Sustainable Alpha: The city of the future is green

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Molly Bordonaro is senior vice president at Gerding Edlen.

Sustainable Alpha features shared conversations with the best minds, portfolio managers and industry leaders working to maximize returns while prioritizing the environment, social and governance factors — what’s become short-handed in the industry as ESG. Sustainable Alpha highlights portfolio approaches and investment trends against the backdrop of broader themes such as resource constraints, policy changes and demographic shifts — all while shedding light on how ESG can impact your investments.

Sustainable Alpha conversations are led by John Wrenn, Senior VP, Investments for UBS. The Wrenn Ferguson Group has a combined experience of 200 years managing over 1.6 billion in assets, offering customized wealth management strategies for individuals, endowments and foundations. View the rest of his conversations with leaders in the sustainable investment community.

Here he's talking with Molly Bordonaro, senior vice president with Gerding Edlen in charge of the development firm's investment program including its Green Cities funds.

John Wrenn: In a recent report, "How Cities Are Vital to the Future of Sustainability" by Joel Makower, the question is asked can you have a healthy company in an unhealthy city? How does investing in healthy buildings drive returns for companies and investors?

Molly Bordonaro: At Gerding Edlen we believe that healthy buildings and healthy cities positively impact residents and businesses, and we strive to design and develop projects that enhance both their surrounding areas as well as the greater city. Our projects focus on the greatest savings with energy, water and waste as well as creating spaces that offer fresh air, foster creativity and incorporate art and culture. Market demand for green buildings — both commercial and residential — is now definitively demonstrating superior market performance with a number of notable, third-party studies confirming higher rents, lower vacancy rates and less tenant turnover for green or LEED certified properties. In addition, today's companies are realizing the importance of being in sustainable properties in order to recruit and retain the best and brightest employees. This market demand for green buildings is driving higher valuations for sustainable properties and third-party studies have noted the additional premium investors are willing to pay. In addition to increased rents and income, owners are procuring green buildings to mitigate the many risks associated with energy-price volatility and increased state and local government regulation, as well as operating savings associated with the new environmental technologies.