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Adaptive Reuse in Olympic Cities
Green Certified
Community Profile: Aurora, Illinois
USPAP Q&A
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Adaptive Reuse in Olympic Cities
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From an urban planning perspective, hosting the Olympic Games requires a number of unique building uses. In order to house
the events and their participants, many structures must be essentially "zoned" for Olympic use. After the Games,
however, if these structures no longer serve a clear purpose, a large-scale conversion strategy becomes necessary. To meet
this development challenge, adaptive reuse (AR) is often implemented by city planning committees. The objective of the AR
concept is, "to prolong the period from cradle-to-grave for a building by retaining all or most of the structural system
and as much as possible of other elements, such as cladding, glass, and interior partitions"; according to MIT's Green
Campus development group. Adapting their obsolete Olympic venues offers cities the benefits of reduced operating costs and
ultimately a greater return on their investment.
Although AR is applied to an extensive range of projects, it has proven successful in returning the land and space left
behind by Olympic construction to practical use. The 640-acre Sydney Olympic Park, for example, has undergone a continuing
process of conversion over the past six-years. Some structures remaining from the 2000 Summer Games have been adapted into
poly-functional recreation and park facilities, while others have been leased to restaurants and banks. Building on this
concept, London's 2012 plan calls for several new facilities to be reused in their original Olympic form, while others will
be reduced in size or relocated elsewhere in the UK for more flexible use. Each of these AR approaches demonstrates the value
of finding smaller uses for a large post-Olympic zone. Similarly, the city of Turin has already converted its entire Olympic
Village from 2006 into retail space and student housing. Turin's pre-development plan effectively used AR to return an Olympic
project into usable space within one year. Following these models, both Vancouver and London have slated their Olympic Villages
to be converted into thousands of residential units after the 2010 and 2012 Games. These examples demonstrate how even a small
AR initiative can achieve more efficient land and building use after the 17-day Olympiad comes to a close.
If not adapted quickly, however, vacant land and buildings can have significant financial consequences for taxpayers. Athens
is a prime example of this particular situation. In addition to building new structures, the Athenian Olympic Committee renovated
and greatly expanded many existing sports venues leading up to 2004. Yet, 18-months after the games, these structures were
rarely used and few were open to the public (see end note 3). In the meantime, the UK's Building magazine estimates that
these empty stadiums have cost the Greek public $40 million per year in maintenance. They serve as a reminder of the rushed
development strategy implemented for the 2004 Summer Games, and of the costs of vacant structures. An extensive AR plan avoids
these additional costs by ensuring that buildings are in a structural position to be redesigned and/or leased beginning immediately
after the termination of their Olympic function.
Aside from achieving cost and space efficiency, an Olympic planning committee may combine AR and sustainability goals
by reusing older, pre-existing structures for events. Not only does this strategy conserve virgin material and land, but it
also provides an opportunity to renovate outdated buildings with modern facilities (for instance, the opening and closing
ceremonies in Turin took place in a refurbished stadium dating from 1933). Building on this concept, Vancouver will utilize
its existing infrastructure and many of the city's Olympic-ready venues in 2010, rather than relying on new construction.
The current BC Place Stadium (1983) will host opening/closing ceremonies, while older buildings such as the Vancouver Convention
and Exhibition Center, are undergoing renovation projects to expand their capacity. In general, renovation projects have reduced
the need for new construction, making them attractive options for planners. As seen in the previous table, a clear correlation
exists between the number of new Olympic structures built and the total development cost to taxpayers, showing how each element
of AR affects the others.
High construction costs may be misleading however, as the efficiency of AR is often trumped by other urban priorities.
For instance, Beijing's $40 billion estimated budget for the 2008 Olympics has virtually no AR considerations, but a huge
portion of city's Olympic funding has been spent on improving transportation and air quality. From statistics contained in
the table, it is clear that China, compared to other host cities, is not following the AR model of smaller and cheaper buildings
that are easily reused. Rather, Beijing has elected to build larger, permanent structures due to the city's need for an expanded
infrastructure. Chinese objectives for the 2008 Summer Games serve as a reminder that AR (and sustainability in general) will
not fit the agenda of every host city. If later games are held in Africa and South America, as the IOC has suggested, candidate
cities may also opt for more permanent, high-budget investments rather than space-saving development. This direction makes
more sense for locations where existing infrastructure or venues are limited.
Urban planning committees must undeniably build to meet their unique needs, but those that can include AR in their Olympic
development cycle stand to save money and valuable city land. As the Olympic examples have demonstrated, future conversion
consideration in the planning phase, or creative reuse of existing structures, can make or break a municipal budget. While
less developed cities may opt for larger and more permanent improvements, AR concepts offer savings in conversion and vacancy
expenses by way of a faster transitional period after the Games. Ultimately, practical use is returned to land and structures
at a reduced cost of time, money, and new materials.
Endnotes
1. Developing Sydney Olympic Park. http://www.sydneyolympicpark.com.au.
2. London Olympic Delivery Authority. http://main.london2012.com/en/ourvision/regeneration.
3. Oscar Reyes, "The Olympics and the City."; April 2005 http://www.redpepper.org.uk.
4. International Olympic Committee, "Legacies and Costs of the Olympic Games." Olympic Review, April 2005.
5. Associated Press, "Beijing 2008 Olympics Aiming High." August 7, 2007. Catherine Wheatley, "The Last
Straws." Building. May 2007, Page 43.
The shift to green building is more than an emerging trend; it is a force that will fundamentally change commercial construction
over the next decade. Interest in green development is poised to gain momentum as rising energy costs, global warming, and
evidence of enhanced productivity continue to drive demand for sustainable work environments. Calculating the value of truly
"green" features, however, will be more challenging than past improvements and ventures into sustainability. Previously
green benchmarks in American construction (urban heat island reduction, appliance efficiency, and solar panels) constitute
only a small fraction of the new green building model, and may in fact be the easiest features to appraise. Rather than installing
single improvements, the new concept of sustainable development requires an entire structure to fit an environmentally sound
profile. This profile integrates every step of the development process, from high efficiency land use and low-waste construction
guidelines, to tenant health standards with improved indoor air quality and sunlight distribution.
By the end of 2007, about 6% of the country's non-residential construction will be green, translating to a $15 billion
piece of the industry (see end note 2). With the increasing availability of fully green workspace, new questions will quickly
and inevitably arise for appraisers. Some components of sustainable construction, such as water conservation and energy reduction,
can be easily quantified in real dollar savings. Other improvements, however, are less tangible. For example, how does one
put a price on, or even calculate, the image boosting potential of operating a green development? And how, if at all, can
an environmental benefit be appraised?
While there are currently less than 1,000 green certified properties in the country, preliminary statistics have shown
increases in employee productivity, less sick days, and improved moods for the tenants of highly green structures. But do
these features translate to value? Without a larger sample size it is difficult to determine. In fact, part of the challenge
facing the valuation community is the limited number of green sales and lease transactions.
Given the narrow range of properties available for comparisons, the most logical first step for appraisers is to adopt
a set of standards for this segment of the industry. Fortunately, a national rating system already exists. The U.S. Green
Building Council (USGBC) uses the Leadership in Energy and Environmental Design Green Building Rating System (LEED) as the
national benchmark for sustainable construction and building operation. LEED uses a 69-point scale to evaluate buildings (new
construction), with anything receiving a score of 26 or above being granted LEED Certification. There are three additional
ratings above "Certified" depending on the range of a particular building's score. The system is still gaining traction,
but learning which components of a structure meet (or could be improved to meet) LEED standards will eventually help to assign
value based upon structures with comparable ratings.
For the interior design of large commercial developments, examples of USGBC recommended features include bicycle storage
rooms, a minimum 20% water use reduction from conventional or previous construction, and daylight views in 75-90% of open
space. It is also suggested that 70-100% of appliances in the structure have an Energy Star Rating. However, these are mainly
cosmetic changes in design and don't effect the selection and use of building materials.
The construction process requires its own set of guidelines, given that material selection is of great importance to a
high LEED rating. Credit is awarded for the use of at least 10% recycled content and diverting 50% of construction waste material
from landfills. Due to these considerations, green building adds 1-2% to commercial construction costs, while the amount
can range significantly higher for residential units.
There's no question that LEED structures cost more to build and ask higher base rents, but the benefits to tenants and owners
are significant. For example, conventional office space may lease for $25.00/SF base rent in a given area, while green space
in a certified building may lease for $30.00/SF base rent in the same area. After taxes and common area maintenance (CAM),
however, their gross rental rates may be quite similar, as these variables can offer large savings in efficiency to green
tenants. If a tenant in the conventional building paid CAM of $7.00/SF, while tenants in a green structure paid $2.00/SF,
the $5.00/SF difference in base rent would already have been neutralized. These utility and maintenance savings are very possible
due reduced electric and gas costs, water reuse, and natural lighting. Moreover, given that federal and state tax incentives
are likely to increase, green workspace could conceivably become much more cost-efficient than traditional structures in the
near future.
It may be more valuable for landlords to own green/LEED buildings as well, since most modern green features offer recognized
health benefits. Given the prevalence of smoking bans, which have taken effect in many American cities, and precautions against
particulate matter such as asbestos, health considerations seem to be highly desirable. Therefore, air quality monitoring
and the required use of "low-emitting" construction materials (these range from composite wood to carpeting) will
not only provide a safer work environment, but should increase demand. The greatest ownership advantage, however, may be a
product of tenant satisfaction. Happy tenants will renew, and more lease renewals over comparable non-green properties could
mean millions of dollars in savings for a landlord.
Yet, in today's market, landlords, tenants, and homeowners alike may view green buildings as superadequate. The vast majority
of LEED developments have been commercial or municipal buildings (McGraw-Hill Construction estimates that only 0.3% of American
homes are truly green), and some have only been constructed as such due to city mandates. Nevertheless, new initiatives from
state and federal government could help propel consumer demand for green projects. In Europe, for example, green-seekers
have enjoyed government (EU) funding and significant tax breaks. American incentives are limited by comparison, and vary widely
by state.
Perhaps if green homeowners are offered greater buying incentives, such as reduced mortgage rates, or if energy-saving
technology, like wind or solar energy, becomes so efficient as to be compulsory, then demand for green living will increase.
Unfortunately, given the housing situation going into the Third Quarter, many markets will already be struggling to attract
buying activity within traditionally constructed homes.
It is likely, therefore, that appraisers will be dealing almost exclusively with green features in office and industrial
properties coming online in the near future. As companies seek to lower operating costs and improve their green image with
these buildings, features such as water reduction, indoor environmental control, and sustainable construction will be essential
selling points. Appraisers will need to be increasingly aware of LEED eligibility, and specifically which components bring
real savings vs. health or psychological benefits to a project.
In summary, green projects, though requiring a greater initial investment, easily recoup their premium prices through
maintenance and utility savings. While heating/cooling and water efficiency thereafter adds value on its own, green properties
also offer landlords and tenants broader health and image benefits. Many American companies are adapting to green living,
and using eco-friendly workspace is now a key part of a responsible business model. In order to value these types of advantages,
appraisers can rely on the growing popularity of sustainability ratings such as LEED certification. And, while the current
pool of LEED certified structures is certainly small, it has nearly doubled since July of 2006, representing the momentum
of the development landscape. Growing certification numbers dictate that green building objectives, systems, and terminology
will soon be an essential part of property valuation.
Endnotes
1. Heat Island; The heat generated by large buildings is often mitigated through trees, gardens, or soil on rooftops.
2. John Ritter, "Building 'green' reaches new level." USA TODAY, Nation. 7/26/06.
3. 984 buildings as of 8/7/07. LEED Certified Project List. United States Green Building Council. http://www.usgbc.org.
4. LEED Commercial Interiors Project. United States Green Building Council. http://www.usgbc.org.
5. From Portland State University, reported by John Ritter, "Building 'green' reaches new level."; USA TODAY,
Nation. 7/26/06.
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Community Profile: Aurora, Illinois
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The city of Aurora extends into portions of Kane, DuPage, Will, and Kendall Counties, covering approximately 39.4 square-miles.
It is the third largest city in Illinois by population. The city is bounded by Naperville to the east, Montgomery to the south,
Sugar Grove to the west and both North Aurora and Batavia to the north. Cutting through the center of Aurora on a southwest
direction is the West Branch of the Fox River. Lake Street parallels the River through most of the city.
For the most part, the Chicago metropolitan area is flat and in many cases, community boundaries can be relatively arbitrary.
They tend to wrap around large land uses such as a cemetery, or stop at the Lake, a canal, a river or a railway track or follow
a main road or section street. For the Aurora community, several years of annexing have taken away any resemblance of a regular
shape and the city is now a patchwork of community lines with no major demarcating features. To the north, the boundary appears
to be at the East-West Tollway, Interstate 88. To the west portion of Aurora, Orchard Road makes up the boarder, while the
Virgil Gilman Nature Trail and both Montgomery Road and Hericho Road make up the southern line. The eastern perimeter is highly
irregular with no major pattern but generally ending at Highway 59. The most eastern portions of the city of Aurora cross
into a total of four counties: Kane, Kendall, Du Page and Will.
Infrastructure
Kane County as a whole has been experiencing rapid growth during the past 30 years due to the expansion of the Chicagoland
area. Aurora has shared in much of this growth, and has become a commercialized area with high demands of housing construction
as a result. Helping to fuel this growth is the area's transportation infrastructure. For example, the express train to the
city is only 35 minutes, with three inbound and three outbound express trains daily. In 1990, a second train station opened
on Illinois Route 59 further enhancing the rail access.
The city is also served by two Interstate highways, I-55 (Stevenson Expressway) to the south and I-88 (East-West Tollway)
to the north. The latter is part of the Oak Brook-Naperville 'high tech' corridor, known as the East-West Corridor. The former
is opening up many new residential and industrial areas toward the southwest of Chicago, and with-in driving distance of Aurora.
The Loop is easily accessible, with a drive-time of 45-60 minutes depending on traffic. The Chicago O'Hare International Airport
is approximately 40-miles northeast of Aurora.
Population
The Aurora area has shown well above average rates of population increase over the last decade. According to the 2000
Census, between 1990 and 2000 the population of Aurora increased from 99,581 to 142,990, or 43.6%, and is projected to have
climbed a further 19.3% by 2006. Naperville, located in DuPage County municipality, also saw an overall increase, when its
population rose 50.4% from 85,351 to 128,358 people. Naperville is estimated to have grown an additional 11.3% as of 2006.
Population comparisons and the projected 2000-2006 growth rate for nearby communities are outlined on the next page.
The inner suburban and city population has moved to the outer suburbs for newer development opportunities and the greener
open areas. This movement demonstrates the standard population growth cycle for a large metropolitan area such as this location.
The population statistics as of the 1990, 2000, and 2005 Census for the City of Aurora and surrounding communities are detailed
in Table #1 below.
The majority of the metropolitan area's population is located in Cook County, but trends in Kane, Kendall, and DuPage Counties
(as well as other collar counties) also show healthy and increasing population levels. The 1990 to 2005 population statistics
show impressive increases over this period. As mentioned, this is likely due to the suburban population growth into newer,
greener areas that are noticeably less dense than the city areas in Will County and the other collar counties (these counties
are also known to contain more favorable tax laws).
Other reasons exist for this strong population growth as well. Most importantly, the southwest suburban area lies in the
outward path of development from Chicago. In the 1980's, the Naperville-Aurora-Warrenville region was one of the closest areas
to Chicago that still offered large tracts of developable land. Additionally, good transportation, good schools and a pro-development
climate have contributed to strong growth. At this point there are still tracts of undeveloped land to the southwest of Naperville
and Aurora along Illinois Route 59, and over the long term these areas are likely to be developed in a mainly residential
direction. The total population of the metropolitan area has also increased over the last fifteen years, but this increase
has been mainly away from the more established areas in the older suburbs.
Local Economic Forces
The increase in employment in the Aurora-Naperville region compares favorably with the metropolitan and city of Chicago
employment fluctuations. The recent employment trends in the Aurora-Naperville area are shown in the table below.
The employment percentages in the Aurora-Naperville area showed strong increases from 1990 to 2000. The metro area in
general saw significant increases in employment during this period as well. The only weakness was in the city of Chicago,
where employment decreased by 5.18%.
These statistics demonstrate the strength of the job market in Aurora and other outer suburbs such as Naperville. In
general, the newly developed areas further away from Chicago have shown significant increases in employment, not only in the
past decade, but in the past twenty years.
The previous table shows the major employment types in the Aurora community as of 2005. The sales, office, and management,
professional industries show the largest percentages of persons employed with a combined total of 55.5%. This is to be expected
for a middle-income community. The following table shows the actual employers in the area and the number of persons employed.
Per Capita Income
The city of Aurora posted about average per capita income for the area in 2005. Although at approximately the same level
as Chicago, Aurora's per capita income was far below the level reported by neighboring Naperville (by about 41%). But again,
Aurora has larger areas of industrial development compared to other communities, and is about on par with statistics from
similar cities such as Joliet. The table on the following page compares the surrounding cities and relevant county statistics.
The DuPage County average was significantly higher than surrounding counties and the Illinois state average in 2005, boosted
largely by higher income communities such as Naperville.
Transportation
Aurora is approximately 40-miles west of the city of Chicago's Central Business District of Chicago (the Loop) and approximately
40-miles southwest of the Chicago O'Hare International Airport. The city is the final stop of the Burlington Northern Santa
Fe line of the Metra commuter rail system, which provides rail service into Chicago. Aurora manages the southern parking lot
of the Metra station at Illinois Route 59, while the northern lot is managed by neighboring Naperville. The city uses the
Pace bus system for public busing. Along with Metra trains and Pace buses, Greyhound buses also stop at the Aurora transportation
center. Aurora does not currently have a stop for Amtrak trains.
Housing & Median Home Value
Aurora had a total housing count of 57,954-units according to the 2005 Census Bureau statistics. Of the 54,416 occupied
units, 39,099 or 71.9% were owner-occupied, with a median value of $186,900. There were a total of 15,317-renter occupied
housing units, and an average 3.13-persons per household in the city of Aurora, which is typical of the area.
The Aurora area had somewhat weak home values in 2005. At a median of $186,900, the city was well below county averages.
Naperville had the highest median home value for the area at $382,500, which was more than double that of Aurora. However,
both cities saw a significant increase in value over the 2000-2005 period. The table on the following page shows the Aurora
and surrounding community's median home value statistics.
The Aurora community, even at 37.9% appreciation, shows the weakest rise in home value for the area. Meanwhile, the city of
Chicago showed the greatest increase in value at 85%. Statistics from Kane County were comparable to Aurora, showing only
a 4.9% higher increase. Of the five-county comparison, Cook County recorded the greatest gains in home value, at 53.3% - helped
largely by performance in the city of Chicago.
Conclusion
Aurora is a stable community with a steadily growing residential, industrial, and commercial sector. However, despite
the city's above average population growth during the past decade, home values and per capita income still lag slightly behind
most of its neighbors. Yet, it is our opinion that based on the local amenities, transportation facilities and employment
opportunities in this and the surrounding communities, property values in Aurora will continue to hold steady for the foreseeable
future. This is an area of Illinois that has shown a rapidly increasing population base in the last decade or longer, following
the direction of several suburban pockets of the Chicago metropolitan area. This trend is expected to continue at least through
the near future. It is not expected to realize any large appreciation in this area, but a stable to steady increase in value
throughout this community is predicted over the next decade.
Obligation to Analyze Prior Listings of Subject Property
Question:
Standards Rule 1-5(a) requires an appraiser to analyze all current listings of the subject property. Does it also require
analysis of prior listings of the subject property?
Answer:
No. Similar to sales history requirements for comparable sales, this Standards Rule does not require an appraiser to analyze
a prior listing history for the subject property. However, in the development of an appraisal, an appraiser is required under
the Standards Rule 1-1(b), to not commit a substantial error of omission or commission that significantly affects an appraisal.
If information about a prior listing is known by the appraiser, and that information is relevant to the appraisal problem,
it must be considered.
Q&A taken from:
Appraisal Standards Board, The Appraisal Foundation. USPAP Q&A, March 2007
www.appraisalfoundation.org
