical-laden carpets and humming computers. 

"It is expanding exponentially," said well-connected architect Jeffrey Heller, who with partner Clark Manus is helping to design Tishman Speyer's planned 700,000-square-foot LEED gold tower at 222 Second Street.  "It is very dramatic." 

Heller said about half the new projects his firm is looking at plan to seek some level of LEED certification. 

But the architect and others in the industry believe the future will bring additional ways to measure eco-friendliness, including especially power consumption ratings and impact on carbon dioxide emissions. 

Miller Starr Regalia, a leading real estate law firm, has noticed the explosion of interest - and city rules and mandates - around green building, according to chairman Eugene Miller.  The firm has begun exploring for at least one client a practice known as "carbon banking," in which a real estate development firm could somehow buy credits to mitigate the carbon dioxide impact of its project, perhaps by contributing to regional mass transit projects or renewable energy. 

Lawyers have noted that state Attorney General Jerry Brown has stated publicly that environmental impact reports, which are required for most real estate projects within California, should examine greenhouse gas emissions.  Several local planning agencies have already been sued for failing to do so. 

"All the cities are pushing (green building)," said Miller.