6 Questions With Top ULI Executives Billy Grayson and Marty Borko


As thousands of urban planners, real estate professionals, and assorted others filed in and out of the Los Angeles Convention Center for the Urban Land Institute’s fall meeting, Commercial Observer was able to snag two of the organization’s bigwigs — Billy Grayson, ULI’s chief initiatives officer, and Marty Borko, its executive director for Los Angeles — for a brief (but not too brief) conversation about some of the main issues that had come up in the first days of ULI’s gathering.

These included embodied carbon versus operational carbon, adaptive reuse, and the Biden administration’s new office-to-residential conversion proposal.

SEE ALSO: Gov. Hochul Backs Down on Linchpin of Housing Plan for New York

This conversation was edited for length and clarity.


There was a question at this morning’s general session on embodied carbon versus operational carbon. Could you talk a little bit about some of those issues?

Billy Grayson: The industry — because of regulation, because of incentives from the financial community — has really focused on operational carbon and figuring out ways to get to net-zero operational carbon through energy efficiency, through integration of renewable energy, through energy storage and through better partnerships with tenants… 

I think there’s been a growing realization that the embodied carbon — that is, associated with the extraction, manufacturing, construction and building materials — is a significant amount of the overall carbon over a building’s lifetime. Some studies say it’s as much as 50 percent over the first 50 years of the building’s life. We’re in very early times in figuring out how to measure embodied carbon and how to set standards to cost-effectively reduce it in building construction. But the best opportunity to reuse embodied carbon is adaptive reuse and thinking about how we can reimagine an obsolete building for what the community currently needs.


Measuring the thing sounds like a really critical issue. Who’s doing that?

BG: There are groups like the Carbon Leadership Forum that are setting standards. The federal sector — the EU and Washington — are working to set up national and global standards for embodied carbon. Our ULI Greenprint program did the first voluntary disclosure of embodied carbon from this group of member leaders this year, and we’re just digging into what that can tell us about how the industry is doing in tackling embodied carbon.

The best way to get started in approaching embodied carbon is to better understand the carbon footprint of your materials and see if you can cost-effectively reduce, reuse and recycle. And that’s where adaptive reuse is probably the most cost-effective strategy to significantly reduce embodied carbon. [Replacing the current system would be] looking for ways to integrate rapidly renewable materials and lower embodied carbon materials into your development. So, that could be as simple as mixing your concrete on site versus trucking it in, which will reduce the embodied carbon associated with the transportation of concrete, to using a fly ash concrete or a lower-carbon concrete solution, or building with mass timber.

Marty Borko: Many of our members are actually doing that measurement themselves. That’s the work that Lendlease is doing, or that Kilroy was doing here in L.A. Many ULI members are actually really trying to understand their footprint. And they’re certainly better able to measure what they’re doing, you know, through development or reuse or all those pieces. And I think that’s the beginning of that database.


Obviously, there are a lot of issues in front of developers, not the least of which are interest rates, office vacancies, all these other things swirling around. Where in the whole pecking order do you think decarbonization falls?

BG: I think if you’re looking to attract global capital — or, you’re in a market that has a significant amount of regulatory incentives — you’re focused on decarbonization. If you can’t build unless you’re building a low-carbon building, it’s going to be front of mind. I also know that there’s a growing pool of global capital that will not loan to projects that do not meet a minimum climate standard. So, the Net Zero Asset Owner Alliance, and people who’ve adopted the United Nations’ Principles for Responsible Investment, are expecting their projects anywhere they are in the world to meet a certain environmental and climate performance standard, or they won’t loan money. 

So, in an environment with rising interest rates and liquidity crisis, being able to access that global capital that’s earmarked for sustainable projects is an important part of your global development strategy.


I wanted to ask about something that was said in the general session this morning about adaptive reuse. Laura Hines-Pierce of Hines said today that she had looked at 35 different buildings for possible adaptive reuse and only went ahead with one that fully met conditions.

BG: That checks out with other studies that we’ve seen published about major metro areas. Gensler published a study about San Francisco that was tied into a ULI advisory service panel, and the range of many of these adaptive reuse opportunities in most metro areas is between 2 and 11 percent. So, it varies dramatically, but it’s never going to solve 50 percent of the office stock through adaptive reuse. 

There are a lot of reasons why. One of them is that there is still a huge price spread between buyers and sellers. It’s just not economical at current prices to convert some of these properties. Some of it is structural from an engineering standpoint. It depends on your column spacing, your floor height, the number of elevator shafts, whether or not you can put in operable windows. And some of its public policy, whether it’s zoning or permitting entitlements. If it’s too costly or too complicated to rezone or re-entitle or re-permit your building, that’s going to kill your ability to do a conversion. So that’s why the range is 2 to 11. A lot of it will be public policy driven.


We are sitting at the foot of Downtown L.A., where there’s a lot of buildings that are sitting empty. Do you think there’s a public policy solution to what’s happening in Downtown L.A. given where we are politically?

BG: Time is money, and capital is not patient. Anything that can speed up your process of entitlement rezoning construction will make it easier to do adaptive reuse. I think also certain tax incentives — there are ways to create special tax districts or figure out ways to allow for tax abatement, because some of these projects can also help the city achieve some of its social goals whether it’s driving more affordable housing, or helping to revitalize a downtown that is challenged. 

There is a public incentive to reimagine these buildings. I’ve also recently heard about people who are floating bonds — municipal bonds — to buy down the interest rate of a capital stack. And these are municipalities that were able to borrow at a much lower rate than your average developer. 

MB: The mayor just recently released a new set of policy recommendations, and it’s exactly what [Billy’s] talking about — speeding up the time, getting administrative approvals on entitlements, reducing your entitlement from what can sometimes take 18 months, two years, down to eight, nine months. That would be a huge savings. 


What was the Urban Land Institute’s reaction to the Biden administration’s proposal last week?

MB: Well, it’s happening now — I mean, Friday! So, it’s a lot of conversation. I think people are really trying to dive into it. We’re actually talking about doing some convenings with our Housing Council to better understand it. So, it’s kind of too early to tell, but I think everybody’s optimistic that it was a really valuable step forward. That’s what I came out of today with. It’s been a really challenging time and we’re at this kind of apex where I think people are seeing opportunities that are coming out of all the challenges. So, I think good, I think positive; but I think it’s just too early to understand how it’s going to work.