Empire State Manager Fuels Energy Debate
Malkin Hopes 'Green' Improvements Help Him Lease
By ANTON TROIANOVSKI
Panel discussions on building energy efficiency tend to be low-key affairs. But that was before Anthony Malkin, who runs the Empire State Building, entered the fray.
At a panel discussion put on by a real-estate think tank earlier this summer, Mr. Malkin called it "outrageous" and "a crime" that a popular benchmark for the environmental sustainability of existing buildings didn't do enough to push landlords to improve energy efficiency.
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Benjamin Norman for The Wall Street Journal
Anthony Malkin spent about $100 million to improve the efficiency of the Empire State Building's windows, systems and other infrastructure. He's hoping the investment will save energy and attract tenants.
He added, to some applause: "I'd go further and say it's bull—."
Mr. Malkin, a New York City real-estate scion well known for skirmishes over whom he honors with the Empire State Building's lights, is becoming a vocal player in a different world: the green-building movement.
Mr. Malkin insists green-building advocates and governments aren't doing enough to reward landlords who spend money to make their real estate more energy-efficient. Office building landlords should be required to disclose energy consumption in the same way that auto makers must publicize how many miles their cars get to the gallon. He's being partly driven by his concern that the U.S. uses too much energy. In his panel remarks, he warned that if the rest of the world follows this country's energy consumption model, "We're all going to die and we'll go to war along the way."
Mr. Malkin has a clear financial incentive to make people—particularly prospective tenants—more conscious about energy efficiency. As part of a long-planned $550 million renovation of the Empire State Building in recent years, Mr. Malkin spent about $100 million to improve the efficiency of the Empire State Building's windows, systems and other infrastructure.
Now he's hoping the investment in efficiency—which he says will save $4.4 million a year in energy but cost only $13.2 million more than the renovation would have otherwise cost—will, along with the attendant publicity, help him lease space in the 79-year-old skyscraper.
Success is by no means assured. In one of the worst office markets in decades, about 25% of the Empire State Building's 2.8 million square feet is up for lease. "This is about money and this is about energy," Mr. Malkin says. "The better-credit tenants are focused on this issue of energy efficiency from a bottom-line, profits-and-loss perspective."
Pane by Pane, Empire State Building Goes Green
As part of a massive renovation, one of New York City's most iconic buildings is upgrading all 6,514 of its windows into energy-efficient units. All the work takes place on site in a cramped office-turned-workshop on the fifth floor.
Mr. Malkin's vocal stance comes as building owners are increasingly using environmental features to attract tenants. Features like solar panels, low- flush toilets, rainwater recycling, state-of-the-art windows are being touted as ways to save energy—and money—as well as to do the right thing for the planet. Brokers say the push is catching on with tenants.
Mr. Malkin is wading into a debate about a high-profile ranking program devised by the U.S. Green Building Council that gives buildings grades—like platinum, gold and silver—for how environmentally friendly they are. Mr. Malkin says the program—known as LEED for Leadership in Energy and Environmental Design—in its version for existing buildings gives too much weight to non-energy features, like bike racks, and not enough to building elements that cut down on energy usage, like smart lighting systems.
The Empire State Building would qualify for a gold LEED certificate, Mr. Malkin says, adding that he hasn't decided whether he wants to pursue it. He says the skyscraper would qualify for a higher platinum grade if he had spent $4.5 million to put plants on its set-backs. "Green building practices have become divorced from energy efficiency," Mr. Malkin said at the Urban Land Institute panel.
The council responds that much of the program's value comes in getting as many landlords as possible interested in improving the environment. "Making it a discussion simply about energy I think is shortsighted," said Al Skodowski, an executive at commercial-property-services firm Transwestern and a Green Building Council board member. "The focus has to be, how do we make the program so that everybody can participate in it?"
Mr. Malkin's positions also put him at odds with many of his colleagues in the real-estate business. He advocates more government oversight of building energy use. Other landlords are wary of more government involvement.
"We certainly would prefer voluntary standards," said Dennis Oklak, chief executive of Duke Realty Corp., a publicly traded real estate company, and co-chairman of the sustainability policy committee of industry group Real Estate Roundtable. "It's going to be really very, very difficult to put a one-size-fits-all proposition out there to make it mandatory to achieve certain levels in buildings."
Mr. Malkin, president of Malkin Holdings LLC, is the son of Peter Malkin and the grandson of Lawrence Wien who worked closely with the late real-estate mogul Harry Helmsley. Much of the Malkin family's real-estate empire consists of stakes in the pre-World War II office buildings they purchased during that era. After Mr. Helmsley's death in 1997, his widow, Leona Helmsley, for years fought with Peter Malkin and others over control of the Empire State Building. Mrs. Helmsley died in 2007 and the skyscraper is now managed by Anthony Malkin.
Mr. Malkin says he now plans to implement a similar energy-efficiency program in the remaining 7.25 million square feet of office space he manages in the New York area.
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