Droughts and Floods Give CRE Owners a Reality Check on Water Resiliency

A deep dive into on-site water management, conservation and reuse

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Less than an hour’s drive from Las Vegas, Lake Mead claims the title of the United States’ largest reservoir. Once an abundant and vibrantly blue source of water held back by the Hoover Dam, Nevada’s signature lake is enduring a decades-long drought — and may stay dry for the duration of our lifetimes.  

Despite its proximity to Vegas, Lake Mead isn’t exactly up for gambling with its resources. It supplies water for more than 25 million people in Nevada and California. However, as a result of years of drought, the lake is about 100 feet of water away from being so low that Hoover Dam can no longer function, said Hyon Rah, director of ESG consultancy at Savills.

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The consequences of climate change have become increasingly urgent, not only in regard to energy but also, crucially, to water. Extended droughts vastly reduce the water supply, as seen in the seven states supplied by the Colorado River. On the flipside, flooding can result in too much water à la Florida, Houston and, most recently, parts of California, which has suffered from both drought and heavy rains. Meanwhile, mud or particulates can contaminate water and reduce the amount available to drink. 

Whether or not a particular market is currently facing drought, pre-emptive water management in commercial real estate can help prepare the built environment for various worst-case scenarios. 

In a dream world — hopefully the future —  effective water management will mitigate such risks and lead to water self-sufficiency and resiliency. It’s an achievable goal, said Heidi Creighton, vice president of sustainability at construction firm Skanska.

That is, it’s achievable so long as commercial real estate pays attention.

Skim the latest ESG reports, track local carbon policies or set your sights on net-zero, and it seems like commercial real estate has widely focused its sustainability energies on, well, energy. Reducing greenhouse gas emissions and decarbonizing buildings are necessary endeavors. But where, how and when does water come into play? And, more importantly, should water warrant a stronger stream of resources and efforts? 

The latter question is easier to answer, but the answer is perhaps tougher to hear. 

“[Water is] not getting the attention that it deserves because it is essential to our survival,” said Rah. “I think that alone should give people pause and make them think about it. I mean, it’s more important than energy.”

Take the 167-page energy audit that came across the desk of Benjamin Rodney, vice president of construction and East region ESG leader at Hines. While reading through those pages that detailed a commercial building’s energy, Rodney began to notice water. Or, rather, he noticed a lack thereof. 

You know how many lines talked about what the water meter said?” said Rodney. “Zero. Not a single one.”

This remark strikes at an important — yet passive — truth. Humans can survive without water for roughly three days, give or take. “It would be very inconvenient to live without electricity or energy,” said Rah, “but I’m pretty sure we can live for much longer than three days.”

Herein lies the importance of water management, which addresses water in a few ways. First, there’s water conservation, in which companies aim to use and therefore waste less water. Such strategies may take the form of low-flow toilets, more efficient cooling towers and so on.

There’s also water reuse, which acknowledges the cyclical nature of water (which can’t be synthesized — once it’s gone, it’s gone). Water reuse strategies aim to harness, treat and repurpose water from other sources. Green roofs, for example, capture rainwater, while other on-site systems can collect and treat non-potable water, such as stormwater or wastewater.

Water reuse is a particularly viable opportunity for water management, though it’s become an increasingly unpredictable byproduct of global warming. Think of the water from rising sea levels, increased frequency of 100-year or 500-year storms (such as Sandy in New York and Harvey in Houston), flooding from rain or overflowing rivers, and king tides even on sunny days. Wildfires likewise dry out soil, thereby impacting the ground’s moisture.

Yet, while water is, indeed, everywhere, it’s largely drifted downstream in commercial real estate’s climate-focused endeavors, especially in areas that are not high risk. Real estate’s thriving markets, said Rah, typically come where real estate is expensive; they’re places where industry, infrastructure and jobs abound. Therefore, they’re places where water is an assumed resource. 

“Anywhere you are, where there’s a thriving real estate market right now, you turn on the water and it’s going to come out no matter where,” said Rah. You can be in the middle of the desert, she said, “but if you turn on the tap, the water will come out.”

Such reliability makes it easy to take water for granted and creates a disconnect between water’s actual and perceived availability. 

In New York, for example, water remains an easily attainable and abundant resource, said Rodney, especially compared to places like Colorado, Southern California and the Southwest. (That’s not to say Western states haven’t taken action; Las Vegas, for example, has employed water police, and certain areas of San Francisco have called for on-site water reuse.) 

However, if climate change diminishes New York’s reservoirs, the city may encounter a water scarcity problem — and this year’s winter points to the possibility of that outcome. In the Northeast, there was an astounding lack of snow, which is what typically helps fill regional reservoirs. Meanwhile, Western states this winter endured extreme snowfalls, proving water’s unreliability in any market, at any time. 

The real estate industry has been focusing on carbon emissions more than water “because the wider world has kind of woken up to the fact that we have a climate crisis,” said Lauren Ballou, associate director of ESG at Longfellow Real Estate, a developer noted for its life sciences and academic projects. “And the first obvious place you think about is renewable energy and energy efficiency.”

The narrative, indeed, seems to be energy, energy, energy. But, remember: Water is everywhere, and that includes within the energy narrative. The more energy used, the more water used, said Creighton. 

In fact, water may already be accounted for in the industry’s current actions. “What’s ironic is, I think, one of the largest users of energy are really water and wastewater treatment plants across the board,” said Janine Witko, Americas water leader at design and engineering firm Arup.

In many cases, managing water implicitly means addressing energy, or vice versa. Energy treats and transports water, explained Ballou. So, if a real estate company focuses on energy, water-use reduction may automatically factor into the present strategy. 

“If I’m using less water, there’s less water that goes down the drain,” said Rodney, “which means there’s less strain on my sewer system, which means there’s less energy used in the sewer system, which means there’s less service and maintenance and lower cost for taxpayers. It all plays together.”

LEED, BREEAM and other technical certifications further integrate water into pre-existing climate efforts, said William Masters, ESG and sustainable investment consultant at Arup. 

Many companies that have already committed to LEED-certified developments may have likewise, indirectly, committed to better water management. 

“All those certifications and regulations are really instrumental and help [move] the needle and [make] the case for prioritizing water,” said Creighton, with the caveat that water isn’t a given. “You could get a LEED Gold building and not do anything on water. It’s points, and so it really depends on what you’re prioritizing.”

Nevertheless, many companies may choose not to prioritize water management, as water costs less than electricity or gas. Although water, as a utility, is generally cheap, water management efforts come with upfront premiums. The lengthy return on investment doesn’t exactly incentivize projects, said Creighton. 

Of course, not all water management endeavors have to be expensive. Water management strategies range in ease and convenience and largely depend on a building’s primary sources of water usage. For office buildings, data from the Environmental Protection Agency (EPA) points to heating and cooling, restrooms and landscaping as the three largest water uses.

Of these, restrooms may be the simplest to address. Low-flow toilets are easy yet effective fixes, said Witko. The same level of simplicity holds true for higher-efficiency fixtures in residential buildings. 

Less straightforward, heating and cooling require a significant amount of water and therefore significant management strategies. At 345 Hudson Street, for example, Hines has begun to amend its cooling towers, commonly used in commercial buildings, which reject heat into the atmosphere and require a significant amount of water to operate. At 345 Hudson, the cooling towers required about 4.5 million gallons of water in 2019 alone. That equates to roughly 6.5 Olympic-size swimming pools.

“What we’re trying to do in our designs, moving forward, is figure out how to harness that heat within our buildings in lieu of rejecting it,” said Rodney. “And also get away from those heat-rejection systems that require a substantial amount of fresh water to then replace back into the system.” 

As for 345 Hudson, Hines has adopted a more circular water strategy. Hines’ new heat-rejection approach calls for adiabatic dry coolers (where heat doesn’t enter or leave) and water source heat pumps. Such systems could save up to 4 million gallons of water per year.

Real estate companies can therefore enact water conservation endeavors on both new and existing buildings. Ideally, however, water management begins as early as the planning stage. Designing and constructing with water conservation in mind is a smart and resilient habit to develop.

“If it’s a brand-new development, if you have a blank slate, there’s more you can play with in terms of how you design and what you do,” said Ballou. “But if you’re converting an existing building and if it’s in a dense area, there’s just going to be some real constraints.”

On a small site, for example, an owner can’t build a large solar array to power the whole building, nor can it do significant on-site stormwater treatment. The soil similarly impacts what’s possible, determining whether it’s better to infiltrate the water or treat it with an engineered solution. Considering site parameters creates a challenge Ballou likened to a puzzle, albeit one she defined as fun and interesting. 

Sometimes, the site itself is the issue. Prime real estate with desirable waterfront views are picturesque and profitable. Waterfront homes can command a 60 percent premium over similar homes nearby, said Rah. But these properties, while financially viable, often fall in flood zones. 

“You are in a risky area physically,” said Rah. “So, it doesn’t matter at that point if you have a net-zero building, for example, because it’s going to flood out.”

Still, many of America’s top 10 highest-grossing real estate markets are in areas where water is running out, said Rah. “What happens when you keep putting people in buildings in areas where they are running out of groundwater, surface water, and it’s not raining as much anymore?” she asked, noting that there’s a difference between doing the right project and doing the right project in the right places.

The forethought required for water management begs the question of who exactly bears responsibility for conserving and reusing a building’s water. It’s easy to point to state and local governments, as well as corresponding regulations, for water management or mismanagement.

“Municipalities, local and regional, and state governments play a big role here,” said Ballou. “Because if they’re requiring more stringent code, the design is going to advance to meet that.”

Yet, while local government certainly carries a significant responsibility, so does commercial real estate. The commercial and institutional real estate sector is seen as one of the country’s largest consumers of publicly supplied water, according to the EPA. That includes hotels, restaurants, office buildings and hospitals, among other facilities. Collectively, they account for 17 percent of withdrawals from public water supplies.  

But, as commercial real estate knows all too well, various people contribute to a building at various stages, so addressing the natural environment calls for an all-hands-on-deck approach. 

“I think sustainability only works when you do it in partnership and in an interdisciplinary way,” said Ballou, noting that everyone — landlords, tenants, developers, utility companies, stakeholders and the government — should participate. 

Tenants, in particular, present an interesting conundrum, as owners can’t necessarily control the way in which tenants interact with a property. People have full agency over their offices or apartments, and no landlord can demand that a resident take a shorter shower or do laundry selectively. 

In general, residential buildings use more water because people don’t typically shower, do laundry or cook at the office. But residential water use is increasing even more as people work from home with greater frequency, said Rah. Tenants are not particularly aware of water management in either asset class, however. 

“So much of our infrastructure is buried,” explained Creighton. “It’s in the walls. It’s below ground. It’s out of sight, out of mind.”

To raise tenant awareness and therefore emphasize the value of improved water management fixtures, Creighton suggested focusing on visibility. Actions as simple as making a sign or moving water cisterns into visible rooms are small yet potentially impactful steps. Landlords can also use metering, submetering and water dashboards to raise further awareness and hopefully change behaviors.

However, tenant behavior, especially in offices, likely isn’t impacting water management at the scale necessary for results. “I even feel like the tenants could just leave their sinks running for a long time, and it might never even come close to the amount of water that it takes with some of these system designs we have,” said Hines’ Rodney, adding the disclaimer that that’s not a fact so much as his own theory. 

Even so, smaller-scale endeavors that address leaky faucets, poor plumbing, steam leakage and broken pipes do, ultimately, add up over time. So water management strategies don’t necessarily have to be complex or employ intensive, capital-heavy engineering. While proptech has been employed as a tool, high-tech solutions aren’t always best. Rather, you want to maximize cost and benefits with some simple planning and forethought, said Ballou. 

The EPA, for example, recommends developing a thorough water-management plan, tracking water use, and regularly checking for and repairing leaks, among other strategies. Tying into a municipally reclaimed water source is likewise easy and inexpensive, especially compared to a cool treatment system on-site. 

Even when a solution requires some heavy lifting — as is the case with Hines’ cooling tower changes — water management remains feasible.  

“To solve the problems that I just spoke about, they’re not simple solutions,” clarified Rodney. “But from an engineering standpoint, they’re things we know how to do.”

As such, water management solutions don’t have to be easy; they just have to be possible. To maximize this possibility, perhaps the best time to manage water is while you still have it. “By the time we turn on the tap and the water doesn’t come out,” said Rah, “it’s going to be far too late.”

Anna Staropoli can be reached at astaropoli@commercialobserver.com